Iacocca Sues Chrysler in Dispute Over Stock Options

Lee A. Iacocca filed suit against Chrysler Corp. on Monday, claiming it acted unlawfully last July when denied his request in July to exercise millions of dollars in stock options earned while he was its chairman.

“I deeply regret being forced to sue a company that I helped build and love very much,” Iacocca said in a statement announcing the lawsuit, filed in Superior Court in Los Angeles.

Chrysler’s board denied Iacocca’s request to exercise options to buy 112,500 Chrysler shares, saying he had violated stock plan rules that forbid his working for anyone without Chrysler’s permission and doing anything that would hurt the company.

Iacocca left the Highland Park, Mich., auto maker in 1992. He joined investor Kirk Kerkorian’s Tracinda Corp. as a consultant last November and helped orchestrate its aborted bid for Chrysler in April.

Chrysler spokesman Steven J. Harris said company officials had not seen the lawsuit Monday. Chrysler is “quite confident with its position” in denying Iacocca’s request, he said.

The options Iacocca tried to exercise in July expired Monday. The suit covers those and 1.6 million more Chrysler options that expire between now and the end of 1997.

Stock options give the holder a right to buy shares at a fixed price at a future date. At Chrysler’s current share price, Iacocca says his options would bring a profit of more than $40 million.

Iacocca led Chrysler from 1978 through 1992. It was near bankruptcy in the early ‘80s when it won federal loan guarantees. Chrysler earned a record profit of $3.6 billion last year. Kerkorian, the company’s largest shareholder, has been pushing the company for months to share more of its wealth with stockholders.

As Iacocca’s suit was being filed Monday, Tracinda filed documents with the Securities and Exchange Commission that said it would pay Iacocca at least $42 million if he fails to get access to the stock options.