Bank Executive Compensation - Litigation


2013.Mar.18   Severance Benefits Denied – ERISA Controls Employment Agreement Dispute.  In Yarber v. Capital Bank, a North Carolina federal district court applied the Supreme Court’s Fort Halifax ERISA standards to an employment agreement's change-in-control severance provision, and dismissed the complaint because the bank CEO had no right to benefits and had not been misled when he executed a TARP waiver of them.  In finding that the CEO’s employment agreement involved an administrative scheme triggering ERISA coverage, the court cited extensive federal case law, and explained in part -- 

  • Determining whether Yarber was terminated for cause, or whether he voluntarily terminated due to a "material adverse change" in his employment status, the assignment of "materially inconsistent" duties, or the failure to provide "substantially similar or greater benefits taken in the aggregate" would require Capital Bank to exercise substantial discretion to determine his eligibility for severance pay. [citations omitted] Moreover, because Capital Bank had similar contracts with other employees, Compl.~56, Capital Bank would need to maintain records and create some administrative process to ensure that the bank determined severance pay eligibility in a fair and consistent manner. See Collins, 147 F.3d at 596. This factor weighs heavily in favor of finding an ERISA plan.   [Page 7 of Slip Opinion]

2011.July.15  Former Employees Lose Bonus Claims (TARP Involved). Employees who resigned rather than consent to the Treasury Department's TARP requirements did not establish an involuntary or constructive termination, nor a breach of their employer's covenant of good faith and fair dealing when "Hartford acted in compliance with the terms of the Plan in denying ... further compensation or payments after they resigned."  Twin City vs. Arch Insurance, NY Sup. Ct, NY County, 7/12/2011.