Lawyer Pay
Hedge Fund Sues Over General Counsel’s $10M Bonus
Posted Feb 12, 2008, 06:45 am CDT
By Debra Cassens Weiss
A hedge fund has filed a lawsuit claiming that a $10 million bonus awarded to the general counsel of Transmeta Corp. is "outrageous, illegal and unconscionable."
The stockholder’s derivative suit was filed by Riley Investment Management, which owns about 7 percent of Transmeta and has offered to buy the company, the Recorder reports.
The legal newspaper says the bonus was part of a promise the microchip licensing company made to pay its general counsel, John O'Hara Horsley, a percentage of the winnings in Transmeta’s patent infringement suit against Intel. The suit settled for $250 million last year, a figure that was much higher than the company’s market value of $41.8 million. Horsley took a $150,000 pay cut during the lawsuit, and his reduced salary of $250,000 will be subtracted from the bonus.
Riley is represented by Paul, Hastings, Janofsky & Walker. “In this era of people taking a hard look at executive compensation, we view this to be a particularly egregious example of a board and its officers looking out just for themselves,” Paul Hastings partner Peter Stone told the Recorder.
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Comments
Posted by rana muhamamd akram khan - 6 months, 3 weeks, 1 day, 18 hours, 33 minutes ago
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Posted by Rob - 6 months, 3 weeks, 1 day, 16 hours, 23 minutes ago
Wonder what the hedge fund manager’s comp was last year. I bet it was at least as much.
Posted by Mark Pitchford - 6 months, 3 weeks, 1 day, 15 hours, 33 minutes ago
I think the hedge fund manager is confused. The backlash against executive compensation is because it is “performance based” but currently executives aren’t required to perform.
I’d say litigating a 250 million dollar cases to a beneficial conclusion is a pretty good performance. Not to mention that this guy took a salary cut during the litigation.
I concur in questioning the fund manager’s compensation. I’d lay odds that it dwarfs this general counsel’s one time bonus.
Posted by Jay - 6 months, 3 weeks, 1 day, 15 hours, 30 minutes ago
By agreeing to a percentage of a law suit, Mr. Horsley risked getting $0 too.
Posted by Ms. Corp Counsel - 6 months, 3 weeks, 1 day, 13 hours, 6 minutes ago
I agree that this has little relevance to recent highly-publicized incidents of egregious executive compensation. In my mind that is when a CEO steps down due to e.g., poor performance and walks with hundreds of millions. It just doesn’t seem right that shareholders suffer and employees face downsizing while the CEO makes off like a bandit – even when that number was contractually pre-determined.
This is all about risk-reward. Horsley agreed to a pay cut in exchange for a cut of the winnings should their suit prevail. There were no guarantees of winning much less what the award might be. It could easily have gone the other way or been a much lower number in which case we wouldn’t be discussing this issue.
Riley should know better as risk-reward is the driving principle behind any startup. It’s a gamble with a potentially big payoff. As for Paul Hastings he is obviously thinking with his paycheck and not with any common sense.