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Carlsons' bitter family battle becomes public in court

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Marilyn Carlson Nelson
Marilyn Carlson Nelson is CEO of the Carlson Companies.
Photo courtesy of the Wharton School

(AP) - Curtis Nelson, the grandson of the man who founded Carlson Companies, has sued the family business and his mother, claiming he was denied his rightful position at the company's helm because of a "hostile" relationship with his mother and the company board.

      In the lawsuit filed Tuesday, Nelson demands his share of the company, which, according to Forbes magazine, had total revenues of nearly $5 billion in 2005.

      The lawsuit pits the third-generation heir who wanted to be the next chief executive against Marilyn Carlson Nelson, who decided her son wasn't up to the job.

      "Curtis had expectations and so did his mother, and apparently they weren't clear on it," said Tom Hubler, a family business consultant. "They need to sit down and forgive each other and get this settled out of court."

      Carlson Companies, one of the largest family-held corporations in the country, was built by Minnesota business icon Curt Carlson -- who started the business in 1938 with a $55 loan. 

"Curtis had expectations and so did his mother, and apparently they weren't clear on it. They need to sit down and forgive each other and get this settled out of court."

It was originally Gold Bond Stamps, a consumer loyalty program, then grew to a hospitality, travel and marketing enterprise with about 170,000 employees in more than 140 countries.

      Carlson Nelson, the current CEO, intended to retire at age 65 but held on, hoping her son would rise to the job, according to legal documents. Carlson Nelson is now 67. It's unclear what the board of directors will do about selecting her successor.

      Concerns about Curtis Nelson peaked about a year ago when the company's board removed him as president of operations. He then declined an offer to be vice chairman, storming out of the board room on at least one occasion.

      Carlson Companies formally fired Curtis Nelson at the end of January after banning him from the corporate campus.

      In an interview from the British Virgin Islands, Nelson told the Star Tribune that his ouster was based on "family politics."

      Lawyers for the company and Carlson Nelson say neither Nelson nor any family member has a legal claim on company assets and that Curt Carlson worked to prevent a division of the company before his death in 1999.

      "This is a painful time for Marilyn and (husband) Glen and the family, but you have to do what's best for the company, its employees and its customers," said Mike Ciresi, the attorney representing the company and its board of directors.

      The Carlsons are a prominent business family in Minnesota. Marilyn Carlson Nelson is known for her civic interests and for regularly making the list of the most powerful women in corporate America. Her net worth in 2005 was estimated at $1.4 billion by Forbes.

      Curtis Nelson began working in the family business at age 12, as a dishwasher, busboy, cook and weekend head cook at the Country Kitchen in Wayzata. He graduated from Cornell University in 1986 and entered a hotel management training program.

      In 1989, at his grandfather's urging, Nelson joined the business.

      "Curt assured Curtis that his ultimate goal was for Curtis to become CEO of the company," the lawsuit said. From the time Nelson joined the company, "Curt and Marilyn made various public statements that Curtis was being groomed to become CEO."

      But in a countersuit, the company and its board said Nelson engaged in "self-defeating" conduct extending beyond "erratic business judgment."

      During a leave of absence in May 2003, Nelson agreed that if he remained "clean and sober" and met other conditions, he would be reinstated as COO, the company response said.

      Despite the agreement to stay sober, "Curtis used his company computer and company e-mail system -- in 2006, while he was president and COO -- to make purchases of large quantities of controlled substances from multiple on-line pharmacies," the company response said. "He also ordered a product called 'Quick-Detox,' which is advertised as helping users to 'pass any drug test!!!'"

      In the interview, Nelson said he was an addict and alcoholic and struggled with painkiller addiction after his liver transplant in 2000.

      In 2003, independent board members Lawrence Perlman, Duane Kullberg and Harald Einsmann told Nelson in a memo that there was no assurance he would become CEO.

      Referring to an undisclosed occurrence, the board members wrote, "Before this recent event, there was no assurance that you would get the CEO job and now the mountain you need to climb is higher."

      The company also alleges Nelson owes it $600,000 for management services for a private hotel venture. The company also says Nelson made poor business decisions.

      Still, Nelson claims his mother stripped him of responsibilities without identifying "any objective measures of performance where Curtis had been rated less than outstanding."

      The company response said Carlson Nelson was her son's biggest supporter and the board criticized her for having a "blind spot" for him.

      The responses also say Nelson received more than $5.5 million from Carlson Companies for his 2006 bonus, termination payments, residual and deferred compensation. He also gets health care coverage until age 65.

      "In addition, from 2004 to 2006, he received more than $5.4 million in cash and asset distributions from the trusts. (Yet he complains of 'pitifully small dividends.') He will get ongoing trust distributions. He is not entitled - or deserving - of anything more," the company response said.

                          (Copyright 2007 by The Associated Press.  All Rights Reserved.)