Posted on 08/01/2006 7:18:58 PM PDT by paulat
Shareholder sues McGavick over Safeco pay
05:26 PM PDT on Tuesday, August 1, 2006
Associated Press
OLYMPIA, Wash. - A Safeco Insurance Co. shareholder sued Republican U.S. Senate hopeful Mike McGavick on Tuesday, claiming the former executive's $28 million payout for leaving the company was fraudulent and wasteful.
The claim resembles criticism from Washington state Democrats, who already have filed a federal campaign complaint about what they called McGavick's improper "golden parachute."
McGavick has dismissed those complaints, but did not immediately return messages seeking comment on the lawsuit. Safeco spokesman Paul Hollie also declined immediate comment, saying company lawyers were still reviewing the complaint.
The lawsuit was filed by Emma Schwartzman, 27, a former waitress now studying at the University of Washington. Schwartzman says her great-great-grandfather was a founder of General Insurance Co., a Safeco predecessor.
McGavick and Safeco are named as defendants in the lawsuit, as are the company's board members, including former Democratic Gov. Gary Locke. It was filed in U.S. District Court in Seattle.
The lawsuit claims a transition agreement paving the way for McGavick to leave Safeco at the end of February was "an extraordinary feat of corporate waste and fraud."
"It authorized the improper transfer of millions of dollars of Safeco's assets to McGavick as unearned compensation," the complaint said, adding that the agreement was "artfully drafted" to hide large amounts of money from shareholders. It seeks the return of McGavick's entire 2006 compensation, or whichever portion is found to be improper.
McGavick had served as Seattle-based Safeco's chief executive since 2001, leaving in March to concentrate on his Senate campaign. He is trying to unseat first-term Democrat Maria Cantwell - herself a millionaire and former corporate executive at RealNetworks Inc.
In financial disclosures filed with the Senate in June, McGavick reported earning $28 million from Safeco for the first two months of this year. McGavick's campaign said most of that compensation was stock and stock options from the company.
McGavick's 2006 Safeco pay includes about $23 million in stock and options. McGavick also collected a bonus of about $2.3 million for his work in 2005, the campaign said.
In addition, McGavick was given about $3.3 million in accelerated stock options for helping the company through its leadership transition and agreeing not to work for competitors for three years.
The lawsuit claims McGavick's payments were irresponsibly excessive, particularly because he already was working on his campaign in the early part of the year. It calls his two-month transitional employment an "artifice" meant to help McGavick exercise more stock options.
McGavick has not yet said if he will use his personal fortune to finance his campaign, as Cantwell did when she defeated former Republican Sen. Slade Gorton in 2000.
McGavick said in July that his campaign had raised about $1.7 million in the previous quarter, and counted about $1 million cash on hand. Cantwell said she had raised more than $2 million and had more than $6.4 million in the bank.
The state Democratic Party asked the Federal Elections Commission to investigate McGavick's compensation in April, arguing the multimillion-dollar package could amount to an illegal campaign subsidy.
A statement released by Schwartzman's lawyers said neither the Democrats or the GOP knew about the lawsuit before it was announced Tuesday. Cantwell's campaign and the state Democratic party declined comment.
Among Schwartzman's lawyers is Knoll Lowney, a Seattle attorney who recently helped overturn a 2001 state initiative that limited local property tax increases.
Gary Locke is on the board of SAFECO...will they make him defend Cantwell?
She is nothing but a Dem stooge.
I wonder if the Cantwell campaign hired him, too?
I already asked the kind Admin Mod to fix my title....
Hired who?
The person making the complaint. After all, Cantwell hired some of her former primary opponents to work for her campaign.
That's why I didn't get your question. The plaintiff is a 27-year-old waitress who was recruited by a Dem blogger.
It's really worth it to see the story.
sionnsar ping!
oops! sionnsar ping!
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