Boyle v. Petrie Stores Corp.

518 N.Y.S.2d 854 (1985)

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Nature of the Case

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Facts

P was approached about the possibility of running the D stores. He was 38 years old and was then chairman of the board of the F. & R. Lazarus Stores headquartered in Columbus, Ohio. Lazarus was a division of Federated Department Stores of which P was executive vice-president. P had worked at Bambergers from 1964 to 1973 and worked in retail for the Melville Corporation until 1976 when he had joined Federated. P had operating and merchandising responsibilities for 18 retail department stores with 10,000 employees. He was then earning $350,000 annually. D told P that he would like him to take over the running of the Petrie Stores. P wanted to know why he should leave his current position and make a change, particularly since he had been informed that D was a difficult man to deal with and could summarily dismiss an employee. P and D (with attorneys on both sides) negotiated an employment contract. P was to become president and chief executive officer of D and was to be awarded 50,000 shares of common stock then held in the corporate treasury, with options to purchase additional shares. The contract contained explicit provisions as to the grounds for and the consequences of termination of the contract. P, as a chief executive officer and president, was, subject to the control of the board, to 'have general supervision over the business of the corporation.' The contract was for a term of five years, and Mr. Boyle was to be compensated at the rate of $400,000 for the first three years, $ 425,000 for the fourth year, and $ 450,000 for the fifth. In the event of a breach by D, including termination other than for a material breach or just cause, P would be entitled to over $2,100,000, excluding stock options, in liquidated damages. P reported for work and informed the other D executives that he was now the chief executive officer, and they should take their directions from him, Mr. Petrie continued to give operating directions just as he always had. P decided to assert himself as the chief, in fact as well as in name. Petrie refused to step aside. Eventually, Petrie, who owned 63% of the stock fired P. This was two months after P had begun work. P sued D for the golden parachute. D claimed the liquidated damages were unconscionable and a penalty.