Former Dow Chemical Co. executives Romeo Kreinberg and J. Pedro Reinhard separately have retained well-known lawyers since being fired by the plastics and chemicals giant April 12.
The two Dow veterans - with a combined 67 years of service to the Midland, Mich.-based firm - were accused of being involved in ``unauthorized discussions with third parties about the potential acquisition of the company,'' according to a Dow news release.
Now, Kreinberg has hired Stanley Arkin of New York-based Arkin Kaplan Rice LLP, according to an April 16 Dow Jones Newswires story, while Reinhard has retained Gary Naftalis of New York's Kramer Levin Naftalis & Frankel LP law firm.
Attempts to reach Arkin were unsuccessful, and Kreinberg did not return calls placed to his Midland residence. Naftalis' office confirmed that he is representing Reinhard and forwarded a prepared statement. In the statement, Reinhard denied any wrongdoing. Kreinberg did the same in several published reports.
``I categorically deny that I have been part of any secret effort to take over or acquire Dow Chemical,'' Reinhard said. ``It is regrettable that the company has rushed to publicly condemn me in the face of my complete denial of wrongdoing.
``I have loyally served this company for 37 years, including as a director since 1995. My integrity, professionalism, and adherence to my fiduciary responsibilities have never been questioned before. I have always faithfully complied with my fiduciary duties to Dow.
``My conscience is clear,'' Reinhard added. ``I plan to explore my legal options and have retained counsel.''
Naftalis recently defended Walt Disney Co. Chief Executive Officer Michael Eisner in a shareholders' lawsuit concerning the hiring and termination of Michael Ovitz. In 2006, Arkin defended Elsie Ma Leung - former chief financial officer of Gemstar-TV Guide International Inc. - from charges that that she helped inflate the company's revenues. That case resulted in a settlement with the Securities and Exchange Commission.
Neither Kreinberg nor Reinhard has taken any formal legal action against Dow, company spokesman Chris Huntley said in a telephone interview. Industry sources said that Dow stock options held by Kreinberg and Reinhard may be affected by their terminations. Huntley declined to comment on that topic.
Based on shares held and on stock options, Reinhard is Dow's second-largest individual shareholder, while Kreinberg ranks third. The top individual shareholder is Chairman and CEO Andrew Liveris.
At the time of the firing, Kreinberg, 56, was executive vice president of Dow's performance plastics and chemicals unit. The 61-year-old Reinhard retired as Dow's CFO in 2005, but remains on the company's board. On April 16, Dow announced it was reducing the size of its board from 12 to 11, and that Reinhard would not be renominated at the firm's May 10 annual meeting.
Dow spokesman Huntley said the size of the board fluctuates fairly often, and has been as high as 16 in recent years.
Several industry sources said they were surprised by the speed with which Kreinberg and Reinhard were let go by Dow. Two days before the firing, the firm received word from ``an exceptionally reliable contact'' that Kreinberg and Reinhard had met numerous times with investors.
The Wall Street Journal has reported that the whistle-blower came from New York financial firm J.P. Morgan Chase & Co., and that some of the investors were from the Middle Eastern nation of Oman. Dow has declined to confirm either of those claims. Kreinberg had worked with Oman Petrochemical Industries Co. LLC, a petrochemicals joint venture between Dow, the Oman government and the state-owned Oman Oil Co. SAOC.
Sources also said that personal rivalries may have played a role in Kreinberg's and Reinhard's alleged actions. Reinhard was a candidate for the CEO position when Michael Parker was named to that role in 2000. Kreinberg and Liveris also competed for a chief operating officer title that Liveris received in 2003.
Kreinberg and Reinhard could have benefited from a leveraged buyout for Dow by being involved in the ownership and management group of the new firm, sources said.
But Dow's history isn't full of such swift actions.
``Dow always has been a very conservative company,'' said a Dow retiree who spent more than 30 years with the firm. ``Sometimes it was frustrating because so much was done by committee.
``It's the kind of company that doesn't take these kinds of decisions [the firings] lightly, so they must have had solid information.''
The Dow veteran also joined other market watchers in doubting the value of a disassembled Dow.
``Knowing how Dow is built and integrated, [a leveraged buyout] isn't going to happen without intertwining supply,'' he said. ``It's not like buying an insurance company and splitting up the car insurance and the home insurance.''
Dow is one of the world's largest plastics and chemicals firms with 2006 sales of $49.1 billion.
Although Dow's 2006 sales were up 6 percent vs. the year before, its profit fell from $4.5 billion to $3.7 billion. Dow is one of the world's largest producers of polyethylene and polystyrene. The firm derives about half of its annual sales from plastics-related businesses.
