Shares in a New Zealand forestry biotech company have slumped 15 per cent in early trading on the back of news that an overseas firm it part-owns must pay $81 million in compensation following a US court case.
NZX-listed Rubicon were down 4c this morning to 2c, a fall of 14.81 per cent. The benchmarch S&P/NZX 50 was down 0.46 per cent.
Nine former employees of seedlings company ArborGen were tricked into accepting a revised long-term incentive plan that cut their combined compensation package by around 90 per cent after the company began to grow, a South Carolina lower court judge found.
The lawsuit filed in 2010 against ArborGen, part-owned by Auckland-based NZX-listed forestry biotech company Rubicon, alleged that company board members used "deception, misplaced trust and pressure tactics" to convince employees to join the less valuable incentive plan.
• Part-owned Kiwi company fined $81 million
In a judgment released late last month, Judge Edgar Dickson said ArborGen's "legacy employees reposed special trust and confidence" in the defendants -- which included the company itself, several board members, International Paper, MeadWestvaco (now WestRock) and Rubicon.
In turn, the workers were "abused by ArborGen, its founders, its board members and its management team", the judgment said.
"In not honouring the contracts, the defendants acted with a lack of honesty and integrity in communicating with the plaintiffs," it said.
"The defendants orchestrated a cover-up scheme created and executed to switch the plaintiffs out of the [original] plan that the defendants had determined to be 'too rich', all in an effort to eliminate what defendants recognised as a 'high liability risk'."
Rubicon chief executive Luke Moriarty, a New Zealander named as a defendant in the lawsuit, was criticised by Judge Dickson for his evidence.
"At trial he was never qualified as an expert to render opinion testimony on the issue of valuation or damages ... This court views defendant Moriarty's opinions as not supported by competent, credible evidence and self-serving," the judgment says.
Last month when the US court signalled it would likely rule against them, Rubicon said it would appeal the decision.
"Rubicon repeated that the intention is for ArborGen and each of the three partners to vigorously appeal the lower court's decision, and that they had been advised such appeals process could take a considerable period of time to be determined," a company statement said.