As a privately-owned company, Herbert Kohler, chairman and CEO, was determined to keep the amount of non-family stockholders down. In 1979, Kohler introduced a reverse stock split making 1 stock a previous 20 stocks, forcing stockholders to sell partial stocks or buy full stocks. Kohler was trying to avoid the strict regulatory requirements that came along with large amounts of …show more content…
decided to go through a recapitalization in 1998, many non-family shareholders had to sell their shares back to the company. The purpose of this action was to restrict all stock ownership to private stock holders and the Kohler family. The recapitalization caused unrest within non-family shareholders leading them to take suit against the company for undervaluing their stock by a factor of five. Although the company did not agree with the plaintiffs, it was too risky to take the case to court due to two key factors: affecting long term development by inaccurately valuating the company and the IRS would price the stock differently than the Kohler stock held by late Frederic Kohler. To avoid major economic consequences, Kohler Co. had to find out what price non-family shareholders were willing to sell back their stock at. Kohler was always focused on minimizing outsider shareholders as can be seen through the 1978 reverse stock split and 1998