Appeals court upholds $16.5M award to Peter Karmanos

Ian Thibodeau
The Detroit News

The Michigan Court of Appeals ruled to uphold a $16.5-million arbitration award to Peter Karmanos Jr., stemming from a lengthy legal battle with Compuware Corp., the company he co-founded.

On Thursday, judges Christopher Murray, Mark Cavanagh and Kurtis Wilder upheld the decision for Compuware to award Karmanos $16.5 million for wrongful termination and taking away his stock options in 2013.

The judges wrote in a six-page opinion that Compuware’s appeal is “at root, a thinly veiled attempt to take a second bite at the apple.”

Compuware’s appeal argued that the “award fails to specify any basis in fact or law justifying such damages.”

The appeals court decision upheld a 2015 ruling by Wayne County Circuit Judge Daniel Ryan, who said Compuware had no basis to second-guess, modify or vacate arbitrator Gene Esshaki’s decision in February to award the money.

Karmanos retired as executive chairman of the company in 2013, at which point he worked for Compuware under a consulting deal. He was fired as a consultant after telling the firm’s management they needed “to get their head out of their” behinds.

Prior to the shakeup, Compuware had rejected a 2012 takeover attempt and opted to make a series of moves to boost profitability and share price. That included a two-year cost-cutting program.

The cuts led to 160 layoffs and plans to close or shrink 16 offices globally. Officials also canceled a white-tie gala to celebrate Karmanos’s retirement. The decisions were criticized by Karmanos’ wife and the ex-chairman, which cost him the consultant agreement.

He sued Compuware in November 2013, alleging the company fired him from the $3.6 million consulting job without cause and withheld stock options. Karmanos alleged he suffered significant damages, including unpaid salary, severance pay, bonuses and stock options.

In 2014, Compuware sold the company to Chicago-based private equity investment firm Thoma Bravo LLC and was split into two entities, with the mainframe operations remaining in Detroit and the software operations moving to Boston.

The Compuware Building, the iconic building at Campus Martius downtown, was sold to Dan Gilbert’s Bedrock Detroit and Meridian Health. Compuware now leases space in the building.

Karmanos then founded software company MadDog Technology in Birmingham.

Karmanos has donated money to the Michigan Cancer Foundation, which was renamed the Barbara Ann Karmanos Cancer Institute in 1995 in memory of his first wife, who died of breast cancer in 1989.

He has also donated to scholarship funds for students of Greek heritage and was named Goodfellow of the Year in 2013 for his contributions to the city of Detroit.

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