The Inbox - March 1, 2013
Capping off a big week in Suits by Suits, where even the Pope has to give two weeks’ notice before resigning:
- We lead off with suits by suits… in space, as former Astrotech CFO John Porter sued Astrotech CEO Thomas B. Pickens III – son of legendary corporate raider T. Boone Pickens – and five other directors for breach of fiduciary duties, alleging that the team diverted tens of millions of dollars in fraudulent unsecured loans to subsidiaries that drove down Astrotech’s stock price by 89% from a high of $146 per share such that Astrotech has been warned three times by the NASDAQ for trading at less than $1/share.
- Let the second-guessing begin! After working through her own maternity leave,(see also our follow-up story here), Yahoo! CEO Marissa Meyer shocked many – and invited considerable second-guessing of her own life – by banning telecommuting at Yahoo and requiring all employees to work in the office.
- Former Morgan Stanley broker Mark Mensack filed suit against his former employer and FINRA, the private self-regulatory organization that performs financial regulation and oversight over member brokerage firms and exchange markets, after a FINRA arbitration panel ruled that Mensack had to repay his $1.2 million sign-on bonus when he resigned and filed a whistleblower suit against Morgan Stanley.
- California continues to be on the cutting edge of arbitration law; we recently discussed the California Supreme Court’s decision to let stand an appellate court decision refusing to compel arbitration against an employee who had not signed an arbitration agreement (even though she had lied to her employer and said she had). Recently, a federal court applying California law went the other way, granting an employer’s motion to compel arbitration against not only its former employee, but that employee’s company, which was not a signatory to the original arbitration agreement. Torbit, Inc. v. Dayanyze, Inc. (N.D. Cal. Feb. 13, 2013).
- Speaking of arbitration, yesterday the U.S. Court of Appeals for the Fifth Circuit upheld Nabors Drilling USA’s use of an “acknowledgement form” to compel arbitration of a former employee’s claim of age discrimination, overruling the trial court’s ruling that the form was ambiguous.
- Last month, we told you to watch the “State By State Smackdown,” as various jurisdictions react in different ways to California’s unique law prohibiting the enforcement of noncompete clauses in employment contracts. The Smackdown continues in Massachusetts, where the state legislature is considering a new law (House Bill No. 1715) which would establish that noncompete clauses of six months or less are presumptively reasonable, and clauses exceeding six months can be enforced if the court finds that the employee has (a) breached a fiduciary duty, (b) taken company property, or (c) earned at least $250,000 per year in annualized compensation. The final term is the most interesting; presumably, it reflects a legislative finding that highly-compensated employees are more free to negotiate for terms in their employment agreements than those making less than 250K. We’ll keep you posted if the bill becomes a law.
- A federal district court held that former Goldman Sachs director Rajat Gupta must reimburse the company $6.22 million for 90% of the expenses it incurred in connection with Gupta’s criminal insider trading case.
- Under the terms of the 2009 federal auto bailout, General Motors has to get approval from the U.S. Treasury Department for its executive salaries. So when the Detroit Free Press reported that GM was seeking an $11.1 million compensation package for its CEO, Dan Akerson – which the Detroit Free Press characterizes as a $2.1 million raise – it prompted a strongly-worded rebuttal from GM. All of this occurred as the Oversight and Government Reform Committee of the U.S. House of Representatives continues to conduct hearings on “Bailout Rewards: The Treasury Department’s Continued Approval of Excessive Pay for Executives at Taxpayer-Funded Companies.”
- And in more government news, The Wall Street Journal has the details on Treasury Secretary nominee Jack Lew’s golden parachute from Citigroup, which pays him a bonus for returning to service in the federal government.
- We’re also keeping our eye on recent complaints by Weight Watchers employees – the overwhelming majority of whom are women – who allege that the weight loss giant has kept salaries low and pressured its employees to work unpaid hours while earning lavishing huge sums on high-profile celebrity endorsers such as Jennifer Hudson and Jessica Simpson.
- Meanwhile, after the Minneapolis-St. Paul Business Journal declared CEO Bill Cooper "the most overpaid CEO in Minnesota," TCF Bank reworked Cooper's severance agreement... to increase his base guarantee to $4.5 million if Cooper leaves or is fired for cause other than gross misconduct.