Charging that Nancy Silberkleit’s continued presence at Archie Comics “presents a real, imminent and severe threat to the company and its employees,” Co-CEO Jonathan Goldwater has sued to force her removal as a director and co-CEO.
In a 13-page complaint filed Tuesday, and first reported by the New York Daily News, the son of Archie co-founder John Goldwater insists, “Unless Silberkleit is removed as a director and an officer, the company — an iconic American company — is in serious danger of failing and being liquidated.”
The suit brings to a head a struggle within the 73-year-old company that came to light in July, when Archie sued Silberkleit, seeking to remove her from its Mamaroneck, New York, offices because of what it described as “inappropriate and offensive language and behavior.”
The company contends that Silberkleit’s “offensive” behavior dates back to 2009, when she stepped into the co-CEO role following the death of her husband Michael Silberkleit, son of co-founder Louis Silberkleit. While the allegation that she interrupted a meeting and pointed to each of the four men in the room, shouting “PENIS, PENIS, PENIS, PENIS,” has been the most widely reported, Archie has cited several instances of threats and harassment it insists amounts to “a pervasive, hostile work environment which is seriously and substantially impairing the company’s operations.”
Manhattan Supreme Court Justice Shirley Werner Kornreich agreed, issuing a preliminary injunction on Nov. 28 barring Silberkleit from “harassing, yelling at or abusing” anyone at Archie’s headquarters or having any contact with staff and vendors regarding matters other than those required by her employment contract.
But in the lawsuit, Goldwater contends “the ink was barely dry” on Kornreich’s order when Silberkleit violated it by having unnecessary contact with staff. A hearing on a contempt motion is scheduled for Tuesday. He also claims Silberkleit has operated outside the terms of her contract by spearheading a comic fair program that’s so far cost the company more than $100,000 while grossing no more than $10,000. And while Broadway shows are among Silberkleit’s responsibilities, Goldwater argues she was negotiating to grant broad right to a producer that could potentially jeopardize the use of Archie characters in other media.
“Granting final editorial approval over a Broadway play to an independent producer gives that producer the ability to alter, and severely impact, the identity of characters which have been developed by the company over 70 years!”the lawsuit states.
At the heart of the complaint, however, is confirmation that “the corporate governance structure at the company is simply unworkable.” “If it is not changed,” the lawsuit states, “the company will suffer irreparable damage and may indeed face dissolution.”
That contention reflects comments made during an August hearing by Kornreich who, while sympathetic to Archie, admitted to being “hamstrung,” and suggested the only remedies would be to terminate Silberkleit’s employment or, more drastically, to dissolve the business, “which would, of course, destroy a very valuable company and an important asset to both the Silberkleit and Goldwater families.” Kornreich said there is “clearly cause” to fire Silberkleit.
But Silberkleit isn’t simply an employee; as co-executor of her late husband’s estate, she controls a 50 percent stake in the company. Goldwater owns 25 percent of the shares, and represents the other 25 percent held by the estate of his late brother Richard Goldwater, who passed away in 2007.
It’s a split that leaves Archie’s board of directors deadlocked. Goldwater contends it also hampers the growth of the company, as Silberkleit has rejected proposals for outside investors, who would of course seek an equity share. She has “repeatedly and emphatically said that she would never agree to any dilution of the Silberkleit 50 percent equity interest at any price and under any terms, conditions or circumstances,” the complaint states.
However, Silberkleit’s control of her late husband’s shares is in dispute, as the children from Michael Silberkleit’s first marriage are contesting their father’s last will, written while he was dying of cancer. Eugene Zuriff, an attorney named in that will as co-executor of the estate, also began proceedings last week to strip Nancy Silberkleit of her authority to represent those shares.
“Whether Ms. Silberkleit, Nancy Silberkleit is really the person who should be here or even representative of the families is a huge question,” Kornreich said in August. “At this point it is questionable who owns the Silberkleit shares, but the company, frankly, is in chains. As far as I can see, if, in fact, Ms. Silberkleit stays, the company will probably be destroyed, which she doesn’t seem to care.”
Goldwater’s complaint stresses that in petitioning for Silberkleit’s removal as a director, he isn’t seeking to deprive the estate of its representation on the board, as Zuriff could fill that role.
Although Silberkleit has yet to respond to this latest lawsuit, she has denied making threatening or demeaning comments that might jeopardize the operation of the company, and contends Goldwater is a chauvinist who seeks to “gain complete corporate control of the company.”
The full suit, as filed by Goldwater, is presented below.