HARLEM — Several shareholders of a company affiliated with legendary restaurant Rao's filed a court petition last week alleging mismanagement by the company’s current CEO and calling for an emergency shareholder meeting.
Shareholders, who collectively own 75 percent of Rao’s Specialty Foods, which is affiliated with Rao’s Restaurant, a venerable Italian eatery in East Harlem, filed an Article 78 petition on July 15 in state Supreme Court.
The shareholders are calling for an emergency shareholder meeting for as soon as July 25, according to court documents.
The petition alleges that Sharon Straci, the company’s CEO, has run the company as her “personal fiefdom,” without regard to the shareholders, including allegedly inflating her own salary.
According to court documents, there has not been a shareholder meeting held “in at least a decade” and they allege under Straci, the company has not followed “basic corporate requirements and formalities” of state law and “has been run… without board approval."
Under state law, shareholder meetings are expected to be held annually, according to court documents.
The shareholders allege that because of this, they have not had the opportunity “to review Straci’s work on behalf of the corporation and decide whether to retain her.”
The petitioners include:
► Frank Pellegrino, Sr., who is the chairman of the company’s board of directors and owns 37.5 percent of the company. He is also the co-creator “of the original recipes” and the original founding member of the company, according to court documents.
► Bonnie Haydon, owns 12.5 percent of the company’s stock.
► Morano Associates, Inc., a company which owns 12.5 percent of the company’s stock.
► The Victor Family Trust, a trust that is a designee that serves on the company’s board and owns 12.5 percent of the company’s stock.
In addition, the documents allege that Straci has inflated her salary — set currently at $1.7 million per year — and “has made major corporate decisions without informing the board” or majority shareholders.
The documents also name her husband, Ronald Straci, the secretary and general counsel of the company. Shareholders claim the $230,000 annual salary he receives was also set without board approval.
The documents also allege that Straci has kept the shareholders “in the dark” about purchasing decisions “involving amounts as high as $10 million and the decision to enter into discussions about selling the company.”
Rao’s Specialty Foods opened in 1992 as an extension of the iconic restaurant Rao’s, located on West 114th Street, which was founded in 1896, to sell sauces and other foods.
The company and a lawyer for the shareholders did not respond to a request for comment.