Tech company sued over GC's $10m bonus
California tech company Transmeta Corporation is being sued by an activist hedge fund over the $10m (£5.14m) bonus it paid to its general counsel, writes The Recorder. Riley Investment Management, which owns around 7% of Transmeta and earlier this month made an offer to buy the company, filed the suit on 31 January after Transmeta agreed to give general counsel John O'Hara Horsley a cut of a $250m (£128.5m) settlement reached with IT giant Intel in October.
February 13, 2008 at 09:38 AM
2 minute read
California tech company Transmeta Corporation is being sued by an activist hedge fund over the $10m (£5.14m) bonus it paid to its general counsel, writes The Recorder.
Riley Investment Management, which owns around 7% of Transmeta and earlier this month made an offer to buy the company, filed the suit on 31 January after Transmeta agreed to give general counsel John O'Hara Horsley a cut of a $250m (£128.5m) settlement reached with IT giant Intel in October.
The lawsuit targets Horsley and other Transmeta executives and board members for breach of fiduciary duty, gross mismanagement, waste of corporate assets and abuse of control, calling the bonus "outrageous, illegal and unconscionable".
Paul Hastings Janofsky & Walker is representing Riley Investment, with Palo Alto litigation partner Peter Stone leading the team. Fenwick & West securities litigation co-chair Kevin Muck is representing Transmeta and the directors and officers named as defendants.
The settlement came about after Transmeta took on Intel in a make-or-break patent infringement suit in 2006, promising to pay its general counsel a proportion of any winnings.
The lawsuit claims two other Transmeta executives took excessive cash bonuses worth $1.2m (£620,000) after the settlement, which requires Intel to pay $150m (£77.1m) up front and $20m (£10.3m) annually for the next five years.
Prior to the deal, the market value of Transmeta was just $41.8m (£21.5m). The stock price more than tripled on news of the settlement and the company's market cap is currently around $160m (£82.2m).
The alleged $10m bonus would have made Horsley among the top-earning general counsel in the US, according to a survey by Corporate Counsel.
When ranked by cash, the top-paid GC for 2006 was Allegheny Technologies' Jon Walton, who took home a $400,000 (£205,520) salary and bonuses worth more than $4.8m (£2.5m). Walton, like many other general counsel, made considerably more when factoring in stock awards.
Stone said Riley Investment wants the money given to the company and its shareholders instead of Horsley, adding that the lawsuit would go ahead even if Riley buys Transmeta.
The Recorder is a US sister title of Legal Week.
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