Compliance April 28, 2004

Appeals Court Upholds Return of Stock Option Proceeds

April 28, 2004 (PLANSPONSOR.com) - A federal appeals court has upheld a provision in a series of stock option agreements calling for the company stock to be recovered if an accompanying non-compete clause was thrown out.
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The ruling by the US 5 th Circuit Court of Appeals, also awarded a Birmingham, Alabama-based bank company $224,908 representing the amount Texas bank lender Gary Olander earned from the stock option agreements. Compass Bank has 376 offices in Texas, Alabama, Arizona, Colorado, Florida, New Mexico.

According to the appeals ruling, Olander’s dispute involving Compass centers around Olander’s June 2001 decision to jump to direct competitor Whitney National Bank. Before making the move, Olander exercised option agreements for 1994, 1995, 1996, 1996, 2000 and 2001, and then challenged the validity of the non-compete clauses in a court suit. Compass countersued, demanding return of proceeds from the stock option exercises.

A Texas federal judge agreed with the bank in part, invalidating the non-compete clauses and ordering a return of proceeds from the 2000 and 2001 option agreements. The appeals judges disagreed and added damages from the remaining options agreement to reach their final award total.

The opinion in Olander v. Compass Bank is at  http://www.ca5.uscourts.gov/opinions/pub/03/03-20048-CV0.wpd.pdf .

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