July 25, 2026  ·  Complaint filed July 24, 2026  ·  United States District Court for the Southern District of New York, No. 1:26-cv-06314

By David Brunk, civil litigation attorney

Read the complaint

Wheeler v. Doss Alleges Graphic Packaging Board Ignored $148M Inventory Glut, Misled Investors on $1.05 Billion to $1.25 Billion EBITDA Projections

Inventory Mismanagement and Misleading Guidance

A derivative complaint filed July 24 in the United States District Court for the Southern District of New York alleges that Graphic Packaging Holding Company’s board and executives misled investors about a $148 million inventory buildup while customer demand declined, artificially inflating the company’s stock price before it collapsed by more than 50%. The complaint, brought by stockholder James Wheeler on behalf of Graphic Packaging, centers on allegations that the company’s leadership failed to align production with demand, leading to a cascade of financial misrepresentations and operational failures. The complaint alleges that the company’s net sales for the fiscal year 2025 were projected to be at least $8.4 billion, a figure that was later revised downward as the company’s operational failures became apparent (Compl. ¶105).

The complaint alleges that Graphic Packaging’s finished goods inventory increased by 17%—from $515 million at the end of 2022 to $602 million at the end of 2023—despite a 4% decline in organic sales for fiscal year 2023. According to the filing, total net inventories rose to $1.754 billion, a $148 million year-over-year increase (Compl. ¶56). The complaint further alleges that defendants Michael P. Doss, the company’s former CEO, and Stephen R. Scherger, its former CFO, publicly dismissed the buildup as "short-term inventory destocking" during earnings calls in 2023, with Doss stating on November 1, 2023, that destocking was "largely in our rearview mirror" (Compl. ¶57). The filing asserts that these representations were materially misleading, as the company’s inventory levels continued to rise unchecked. The complaint also notes that the company’s revenue for Q1 2025 was $2.12 billion, reflecting a 6.2% year-over-year decline (Compl. ¶105). The complaint alleges that input cost inflation at the midpoint of the company’s revised guidance reached $80 million, further straining its financial performance (Compl. ¶40).

The complaint also highlights the company’s $1.67 billion Waco Mill project, part of its Vision 2025 capital investment program, which was originally budgeted at $1 billion but ultimately cost 67% more than estimated. The filing alleges that the project’s success depended on aligning production with customer demand, a goal the defendants failed to achieve as inventory levels continued to rise. "Inventory alignment to customer demand is mission-critical," the complaint states (Compl. ¶55). Despite this, the complaint alleges that the board and executives took no meaningful action to address the growing inventory glut. By Q3 2025, the company reported net sales of $2.19 billion, down 1% year-over-year, further evidencing the disconnect between production and demand (Compl. ¶105). The complaint alleges that the company’s production curtailment in Q3 2025 resulted in a financial impact of approximately $15 million, exacerbating its operational challenges (Compl. ¶105).

On February 4, 2025, Graphic Packaging filed an 8-K with the SEC disclosing its 2024 financial results and 2025 guidance, which included net sales of $8.6 billion to $8.8 billion, adjusted EBITDA of $1.66 billion to $1.76 billion, and adjusted earnings per share of $2.48 to $2.73. The complaint alleges that these projections were materially misleading given the company’s inventory glut and declining demand. By May 1, 2025, the company revised its guidance downward, cutting net sales to $8.2 billion to $8.5 billion, adjusted EBITDA to $1.4 billion to $1.6 billion, and adjusted EPS to $1.75 to $2.25. The stock price fell by more than 15% following the disclosure, from $25.31 to $21.37, a decline of $3.94 per share (Compl. ¶39). The complaint further alleges that the company’s adjusted EBITDA for Q4 2024 was $376 million, a figure that underscores the company’s financial challenges even before the full extent of its operational failures became public (Compl. ¶58). The complaint notes that the company’s net sales for 2025 were projected to be at least $8.4 billion, a figure that was later revised as the company’s operational failures became apparent (Compl. ¶105).

The complaint further alleges that defendants repeatedly revised guidance downward throughout 2025, with adjusted EBITDA projections falling from an initial range of $1.66 billion to $1.76 billion to a final range of $1.38 billion to $1.43 billion by December 8, 2025. The company’s Q3 2025 results, disclosed on November 4, 2025, showed net sales of $2.19 billion, down 1% year-over-year, and net income of $142 million, or $0.48 per diluted share (Compl. ¶105). Adjusted EBITDA for Q3 2025 was $383 million, down 13% year-over-year, with an adjusted EBITDA margin of 17.5%, compared to 19.5% in Q3 2024. The complaint alleges that these declines were the direct result of the company’s failure to manage its inventory and production levels effectively. By Q4 2025, the company’s EBITDA had fallen to $305 million, a 19% year-over-year decline, further evidencing the financial impact of the defendants’ mismanagement (Compl. ¶105). The complaint alleges that the company’s production curtailment in Q4 2025 also resulted in a financial impact of approximately $15 million (Compl. ¶105).

On February 3, 2026, Graphic Packaging disclosed that its inventory stood at approximately 20% of sales, well above its 15–16% target, and announced a $260 million inventory reduction plan with a $130 million EBITDA cost. The company also issued its FY 2026 guidance, projecting adjusted EBITDA of $1.05 billion to $1.25 billion, a significant decline from previous years (Compl. ¶107). The stock price fell nearly 16% that day, dropping $2.36 per share to $12.42, and has since declined by more than 50% from pre-May 2025 levels. The complaint alleges that the company’s adjusted net income for FY 2025 was $539 million, down from $759 million in FY 2024, with adjusted net income per diluted share falling from $2.49 to $1.80, further evidencing the financial impact of the defendants’ mismanagement (Compl. ¶106). The complaint also notes that the company’s financial statements for 2025 included a net charge of $95 million from non-recurring and special items, as well as $101 million in amortization of purchased intangibles (Compl. ¶106).

Insider Sales and Share Repurchases at Inflated Prices

The complaint alleges that while Graphic Packaging’s stock price was artificially inflated, insiders sold shares and the company repurchased stock at prices that did not reflect the company’s true financial condition. In August 2025, defendant Philip R. Martens, then Chairman of the Board, sold a total of 63,752 shares for approximately $1.4 million. The complaint asserts that Martens sold these shares while in possession of material nonpublic information about the company’s operational failures, including the inventory glut and production-demand misalignment. Specifically, Martens sold 56,737 shares on August 1, 2025, and an additional 7,015 shares on August 4, 2025, reaping approximately $1,392,063 (Compl. ¶120). The filing contends that these sales were made while Martens knew or should have known that the company’s financial condition was deteriorating. The complaint notes that Martens received total compensation of $430,012 in 2024, including $270,000 in fees and $160,013 in stock awards (Compl. ¶104).

During the same period, Graphic Packaging’s board authorized a $1.5 billion share repurchase program on April 30, 2025. The company repurchased 4,982,296 shares for approximately $111 million in the second quarter of 2025 and an additional 1,782,953 shares for approximately $39 million in the third quarter, totaling $150 million in repurchases at what the complaint alleges were artificially inflated prices (Compl. ¶122-123). The filing contends that these repurchases were made while defendants possessed material nonpublic information about the company’s operational failures, in violation of their fiduciary duties. The complaint alleges that the company’s Q3 2024 adjusted EBITDA was $433 million, a figure that starkly contrasts with the declining performance in subsequent quarters, further evidencing the disconnect between the company’s public disclosures and its financial reality (Compl. ¶58). The complaint also notes that the company’s Q4 2024 EBITDA was $376 million, a figure that was not disclosed to investors at the time of the share repurchases (Compl. ¶58).

The complaint alleges that defendants caused the company to repurchase shares at prices that did not reflect its true financial condition, resulting in a stock price decline of more than 50%. The filing states that the company’s Q4 2025 adjusted EBITDA was $311 million, compared to $404 million in Q4 2024, a decline that the complaint attributes to the defendants’ failure to manage inventory and production levels effectively (Compl. ¶105). The complaint further alleges that the company’s financial statements for 2025 included a $100 million accrual for incentive compensation, which was non-cash in 2026, further distorting the company’s financial position (Compl. ¶107).

Board Oversight Failures and Proxy Misrepresentations

The complaint alleges that Graphic Packaging’s board, including members of its Audit Committee, failed to implement effective internal controls or investigate red flags related to the company’s rising inventory levels. The Audit Committee, which included defendants Laurie Brlas, Robert A. Hagemann, and Larry M. Venturelli, reviewed the company’s rising inventory in the face of declining demand but took no action to address the issue. The complaint specifically alleges that the board’s oversight failures violated their fiduciary duties of loyalty, good faith, due care, and candor (Compl. ¶39). The complaint further alleges that the Individual Defendants breached their fiduciary duties by failing to act with loyalty, good faith, due care, and candor in overseeing the company’s operations (Compl. ¶39). The complaint states that "Individual Defendants owed Graphic Packaging and its shareholders fiduciary obligations of loyalty, good faith, due care, and candor" (Compl. ¶39).

The complaint further alleges that Brlas, an Audit Committee member and Chair of the Nominating and Corporate Governance Committee, "utterly failed to perform these duties" (Compl. ¶140). The filing contends that Brlas failed to implement and maintain effective internal controls, oversee material risks, and investigate red flags related to the company’s inventory mismanagement. Similarly, Venturelli, the Audit Committee Chair, is alleged to have failed in his duties to oversee the company’s risks and ensure accurate financial reporting. The complaint states that Venturelli "utterly failed to perform these essential duties" (Compl. ¶164). The complaint also alleges that the Individual Defendants violated federal securities laws by making materially false and misleading statements in the company’s SEC filings and public disclosures (Compl. ¶1). The complaint further alleges that the Individual Defendants breached their fiduciary duties of loyalty, good faith, due care, and candor by failing to oversee the company’s operations and address its operational failures (Compl. ¶39).

The complaint also alleges that the company’s 2025 Proxy Statement, filed with the SEC on April 7, 2025, contained materially false and misleading statements about the board’s oversight of risks. The proxy statement, which was authorized by multiple defendants, including Brlas, Hagemann, and Venturelli, allegedly omitted material risks related to the company’s inventory mismanagement and falsely claimed that the board and its committees were effectively overseeing the company’s risks. The filing asserts that the proxy statement contained "materially false and misleading statements concerning the Board and its Committees’ oversight" (Compl. ¶189). The complaint alleges that these misrepresentations violated Section 14(a) of the Securities Exchange Act of 1934 and SEC Rule 14a-9. The complaint further alleges that the Individual Defendants made "false and misleading statements... intending to deceive, manipulate, or defraud" investors (Compl. ¶180). The complaint also alleges that the Individual Defendants violated federal securities laws by making materially false and misleading statements in the company’s public disclosures (Compl. ¶1).

The complaint further alleges that defendants failed to disclose the full scope of the company’s operational failures in its SEC filings, including its 2024 Annual Report on Form 10-K, filed on February 12, 2025, and its 2025 Proxy Statement. The filing contends that these filings violated federal securities laws by omitting material information about the company’s inventory glut and the board’s failure to address it. The complaint brings claims against multiple defendants, including Aghili, Brlas, Callahan, Doss, Hagemann, Maselli, Venturelli, Scherger, and Wentworth, for violations of Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 (Compl. ¶1). The complaint alleges that these defendants "employed devices, schemes, and artifices to defraud" investors by concealing the company’s operational failures (Compl. ¶181). The complaint further alleges that the Individual Defendants violated federal securities laws by making materially false and misleading statements in the company’s SEC filings and public disclosures (Compl. ¶1).

Compensation and Enrichment During Breaches of Duty

The complaint alleges that defendants were unjustly enriched through their compensation while breaching their fiduciary duties to the company. In 2025, defendant Michael P. Doss received total compensation of $9,104,747, including a salary of $1,316,300, stock awards of $7,495,753, and other compensation of $292,694. In 2024, Doss received total compensation of $9,407,955, including a salary of $1,316,300, stock awards of $7,158,044, non-equity incentive plan compensation of $462,021, and other compensation of $471,590 (Compl. ¶104). The complaint alleges that this compensation was excessive given Doss’s role in the company’s operational failures and misleading guidance. The complaint further alleges that Doss’s compensation was unjust given the company’s financial performance, which included a $93 million revenue miss in Q1 2025 and a $10 million revenue miss in Q3 2025 (Compl. ¶105).

Defendant Stephen R. Scherger, the former CFO, received total compensation of $2,831,752 in 2025, including a salary of $676,883, stock awards of $2,054,480, and other compensation of $100,389. The complaint alleges that Scherger’s compensation was similarly excessive given his role in the company’s financial misrepresentations and operational failures. The complaint also notes that the company’s adjusted EBITDA for 2025 was projected to be between $1.40 billion and $1.45 billion, a significant decline from earlier projections, further evidencing the defendants’ failure to manage the company’s operations effectively (Compl. ¶105). The complaint alleges that the company’s input cost inflation at the midpoint of its revised guidance reached $80 million, further straining its financial performance (Compl. ¶40).

The complaint further alleges that the board structured Doss’s departure as an involuntary termination without cause, allowing him to retain his compensation despite the company’s operational failures. The filing states that "the Board structured Defendant Doss’s December 31, 2025 departure as an involuntary termination without cause" (Compl. ¶177). This arrangement, the complaint alleges, allowed Doss to avoid accountability for his role in the company’s financial misrepresentations. The complaint also alleges that the company’s financial statements for 2025 included a $100 million accrual for incentive compensation, which was non-cash in 2026, further distorting the company’s financial position (Compl. ¶107). The complaint notes that Doss’s 2024 compensation included stock awards totaling $7,158,044 and a salary of $1,316,300, while his 2025 compensation included stock awards totaling $7,495,753 (Compl. ¶104).

The complaint also alleges that the company’s directors received excessive compensation while failing in their oversight duties. For example, defendant Laurie Brlas received total compensation of $280,012 in 2025, including $120,000 in fees and $160,012 in stock awards, while allegedly failing to implement effective internal controls or investigate red flags. Similarly, defendant Larry M. Venturelli received total compensation of $305,012 in 2025, including $145,000 in fees and $160,012 in stock awards, despite his role as Audit Committee Chair (Compl. ¶104). The complaint brings claims against all individual defendants for unjust enrichment, alleging that they received excessive compensation while breaching their fiduciary duties (Compl. ¶1). The complaint further alleges that the company’s financial performance in 2025 included a $95 million net charge from non-recurring and special items, as well as $101 million in amortization of purchased intangibles, further evidencing the financial strain caused by the defendants’ mismanagement (Compl. ¶106). The complaint notes that defendant Philip R. Martens received total compensation of $430,013 in 2024, including $270,000 in fees and $160,013 in stock awards, while allegedly selling shares based on material nonpublic information (Compl. ¶104).

The complaint alleges that defendants wasted corporate assets through their excessive compensation and the company’s share repurchase program. The filing brings a claim for waste of corporate assets against Aghili, Brlas, Callahan, Doss, Hagemann, Maselli, Venturelli, Scherger, Martens, and Wentworth, alleging that they caused the company to repurchase shares at artificially inflated prices and receive excessive compensation while failing in their oversight duties (Compl. ¶1). The complaint alleges that the company’s share repurchases totaled approximately $150 million, which the complaint contends were made at prices that did not reflect the company’s true financial condition (Compl. ¶122-123). The complaint further alleges that the company’s adjusted EBITDA for 2025 was at least $1.45 billion, a figure that was not disclosed to investors at the time of the share repurchases (Compl. ¶105). The complaint notes that defendant Andrew P. Callahan received total compensation of $54,262 in 2024, while defendant Aziz Aghili received total compensation of $280,013 in both 2024 and 2025, including $120,000 in fees and $160,013 in stock awards (Compl. ¶104).

Legal Claims and Demand Futility

The complaint brings seven counts against the defendants, including violations of federal securities laws, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, waste of corporate assets, and unjust enrichment. Specifically, the complaint alleges the following causes of action:

• Count One: Violation of Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 against Aghili, Brlas, Callahan, Doss, Hagemann, Maselli, Venturelli, Scherger, and Wentworth (Compl. ¶1). The complaint alleges that these defendants made materially false and misleading statements with scienter, intending to deceive, manipulate, or defraud investors (Compl. ¶180-181). The complaint further alleges that the Individual Defendants violated federal securities laws by making materially false and misleading statements in the company’s public disclosures (Compl. ¶1).
• Count Two: Violation of Section 14(a) of the Securities Exchange Act of 1934 and SEC Rule 14a-9 against Aghili, Brlas, Callahan, Doss, Hagemann, Venturelli, Scherger, and Wentworth (Compl. ¶1). The complaint alleges that these defendants authorized the company’s 2025 Proxy Statement, which contained materially false and misleading statements about the board’s oversight of risks (Compl. ¶189). The complaint further alleges that the Individual Defendants violated Section 14(a) by authorizing the proxy statement while knowing or recklessly disregarding its material misrepresentations.
• Count Three: Contribution under Section 21D of the Securities Exchange Act of 1934 against all individual defendants (Compl. ¶1). The complaint alleges that the defendants are jointly and severally liable for the company’s violations of federal securities laws and must contribute to any damages awarded in the related securities class action.
• Count Four: Breach of fiduciary duty against all individual defendants (Compl. ¶1). The complaint alleges that the defendants breached their fiduciary duties of loyalty, good faith, due care, and candor by failing to oversee the company’s risks, maintain effective internal controls, and address red flags related to the company’s inventory mismanagement (Compl. ¶39, ¶201). The complaint further alleges that the Individual Defendants breached their fiduciary duties by failing to act with loyalty, good faith, due care, and candor in overseeing the company’s operations (Compl. ¶39). The complaint specifically alleges that the Individual Defendants breached their fiduciary duties of loyalty, good faith, due care, and candor by failing to oversee the company’s operations and address its operational failures (Compl. ¶39).
• Count Five: Aiding and abetting breach of fiduciary duty against all individual defendants (Compl. ¶1). The complaint alleges that the defendants aided and abetted each other’s breaches of fiduciary duty by failing to take corrective action or investigate the company’s operational failures.
• Count Six: Waste of corporate assets against Aghili, Brlas, Callahan, Doss, Hagemann, Maselli, Venturelli, Scherger, Martens, and Wentworth (Compl. ¶1). The complaint alleges that these defendants wasted corporate assets by causing the company to repurchase shares at artificially inflated prices and receiving excessive compensation while breaching their fiduciary duties (Compl. ¶212-213). The complaint further alleges that the company’s share repurchases totaled approximately $150 million, which the complaint contends were made at prices that did not reflect the company’s true financial condition (Compl. ¶122-123).
• Count Seven: Unjust enrichment against all individual defendants (Compl. ¶1). The complaint alleges that the defendants were unjustly enriched through their compensation and stock sales while breaching their fiduciary duties to the company. The complaint further alleges that the defendants received excessive compensation while the company’s financial performance deteriorated, including a $93 million revenue miss in Q1 2025 and a $10 million revenue miss in Q3 2025 (Compl. ¶105).

The complaint alleges that demand upon the board to take corrective action was futile because the directors were conflicted and would not have acted impartially. The filing cites an exclusion in the company’s directors and officers liability insurance policy, referred to as the "insured versus insured exclusion," which allegedly forecloses recovery if the directors voluntarily institute suit against themselves (Compl. ¶175). The complaint states that this exclusion "forecloses recovery if the directors voluntarily institute suit against themselves" (Compl. ¶175). The complaint further alleges that the company’s D&O insurance policy contains an "insured versus insured exclusion that forecloses recovery if the directors voluntarily institute suit against themselves" (Compl. ¶175).

The complaint further alleges that defendant Robbert E. Rietbroek, who became CEO on January 1, 2026, could not have considered a demand for action that might require him to sue the directors who control his continued employment. Rietbroek’s employment agreement provided for a base salary of $1,350,000, non-equity incentive plan compensation of not less than 150% of his base salary, and stock awards of not less than 560% of his base salary, in addition to a $4,000,000 one-time grant of restricted stock (Compl. ¶157). The complaint states that "Rietbroek could not consider a demand for action that might require him to sue the directors who control his continued employment" (Compl. ¶157). The complaint further alleges that Rietbroek’s financial incentives created a conflict of interest that rendered demand futile.

The complaint alleges that the board took no remedial action to address the company’s operational failures, including failing to terminate Doss or Scherger, recover their incentive compensation, or reform the company’s internal controls. The filing contends that the board’s inaction exposed the company to liability in the related securities class action filed on May 7, 2026, which alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 (Compl. ¶195). The complaint further alleges that the board’s failure to act violated its fiduciary duties and federal securities laws, including the duty to maintain accurate and complete disclosures. The complaint states that the defendants "failed to... make truthful, accurate, and complete statements regarding its core operations" (Compl. ¶201). The complaint also alleges that the Individual Defendants violated federal securities laws by making materially false and misleading statements in the company’s public disclosures (Compl. ¶1).

The complaint alleges that the company’s stock price decline of more than 50% was directly caused by the defendants’ misconduct. The filing states that the defendants "caused the stock price to decline by more than 50%" (Compl. ¶212). The complaint further alleges that the defendants’ actions led to significant financial losses for the company and its shareholders, including the $150 million spent on share repurchases at artificially inflated prices and the $130 million EBITDA cost of the inventory reduction plan announced in February 2026 (Compl. ¶107, ¶212). The complaint notes that the company’s total compensation for Doss in 2024 was $9,407,955, while his total compensation in 2025 was $9,104,747, figures that the complaint alleges were unjust given the company’s operational failures (Compl. ¶104).

The allegations described here are taken from the filing and remain unproven; no responsive pleading is reflected in the source document.

David Brunk is a civil litigation attorney. He can be reached at david@newmanbrunk.com.