Article courtesy of Jeff Dutson of King & Spalding
The Georgia Court of Appeals agreed that Siddhartha Mookerji, founder of Software Paradigms International Inc., was entitled to the compensation over the objection of SPI Holdco, LLC which was acquired in 2017 by private equity group Tower Arch Capital.
SPI Holdco, LLC v. Mookerji, 864 S.E. 2d 633 (Ct. App. Ga. 2021)
In May 2015, Mookerji sold SPIG and its parent company, Software Paradigms International Inc., to Tower Arch. As part of the deal, Mookerji signed a three-year employment contract to serve as CEO of the software company after the sale. The agreement provided for severance and incentive compensation, specifically addressing the amount due to Mookerji upon sale of the company. In September 2016, prior to the expiration of the agreement, the company fired Mookerji without cause. Mookerji filed a complaint against the company, contending that his termination violated the employment agreement because it occurred prior to the expiration of the term set forth in the agreement and occurred without cause or proper notice. Mookerji also alleged that the company failed to pay him incentive compensation and a Tesla of his choosing that he was entitled to under the employment agreement.
While the trial court declined to award Mookerji attorney fees and litigation expenses, it agreed that, under the employment agreement, he was entitled to $5,400,000 in incentive payments for the years 2015 and 2016 and to a Tesla of his choosing. The company appealed, and the dispute hinged on whether future acquisitions included in SPI Holdco’s business income were to be included in the calculation of Mookerji’s incentive payments. The company argued that the calculation excluded revenue derived from acquisitions occurring after the commencement of Mookerji’s employment agreement. The appellate court disagreed because the company’s suggested interpretation contradicted the plain language of the agreement. During its term, the contract provided for incentive payments to Mookerji upon the earnings from SPI Holdco’s sale.
Since the sale of the company occurred during the term of Mookerji’s employment agreement, he was entitled to receive incentive compensation and a Tesla of his choosing. In the appellate court’s view, had the company intended to exclude acquisitions from being calculated into any income-based incentive payments, they could have.
