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low as evidenced by the high rates of workmen's compensation
claims and inventory shrinkage that most likely resulted from
employee theft. Petitioner was also experiencing increased
competition around that time from the entry of large discount
home centers into its market.
After petitioner redeemed UBM's shares during April 1985,
petitioner's shareholders were interested in finding someone to
manage petitioner's business and return it to profitability so
that they could sell it. Someone suggested to Mr. Neiman that he
contact Jesse Ruf (Mr. Ruf), who had many years of experience in
managing home centers.
During 1970, the president of W.E. Cooper Lumber Co. (Cooper
Lumber) recruited Mr. Ruf to become its general merchandise
manager. At that time, Cooper Lumber, which owned two stores in
Los Angeles, California, and was building a third, was in the
process of shifting from a lumberyard to a home center business.
Prior to Mr. Ruf's joining Cooper Lumber, its majority owner and
leader, Bill Cooper, died, and that company was experiencing
financial difficulties. Upon joining Cooper Lumber, Mr. Ruf was
responsible for marketing, merchandising, advertising, day-to-day
operations, human resources, and finances. He helped Cooper
Lumber change its product mix by downplaying its lumberyard and
increasing the variety of items it sold from 18,000 to 34,000.
While he was employed by Cooper Lumber, sales increased from
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