CUDAHY, Wis.-The former president of Prime Financial CU, taken over by state regulators in February, is seeking almost $3 million from Guardian CU for breach of contract related to the failed merger of the two institutions.
Rich Koenig, who headed Prime Financial since 1995 and was slated to head the combined credit unions' CUSO operations, left the $190-million credit union last October before the merger was consummated. At the time, Prime Financial was preparing to report an $8 million loss and Koenig was chairing Central States Mortgage Co., the mortgage CUSO that was in the process of collapsing.
As part of the merger, Koenig signed a 10-year contract with Guardian CU to be president of consulting service development and of its CUSO operations, according to a suit filed in state court. Guardian President Steve Wesson was supposed to become CEO of the merged credit unions.
The merger, which would have combined two credit unions with losses (Guardian CU had a $2.4 million loss for 2008), was called off in February, a week before state regulators seized Prime Financial for what it called a "management structure issue."
Under the contract, Koenig was to be paid a $840,000 "retention bonus" on Dec. 31, if the merger closed and a salary of $280,000 a year, according to the suit.
Koenig acknowledges that because the merger wasn't consummated, he should not get the bonus. However, he is seeking $2.8 million for 10 years of salary and $130,000 for the value of his health insurance.
