Caterpillar Inc., the world's largest maker of construction andmining machines, was sued by investors who allege directors wastedcorporate assets by not ensuring that executive-incentive planswere tax-deductible.

Board members also wrongly enriched themselves by takingcompensation that couldn't be deducted, and the company madeinsufficient disclosures to stockholders, lawyers for aPhiladelphia asbestos workers' pension fund and the Lansing,Michigan, Police and Fire Retirement System said in two lawsuitsfiled yesterday in federal court in Wilmington, Delaware.

“There is no reason not to implement compliant compensationplans” that save the Peoria, Illinois-based company tax money, theinvestors contend in court papers.

The investors ask for a jury trial and an order that recipientsreturn wrongly obtained compensation to the company.

Caterpillar, with $60.1 billion in sales last year, said lastweek it opened a new diesel-excavator factory in Victoria, Texas,and will sell the machinery in the U.S., Mexico and SouthAmerica.

The pension funds also challenged in the lawsuit the cash value,including stock options, senior officials could potentially receive— as much as $87.2 million each under a long-term incentiveplan.

“This astronomical number, if it is a true maximum, shocks theconscience as to the amount of corporate waste the board maycommit,” plaintiffs' lawyers said in court documents.

“Our normal practice is to not discuss pending litigation,” JimDugan, a Caterpillar spokesman who hadn't seen the complaints, saidin an e-mailed message.

The cases are City of Lansing Police and Fire Retirement Systemv. Caterpillar, 12cv1076, and Asbestos Workers Philadelphia PensionFund v. Caterpillar, 12cv1077, U.S. District Court, District ofDelaware (Wilmington).

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