Iacocca Sues Chrysler Over Options Ex-Chairman Says Company’s Decision Cost Him Millions

Former Chrysler Corp. chairman Lee Iacocca filed suit against the company Monday, claiming it acted unlawfully by blocking him from cashing in millions of dollars in stock options he earned while he was its leader.

“I deeply regret being forced to sue a company that I helped build and love very much,” Iacocca said in a statement announcing the lawsuit.

Chrysler’s board in July denied a request from Iacocca to exercise options to buy 112,500 Chrysler shares. The company said he had violated stock plan rules that forbid him from working for anyone without Chrysler’s permission and from doing anything that hurts the company.

The action came after Iacocca joined billionaire investor Kirk Kerkorian in an abortive attempt to take over Chrysler.

Chrysler officials had not seen the lawsuit Monday, but spokesman Steven J. Harris said it was not unexpected. He said Chrysler is “quite confident with its position.”

The options Iacocca tried to use in July expired Monday. The lawsuit, filed in Los Angeles, covers them and 1.6 million more Chrysler options that expire between now and the end of 1997.

Stock options give the holder a right to buy shares at a fixed price at a future date and are commonly used to supplement the pay of high-level executives. At Chrysler’s current share price, Iacocca says his options would bring a profit of more than $40 million.

“As compensation for being one of the key architects of Chrysler’s turnaround, the board awarded me the bulk of my earnings in the form of stock options, in lieu of salary and bonuses,” Iacocca said in the statement.

He said Chrysler was trying to “confiscate a large share of my total compensation for the past decade.”

Iacocca retired as Chrysler chairman at the end of 1992. He had led the automaker since 1978.