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NEWS12 October 2009

Emak Worldwide vows to fight former CEO’s damages claim

Legal North America

US— Marketing services group Emak Worldwide has vowed to “vigorously defend” itself against a lawsuit filed against it by shareholders including former CEO Donald Kurz.

The plaintiffs, which include investors Trinidad Capital Master Fund and Sems Diversified Value alongside Kurz, are demanding $100m in compensatory damages and $300m in compensatory damages.

They claim that current Emak CEO James Holbrook drove “one of the best marketing services agencies in the world to the brink of financial ruin” and rejected a $15-per-share takeover offer before the price of the company’s stock fell to 8 cents.

The plaintiffs also alleged that Emak’s share price has risen recently because the firm “unlawfully concealed the loss of its largest client” in the shape of fast food chain Burger King.

However, Emak has hit back at the claims, calling the complaint a “misguided and frivolous effort” and linked it to Kurz’s previous attempts to gain control of the company.

Stephen Robeck, chairman of the board at Emak, said: “It is yet another costly and destructive action involving a disgruntled former employee of the company. Since being ousted as CEO by Emak’s board in 2005, Kurz has made numerous attempts to gain control of Emak, including a failed proxy contest in 2006. The board considers this to be another attempt to baselessly discredit its members and Emak’s management team for personal gain, as evidenced by the suit’s attempt to recover funds for Kurz and the other plaintiffs personally.”

Robeck added that Emak had invited Kurz to join the board in June, three years after he left, in the hope that Kurz “would make a positive contribution to Emak’s business challenges instead of simply continuing what appears to be a personal vendetta”.

CEO James Holbrook also went on the offensive and said: “It is lamentable that Kurz feels the need to continue to attack the company that he failed when he was its CEO. He has cost Emak and its shareholders well over a million dollars in legal fees since his departure, hard-earned money that would have been much better spent investing in our growth areas. We look forward to this ridiculous suit being dismissed in the near future.”

Emak owns the agencies Equity Marketing, Logistix, Mega and Upshot, who between them offer a range of market research, consumer insight development and strategic planning services.

@RESEARCH LIVE

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