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international markets at the time and economists’ predictions of
either slow growth or a decline in the United States economy.
Indeed, Herbert was aware of excesses creeping into the market
and knew the company’s international investments were not doing
well.
The Reorganization
In early 1998, Kohler family members, various charities
established by Kohler family members, and trusts for the benefit
of Kohler family members held most of the shares of Kohler stock.
Outside shareholders, however, held about 4 percent of the Kohler
stock in March 1998. The Kohler family and management wanted to
keep the company as privately owned as possible and remove the
outside shareholders. The family and management also wanted to
facilitate estate planning for Kohler family members and allow
later generations a vote on company matters. In addition, the
family and management wanted to resolve control and ownership
questions and ensure that Kohler was ready for future generations
of the family to take control when the time came. The family and
management considered various options and decided a
reorganization would best meet the company’s needs.
Kohler initially retained the Dorsey and Whitney law firm to
assist in the reorganization in early 1996. The reorganization
was finally completed and became effective on May 11, 1998. The
reorganization replaced the old shares of Kohler common stock
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