Save GrafTech, an investor group led by Nathan Milikowsky, a holder of over 11.2% of the common stock of GrafTech International Ltd. (NYSE:GTI), today detailed certain corporate governance concerns with GrafTech’s incumbent Board of Directors. Save GrafTech’s concerns include: 1) a defamation lawsuit recently filed against GrafTech by a former director, 2) the lack of any written report documenting the findings of the GrafTech Special Committee investigation into Nathan Milikowsky’s prior Board service, and 3) the Board’s refusal to settle the proxy contest on a reasonable basis.
Michael Nahl Lawsuit Against GrafTech for Defamation
On May 7, 2014, former GrafTech director Michael Nahl filed a lawsuit against GrafTech stating that the Company’s April 14 Proxy Statement contained “false and defamatory statements regarding Mr. Nahl,” specifically that the Company accused him of “corruption, dishonesty, conflict-of-interest, and breaches of fiduciary duty in discharging his duties as a director of GrafTech.”
The lawsuit describes the incumbent Board’s false accusations against Mr. Nahl and the Board’s “reckless disregard for the truth” in refusing to correct its proxy statement after Mr. Nahl notified GrafTech in writing of the false and defamatory nature of the statements contained therein.
As the lawsuit explains, “These defamatory allegations about Mr. Nahl are motivated by the incumbent Board members’ desire to ‘win’ a highly publicized, acrimonious ‘proxy contest’ they are now waging against Nathan Milikowsky – and their desire to smear Mr. Milikowsky (and those who associated with him) in the minds of the GrafTech shareholders who are being asked to vote their shares in that proxy contest.”
GrafTech’s Spurious Special Committee Investigation
In early 2012, just over a year after Mr. Milikowsky had been appointed to GrafTech’s Board and in the midst of a multi-year stock price decline, he began raising concerns to the Board and management and advocating specific corrective actions, eventually including replacing Craig Shular as CEO. In September 2012, GrafTech’s Board formed a Special Committee to investigate an alleged leak of confidential information and, in doing so, labeled Mr. Shular and certain other executives “whistleblowers” who could not be terminated for any reason for a period of time.