Schwartzman v. McGavick is a shareholder lawsuit filed on August 1, 2006, in Federal Court in the Western District of Washington. Emma Schwartzman, the great, great granddaughter of a Safeco Corporation founder has brought the suit on behalf of Safeco Corporation against former CEO Mike McGavick and the Safeco Board of Directors.
The central claim in the suit is that a significant portion of the $28.4 million dollars McGavick received from Safeco in 2006 after he resigned as Safeco’s CEO resulted from a fraudulent transaction between McGavick and the Board of Directors. The suit alleges that this transaction breached defendants’ fiduciary duties to shareholders and constituted corporate waste. The suit also claims that the Board of Directors violated federal securities laws by concealing the magnitude and extraordinary nature of the payout.
The lawsuit asks the court to require McGavick to return the improper payments and to protect them pending the outcome of the lawsuit. It also asks that corrective disclosures be issued to shareholders informing them of McGavick’s extraordinary compensation package.