Wednesday, April 4, 2018

Spirit Aero Hit With $50M Benefits Suit Over Noncompete

Law360 (March 30, 2018, 6:13 PM EDT) -- The former president and CEO of aerospace manufacturer Spirit AeroSystems Inc. has hit the company with a suit in Kansas federal court seeking $50 million in retirement benefits he says it wrongly withheld on claims he breached a noncompete agreement, saying the company he was courted — but not picked — to lead was not Spirit’s rival.

Larry A. Lawson said in a Wednesday complaint that Wichita, Kansas-based Spirit owes him 538,160 shares in stock awards and more than $2 million in cash payments, valued together at $50 million. The suit claims the company reneged on his retirement agreement based on a retention contract with investment firm Elliott Associates LP for a potential CEO job at Arconic Inc. that hinged on a proxy battle and that he ultimately did not get.

"Spirit’s termination was entirely opportunistic," Lawson said in the complaint. "By withholding millions of dollars owed to Mr. Lawson and threatening to make public its claim that Mr. Lawson had breached his noncompete obligations to Spirit or would do so if he became CEO of Arconic, Spirit sought to create a cloud of doubt around Mr. Lawson’s candidacy and use that as negotiating leverage to hold Mr. Lawson hostage in an effort to reduce or terminate its obligations to pay Mr. Lawson."

Elliott Associates had secured Lawson as a potential candidate to lead Arconic in the investment firm’s proxy contest to shake up Arconic’s leadership, according to the complaint.

Lawson said Arconic is not a competitor of Spirit or in the same business as Spirit since the companies create aerospace parts in very different places in the supply chain. Moreover, Lawson agreed to be only a candidate for Arconic CEO in Elliott Associates’ proposed takeover, the complaint said. The proxy battle his employment rested on resulted in a settlement between Elliott Associates and Arconic in May, and a veteran of General Electric was appointed to the CEO spot instead.

“It was a foundational requirement of both Mr. Lawson and Elliott that any agreement between them would not result in any conflict with Mr. Lawson’s noncompetition obligations to Spirit,” the complaint said. “Certainly, Mr. Lawson’s agreement with Elliott to remain available to serve as Arconic’s CEO if selected would not violate his obligations to Spirit.”

Spirit knew his relationship with Elliott Associates did not violate his noncompete agreement because it never tried to enforce the contract against him, Lawson alleged. Lawson said the aerospace company was merely attempting to get out of its retirement obligations.

Lawson, who joined Spirit in 2013, previously served as president of Lockheed Martin Aeronautics Co. and executive vice president of Lockheed Martin Corp. Lawson helped Spirit rebound from poor returns and cash flow, raising its revenue by $2 billion and increasing its profit nearly 14-fold during his tenure, according to the complaint. He retired in July 2016.

Elliott Associates announced that it retained Lawson as a potential CEO for Arconic when the investment firm launched its its proxy contest in January 2017, and less than 48 hours later Spirit sent Lawson a letter terminating his retirement agreement and demanding repayment of $2.7 million he had already received, the suit says.

Lawson’s suit seeks a declaration that Spirit applied the noncompete too broadly and a finding Lawson is owed 538,160 shares in stock awards and more than $2 million of cash payments under his retirement agreement.

A representative for Spirit told Law360 that the company does not comment on pending litigation. Counsel for Lawson declined to comment. Contact information for Lawson could not be determined Friday.

Lawson is represented by F.James Robinson of Hite Fanning & Honeyman LLP and Martin L. Seidel and Matthew Freimuth of Willkie Farr & Gallagher LLP.

Counsel information for Spirit AeroSystems was not immediately available.

The case is Lawson v. Spirit Aerosystems Inc., case number 6:18-cv-01100, in the U.S. District Court for the District of Kansas.

Original article can be found here ➤

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