Executive Compensation-First Circuit Rules That The Committee Administering A Bonus Plan Had The Authority To Determine Whether A Participant Was Terminated For Cause And Therefore Lost His Right To A Bonus

In Weiss v. DHL Express, Inc., Nos. 12-1853, 12-1864 (1st Cir. 2013), the defendant, DHL Express, Inc. (“DHL”), was contesting a jury verdict in the district court in favor of the plaintiff, Jeremy Weiss (“Weiss”).

In this case, Weiss’s employment at DHL had been terminated, ostensibly for his failure to properly investigate, document, and ameliorate the misconduct of an employee under his supervision. The termination occurred just months before Weiss was to receive a $60,000 bonus. Weiss filed suit to recover the bonus on the grounds that he was terminated without good cause, which under the terms of the bonus plan (the “Plan”) entitled him to a full payout. Thus, Weiss had brought a breach of contract claim. The district court allowed the claim to go to a jury, which found for Weiss. DHL appeals the jury verdict.

In analyzing the case, the First Circuit Court of Appeals (the “Court”) noted that, under the terms of the Plan, if Weiss was terminated for good cause, he would not be entitled to the bonus. Further, the plain language of the Plan designates DHL’s Employee Benefits Committee (the “Committee”) as the sole arbiter of whether a Plan participant is terminated for good cause. As a result, whether Weiss was terminated for good cause and thus lost his right to the bonus was a decision within the ambit of the Committee’s sole and final decision-making authority. Here, the Committee did in fact determine that Weiss was terminated for good cause. As such, the Court overturned the jury verdict in Weiss’ favor.