Caterpillar Inc., the world's largest maker of construction and mining machines, was sued by investors who allege directors wasted corporate assets by not ensuring that executive-incentive plans were tax-deductible.

Board members also wrongly enriched themselves by taking compensation that couldn't be deducted, and the company made insufficient disclosures to stockholders, lawyers for a Philadelphia asbestos workers' pension fund and the Lansing, Michigan, Police and Fire Retirement System said in two lawsuits filed yesterday in federal court in Wilmington, Delaware.

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