Coty unable to scrap ex-CFO’s claims for breach of contract
The cosmetics and perfumery company, headquartered in New York, attempted to get a summary judgement against the breach of contract allegations made by former chief financial officer Michael Fishoff.
If successful this would have settled the breach of contract matter without a trial and the case would not have gone before a jury.
However, Judge Shira A. Scheindlin concluded late last year, at the District Court for the Southern District of New York, that the breach of contract claims should not be scrapped, according to press reports.
Fishoff’s claims rest on his allegations that the company has wrongfully cheated him out of the money he should have received from cashing in his stock options, awarded to him as part of the Coty’s long term incentive plan.
Under the plan, Fishoff was awarded a total of 200,000 stock options that he attempted to exercise on December 1 2008.
This followed shortly after the actions of CEO Bernd Beetz who exercised 250,000 of his stock options the month previously, which Fishoff claims led to gross proceeds in the region of $10m.
At the time Fishoff requested to exercise his options the company’s shares had been valued by J.P. Morgan in September at $58 per share; however, this value was expected to drop, alleges the lawsuit.
Fishoff claims that senior executives knew that “the budgetary process was getting out of alignment, cost overruns were occurring, gross margins were declining and the current year’s performance was dramatically weakening.”
They were therefore allegedly aware that the price per share valuation of Coty’s stock for purposes of stock option awards would be “materially and dramatically” less than the $58 valuation made by J.P. Morgan.
On December 5, five days after Fishoff’s request to exercise his options, the share price was recalculated by Rothschild to be $31 and the company informed the CFO that his request would be processed at a later time.
Fishoff was dismissed as Coty’s CFO on December 11 2008.
In the lawsuit filed January 22 2009, Fishoff brought complaints for damages based on fraud under the Federal Securities laws, common law fraud, breach of contract, promissory estoppel and breaches of good faith and fair dealing.
Coty refused to comment on the matter.
