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Texas Supreme Court Holds Former ExxonMobil Executive Forfeited Restricted Stock

In the case of Exxon Mobil Corp. v. Drennen, the Texas Supreme Court held that New York law could be applied to determine the enforceability of a forfeiture provision contained in an executive compensation agreement between a Texas-based corporation and a Texas employee. A vice president of ExxonMobil had received restricted stock under an incentive plan, which included a New York choice of law provision. After he took a position with a competitor, ExxonMobil cancelled all of his outstanding shares of restricted stock, pursuant to a clause in the incentive plan which provided that outstanding shares would be forfeited if the executive engaged in ?Ç£detrimental activity,?Ç¥ such as becoming employed by a competitor. The executive sued to recover the forfeited shares. Following judgment in favor of ExxonMobil at the trial court, the court of appeals reversed, holding that the choice of law provision was unenforceable because applying New York law… Continue Reading

October 2014
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