Louisiana-Pacific Board Forces Out Key Executives
With its legal woes multiplying and profits plummeting, Louisiana-Pacific Corp. on Monday announced the resignation of chairman Harry Merlo and two other top executives.
Board member and former chief financial officer Donald R. Kayser, 64, was appointed chairman and chief executive officer.
The resignations followed a rare re-evaluation of earnings that led Louisiana-Pacific to cut its second-quarter profits by a third to $26.3 million, or 25 cents per share, last week. In the second quarter of 1994, Louisiana-Pacific earned $81.9 million or 75 cents a share.
Merlo, 70, had been chief executive since the company was incorporated in 1972. He built a reputation as an innovator in building products and is credited with taking a weak conglomeration of forest products businesses and turning them into an industry leader.
But the company has had to pay nearly $46 million since 1985 to settle lawsuits alleging its Inner-Seal house siding is defective. As well, the U.S. Justice Department last month levied a 56-count indictment against the company, accusing it of cheating on environmental laws and product quality in Colorado.
Merlo was also named in a 1993 lawsuit by a woman who alleged executive and administrative assistants to Merlo were chosen for their sexual attractiveness.The lawsuit is pending in U.S. District Court in Portland.
“Since last spring, when it became obvious that our legal problems were becoming more difficult, the board has been scrutinizing how the company has been managed. After long discussions, we determined that it was time for a new management team,” Kayser said Monday.
James Eisses, 58, executive vice president, and Ronald Paul, 52, vice president for operations, also agreed to step down. Eisses was general manager of the company’s Northern Division based in Hayden Lake, Idaho, while Paul headed the Southern Division in Conroe, Texas.
Louisiana-Pacific trading was two to three-times above average Monday, with more than 900,000 shares changing hands, said Larry Katz, financial analyst with Pacific Crest Securities. Stock closed down $1.635 to $24.62.
“It’s a big surprise,” Katz said. “It’s not very often in corporate America that the whole senior management team gets fired or resigns, whatever may be the case, when the company isn’t in trouble financially.”
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