Compliance Stuff

In  Lawson v. Spirit AeroSystems , Inc. , the U.S. Court of Appeals for the Tenth Circuit upheld the forfeiture of certain stock awards for violating a covenant not to compete.  Like the Seventh Circuit in  LKQ Corp. v. Rutledge (which applied Delaware law), the Tenth Circuit concluded that, under Kansas law, the remedy of forfeiting future compensation is not subject to the same reasonableness standard as traditional enforcement of a non-compete obligation.  The Tenth Circuit reached this conclusion even though the executive’s agreement included both a forfeiture-for-competition provision and traditional enforcement rights ( i.e. , the right for the company to pursue monetary damages and specific performance), because the agreement terms enabled the forfeiture provision to be severed from the traditional enforcement provisions. Background and the Court’s Analysis A retirement agreement allowed the former CEO of Spirit AeroSystems (“Spirit”) to receive cash payments ...

  Managing conflicts of interest is a big part of any corporate compliance officer’s job. Today we have a fascinating glimpse of how complicated that work can be, courtesy of the Wall Street Journal and its detailed account of how the now-former Kohl’s CEO Ashley Buchanan sent company business to his girlfriend. You probably remember the original story, which first hit the headlines on May 1. That was the day the  $16 billion retail chain fired Buchanan , who had arrived as CEO only four months earlier, because Buchanan had “directed the company to engage in vendor transactions that involved undisclosed conflicts of interest.” It soon became clear that the conflict  was Buchanan steering consulting and business contracts to Chandra Holt  — a former colleague from Walmart, an accomplished business executive in her own right, and Buchanan’s romantic partner for years. Lots of people in the ethics and compliance community have praised Kohl’s board for its commitment to ...