The Cato Institute and billionaire brothers Charles and David Koch have reached an agreement that will end their legal dispute for control of the libertarian think tank, according to a joint announcement released Monday.
At its core, the agreement dissolves the controversial stockholder arrangement in exchange for Cato President Ed Crane stepping down from his position.
The two sides have been embroiled in a public battle since March 1 when the Kochs filed a lawsuit against Cato, its CEO, and several of its directors over the distribution of controlling shares of the think tank.
A subsequent lawsuit was filed in April in response to additions Cato made to its board.
In addition, the agreement dictates that Cato will be governed by a self-perpertuating board comprised of 12 long-term members, including David Koch. Charles Koch and Ed Crane, along with Katherine Washburn, will no longer be members of the board. Their replacements will be appointed later and additional details of the arrangement are yet to be worked out.
Crane, who will retire within six months, will be replaced by former BB&T CEO John Allison.
“I have every confidence that John’s leadership will enable Cato to reach new levels of effectiveness,” said Charles Koch in a statement. “The alarming increase in the size and scope of government is undermining freedom, opportunity and prosperity for all. Effective action is required to limit government to its proper role.”
“As this resolution shows, we never sought a hostile takeover of Cato – only a resolution to help further Cato’s mission,” said Wes Edwards, deputy general counsel, Koch Companies Public Sector, LLC.
It remains unclear why this arrangement could not have been reached sooner. According to documents obtained by The Washington Post, Crane had offered to step down in exchange for the dissolution of the shareholder agreement well before the first lawsuit was filed in March — a deal the Kochs declined to accept.
“This is the end of an era at Cato,” said Cato Chairman Bob Levy.
Nonetheless, the compromise is something that both sides say will allow the other to carry on with their work.
“For a majority of Cato’s directors, the agreement confirms Cato’s independence and ensures that Cato is not viewed as controlled by the Kochs,” according to the release. “For Charles Koch and David Koch, the agreement helps ensure that Cato will be a principled organization that is effective in advancing a free society.”
Details of settlement reports last week could not be cofirmed until Cato spoke with its staff Monday afternoon.