Tuesday, January 19, 2010
In the immortal words of Milhouse Van Houten, "How could this have happened? [They] started out like Romeo and Juliet, but it ended in tragedy." So it was wth Empire Resorts and its now-former CEO, Joseph Bernstein. As the Wall Street Journal reports, Bernstein came on board in May to bring Empire back from bankruptcy. He was fired in December.
Bernstein says the termination was "payback" because he blew the whistle to the New York State Racing and Wagering Board upon discovering a financing strategy that had not been disclosed to the company's shareholders. As reported in the Times Herald-Record, the complaint alleges that Bernstein's disclosures were a breach of confidentiality. Empire also accuses Bernstein of making threats and demands towards the end of his tenure. The demands included a $500,000 bonus, a $500,000 consulting fee and the immediate vesting of his stock options. Bernstein appears ready to duke it out in court.
This case interests me because I litigated a similar one in practice. The only difference was that in my case, the CEO negotiated his contract during a bull market and the contract basically guaranteed an absurd severance package, so long as the termination was not for cause, and "cause" was pretty much limited to war crimes. It seems that times have changed.