NEW YORK — Senior officials at beleaguered Woolworth Corp. were named in yet another lawsuit on Friday, this one aimed not only at collecting monetary damages but at ousting the company’s board of directors.
In a complaint filed in Federal Court here, Ronald Sternberg, a Woolworth shareholder, said present directors should be replaced because they were elected based on “materially false and misleading proxy statements” regarding the company’s financial health.
Woolworth directors, the suit contends, conspired to give a false impression of the company’s prospects to “protect and perpetuate their directorial and/or executive positions and the substantial compensation and prestige they obtained.”
The suit is at least the 12th filed in the aftermath of Woolworth’s March 30 announcement that it was investigating possible accounting irregularities and would be forced to restate financial results for the year ended Jan. 29.
As reported, the irregularities and subsequent uproar, including a 16 percent drop in the stock within 48 hours of the announcement and an advisory by factors not to ship Woolworth, prompted William K. Lavin, chairman and chief executive officer, and Charles T. Young, senior vice president and chief financial officer, to step aside temporarily.
Among those named as a defendant in the latest suit is James E. Preston, chairman and ceo of Avon Products, and a director of Woolworth since 1983.
The suit charges Preston and other board members with amending Woolworth’s bylaws in August 1993 in order to “insulate [directors] from liability for their wrongdoings” and to protect them from lawsuits.
The latest suit also seeks to strip the defendants of all salaries and other compensation received during the period in which they allegedly breached their duties and to force them to give up any profit from the sale of Woolworth stock.
Woolworth said it does not comment on pending litigation.
Separately, the state of Louisiana is apparently set to join Florida in filing a suit against the retail giant for unspecified damages.
Florida’s State Board of Administration recently filed suit against Woolworth in federal court in White Plains, N.Y. The Florida board, which oversees the pension fund for state employees, controls 432,500 shares of Woolworth stock. The Louisiana case will involve holdings of about 141,000 shares.
As of Jan. 29, Woolworth had 131.7 million shares outstanding.
I. Walton Bader, of Bader & Bader, local counsel to both states, said Louisiana recently sold its shares and racked up a loss of $1.4 million. Florida still owns its shares, he said.
Bader pointed out that it is much easier for a state to win than for a private shareholder because “all we have to show is failure to disclose, not a willful failure.”