Chairman, Other Execs Forced Out at Louisiana-Pacific

Louisiana-Pacific Corp.’s board forced Chairman and Chief Executive Harry Merlo and two other top executives to resign amid mounting legal problems, the company said Monday.

The building products company said in a statement that the three executives agreed Friday to retire early after the board expressed lack of confidence in them.

The company’s stock closed at $24.625, down $1.625 a share on the New York Stock Exchange.

Board member and former Chief Financial Officer Donald R. Kayser, 64, was appointed chairman and chief executive. Lee Simpson, a former Louisiana-Pacific board member and officer, was appointed president.

Merlo, 70, is recognized as an innovator in building products.

Louisiana-Pacific has been hit by lawsuits over allegations of defects in its Inner-Seal house siding. The company also faces a 56-count criminal indictment in Colorado charging it with environmental law violations.

In addition, Merlo was named in a 1993 lawsuit by a woman who alleged that executive and administrative assistants to Merlo were chosen for their sexual attractiveness. Court records indicate the lawsuit remains unresolved.

“Since last spring, when it became obvious that our legal problems were becoming more difficult, the board has been scrutinizing how the company has been managed,” Kayser said in a statement sent to employees Monday morning. “After long discussions, we determined that it was time for a new management team.”

Executive Vice President James Eisses, 58, and Vice President for Operations Ronald Paul, 52, also agreed to step down last week. Eisses was general manager of the company’s Northern Division based in Hayden Lake, Ida., and Paul headed the Southern Division in Conroe, Tex.

Louisiana-Pacific revised its second-quarter earnings report last week, cutting it by a third to $26.3 million, or 25 cents per share, to reflect increased costs related to the Colorado case and the siding lawsuits. In the second quarter of 1994, Louisiana-Pacific earned $81.9 million, or 75 cents a share.

Since the Inner-Seal siding was introduced in 1985, Louisiana-Pacific has paid out nearly $46 million in defect claims, including at least $7 million this year.