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									Executive Compensation
       John L. Utz

                    Executive Compensation Litigation

  Stock Option Backdating
         Ryan v. Gifford (Del. Ch. 2007) – p. 27 and
          Newsletter Vol. 3 No. 4.
         The court was “convinced that the intentional
          violation of a shareholder-approved stock
          option plan, coupled with fraudulent
          disclosures regarding the directors’ purported
          compliance with that plan, constitute conduct
          that is disloyal to the corporation. . ..”
                    Executive Compensation Litigation

Spring-Loaded Options
     In re Tyson Foods, Inc. (Del. Ch. 2007) – p. 32 and
      Newsletter Vol. 3 No. 4.

        Allegations that “directors that approved spring-loaded
        (or bullet-dodging) options (a) possessed material non-
        public information soon to be released that would impact
        the company’s share price, and (b) issued those options
        with the intent to circumvent otherwise valid shareholder-
        approved restrictions upon the exercise price of the
        options” would satisfy the plaintiff’s requirement to show
        adequately at the pleading stage that a director acted
        disloyally and in bad faith and is therefore unable to
        claim the protection of the business judgment rule.
                    Executive Compensation Litigation

       In re Tyson Foods, Inc. (Del. Ch. 2007) – p.
       Scrushy v. Tucker, 2006 WL 932013 (Ala.
       FPL: Settlement following Klein v. FPL
        Group, Inc., 2004 WL 302292 (S.D. Fla. 2004)
       Olander v. Compass Bank (5th Cir. 2004) –
        Newsletter Vol. 1 No. 1
                    Executive Compensation Litigation

Clawbacks (cont.)
       WorldCom, Inc. v. Boyne (4th Cir. 2003) – p. 96
       International Business Machines Corp. v.
        Martson, 37 F.Supp.2d 613 (S.D. N.Y. 1999)
       International Business Machines Corp. v.
        Bajorek, 191 F.3d 1033 (9th Cir. 1999)
       Foley v. American Electric Power (S.D. Ohio
        2006) – Newsletter Vol. 2 No. 9
                    Executive Compensation Litigation

Clawbacks (cont.)
       ERISA Plans: Importance of top-hat status (to
        avoid vesting requirements)
       Thornton Oil Corp. v. Perconti (Ky. App. 2003) –
        p. 46
       Fields v. Thompson Printing Co., Inc. (3d Cir.
        2004) – p. 46
                    Executive Compensation Litigation

Fiduciary Claim: Disclosure, Treatment of
 Backdated Options in Merger
   Louisiana Municipal Police Employees’
    Retirement Systems v. Crawford, 918 A.2d
    1172 (Del. Ch. 2007)
Stock Options: Blackout Necessary Under
 Securities Laws
   In re Cendant Corp. Securities Litigation (3d
    Cir. 2006) – Newsletter Vol. 3 No. 2
                    Executive Compensation Litigation

Attorney-Client Privilege: Top-Hat Plan
  Marsh v. Marsh Supermarkets, Inc. (S.D. Ind.
   2007) – p. 43
SERP Compensation Definition: Stock
 Option Gains
  Adams v. Louisiana-Pacific Corp. (4th Cir. 2006)
   – p. 50
                    Executive Compensation Litigation

SERP Compensation Definition: Severance
   Gilliam v. Nevada Power Company, 2007 WL
    1557483 (9th Cir. 2007)
SERP Compensation Definition: Retention
   Craig v. The Pillsbury Non-qualified Pension
    Plan (8th Cir. 2006) – p. 52
Top-Hat Plan: Definition
   Bakri v. Venture Mfg. Co. (6th Cir. 2007) – p. 56
   Guiragoss v. Khoury (E.D. Va. 2006) – p. 56
Top-Hat Plan: Release, Fiduciary Claims,
   Callahan v. Unisource Worldwide, Inc. (D.
    Conn. 2006) – p. 57
                    Executive Compensation Litigation

Top-Hat Plan: Retroactive Addition of
 Exhaustion of Remedies Requirement
   Eastman Kodak Company v. STWB, Inc. (2d Cir.
    2006) – p. 58
Oral Promise: ERISA Fiduciary Claim,
 Equitable Relief
   Eastom v. Redmond (N.D. Ind. 2006) – p. 60
                    Executive Compensation Litigation

Oral Grant of Options
  Aretakis v. General Signal, Inc. (D. Mass.
   2006) – p. 70
State Wage Payment Statutes
  Paolini v. Albertson’s Inc. (9th Cir. 2007) – p. 80
Stock Options: Failure to Tender Payment
 with Exercise Notice
  Deal v. Consumer Programs, Inc. (8th Cir.
   2006) – p. 81
                    Executive Compensation Litigation

Stock Option Vesting: Acceleration Upon
 Termination, Share Price Trigger
   Ziegler v. HRB Management, Inc. (6th Cir.
    2006) – p. 82
Employer’s Ability to Modify Retiree Welfare
   Markowitz v. Celanese Corp. (D. N.J. 2006) –
    p. 84
                    Executive Compensation Litigation

Covenants Not to Compete
   Morris v. Schroeder Capital Management
    International (2d Cir. 2007) – p. 91
Separation Agreement: Characterization of
 Termination, Equity Compensation, Fraud
   Healy v. MCI WorldComm Network Services,
    Inc. (9th Cir. 2007) – p. 102
                    Executive Compensation Litigation

Severance: Outsourcing, Prior Employer’s
  Engler v. Cendant Corp. (E.D. N.Y. 2006) – p.
Garnishment of Retirement Benefits:
 Criminal Restitution
  U.S. v. Novak (9th Cir. 2007) – p. 105
                    Executive Compensation Litigation

Split Dollar Life Insurance: Employer’s
 Rights Extinguished by Employment
  Goldring v. Franklin Equity Leasing Co. (Mo.
   Ct. App. 2006) – p. 106
Severance Benefits: Change of Control,
 Comparable Benefits
  Kolkowski v. Goodrich Corp. (6th Cir. 2006) – p.
                    Executive Compensation Litigation

Stock Options: Negligent
 Misrepresentation, Period for Exercise
   First Marblehead Corp. v. House, 473 F.3d 1
    (1st Cir. 2006)
Waste: Entrenchment of Board and Key
   Sample v. Morgan, 40 EBC 2389 (Del. Ch.

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