'Astronomically generous' pay for former Dewey CFO, executive director alleged in clawback suit
Posted Dec 02, 2013 03:54 pm CST
The bankruptcy trustee for Dewey & LeBoeuf is seeking the return of $21.8 million in “astronomically generous” pay from two former leaders of the failed firm.
The suit filed on Wednesday targets Dewey’s former executive director Stephen DiCarmine and former chief financial officer Joel Sanders, report the Wall Street Journal (sub. req.) and the Am Law Daily (sub. req.).
Each earned more than $10 million from 2008 to 2012, according to details of the suit published by the Wall Street Journal. The suit claims compensation for the two men was “an astronomically generous arrangement for law firm administrators, and far in excess of the reasonably equivalent value of the services contracted for or provided.”
The Am Law Daily has the breakdown. Six-year contracts provided for $950,000 a year in base compensation for DiCarmine and $900,000 for Sanders; an annual bonus of $200,000 apiece for each man plus a discretionary bonus; and an annual deposit to irrevocable grantor trusts redeemable every three years, valued at $200,000 for each man. The annual discretionary bonuses for each man ranged from $900,000 to $1.1 million from 2008 to 2012.
The suit says the employment contracts were “unreasonable, if not arbitrary and capricious.”
DiCarmine’s lawyer, Austin Campriello, defended DiCarmine in statements issued to the publications. “No one worked harder for Dewey & LeBoeuf than Stephen DiCarmine, and we will fight vigorously in court any efforts to blame or punish him for the firm’s collapse.” Sanders’ lawyer, Ned Bassen, told the Am Law Daily that the clawback suit is “wholly without merit” and Sanders “earned/deserved every penny he was paid.”
Dewey’s former chairman, Steven Davis, has already reached a settlement with the law firm’s estate and insurer to pay $500,000 to settle mismanagement claims.
ABAJournal.com: “How appeasement and high partner guarantees led to Dewey’s downfall”
ABAJournal.com: “Judge OKs $19.5M settlement over claimed Dewey mismanagement”
ABAJournal.com: “Former Dewey chairman may not have to pay entire $511K settlement; it depends on his income”