Mohawk Industries Announces Preliminary Court Approval of Shareholder Derivative Lawsuit Settlement


Mohawk Industries, Inc. has received preliminary court approval for the settlement of four related shareholder derivative lawsuits. The settlement, outlined in an agreement signed on February 28, includes corporate governance reforms and a $5 million payment for plaintiffs’ legal fees and expenses, which will be fully covered by the company’s insurance carrier.

The U.S. District Court for the Northern District of Georgia granted preliminary approval on April 3. A final hearing to determine whether the settlement should be approved is scheduled for June 30, 2025.

According to the notice filed with the court, shareholders who wish to object must do so by June 16, 2025

Mohawk Industries, Inc. filed a Form 8-K on February 28, 2025, announcing that William W. Harkins will resign from the company effective March 14, 2025, to pursue another opportunity.

James F. Brunk, the company’s Chief Financial Officer, will assume the additional responsibilities of Chief Accounting Officer and Corporate Controller on an interim basis while Mohawk conducts a search for a permanent replacement.

Brunk has been with the company since 2006, previously serving as Chief Financial Officer of Mohawk Home and later as Chief Accounting Officer and Corporate Controller from 2009 to 2021 before becoming CFO in April 2021.

The filing was signed by R. David Patton, Vice President of Business Strategy and General Counsel.

Mohawk Industries announced that after implementing a new order management system in its Flooring North America segment at the end of 2024, the company experienced unexpected issues, including delays and errors in shipments and invoicing. While these challenges temporarily disrupted normal service levels, the manufacturing and financial systems remained unaffected, and the restructuring initiatives previously announced were not impacted.

The company has made progress in resolving the issues, leading to increased shipping rates and a reduction in backlog to normalized levels. Mohawk is working to address customer errors and improve processes, with manufacturing and distribution operations functioning at historical levels.

Mohawk will release its fourth-quarter and full-year 2024 results on February 6, 2025, with an investor call scheduled the following day to provide additional details about the system conversion and its impact.