ATLANTA (CN) – Executives at The Southern Company and its Mississippi Power subsidiary hid problems about a so-called “clean coal” plant in order to ensure the re-election of favored directors and inflate the company’s stock price, a shareholder derivative action claims.
In a federal complaint filed in Atlanta on May 31, shareholder Judy Mesirov says The Southern Company’s board of directors announced four years ago that it would build the region’s first “clean coal plant” and that it would be operational by May 2014.
But Mesirov claims the directors soon realized they couldn’t meet that aggressive goal. Instead of telling shareholders the plan needed to be revised, she says, they kept the information to themselves, breaching their fiduciary duties to investors.
As time went on, Mesirov says, the directors made “numerous improper statements about the Plant … [and] the Individual Defendants also caused the Company to issue misleading proxy statements urging stockholders to vote to re-elect the directors.”
In the meantime, the cost of the power plant project has skyrocketed, Mesirov says.
As a result of these acts, The Southern Company has lost nearly $16 billion in market capitalization, or 31.1 percent of its share value, the complaint says.
Mesirov seeks injunctive relief, restitution, the ability to appoint three new members to the board, independent oversight of the company’s finances, and other relief.
She is represented by Michael Fistel of Johnson & Weaver in Marietta, Georgia.
A representative of The Southern Company did not respond to call requesting comment on the lawsuit.