Hello Eudai.
Thank you for taking on the difficult work of trying to get us out of the jam we’re in. In that regard, do you think we can do anything about Peter’s Golden Parachute? Should we succeed in puncturing it, obviously, we will hasten the consideration of a less flamboyant departure scheme.
Is there a lawyer in the house? I reside in New York. I am not a legal scholar. I certainly do not know to what degree Canadian law and USA law mirror each other. However, of course, there’s always the great historical influence of the mutual English Common Law between us.
Although I’m talking with absolutely zero authority on the subject, I will mention, just for the sake of it, one important legal principle that even I heard of, which is titled, “Unconscionability.” For example, even if you sign and get notarized a loan agreement in a jurisdiction with no interest rate limitation, that doesn’t mean anything goes, no matter how “unconscionable.” If you borrow $100 at 10,000 percent daily interest, the next day you will owe $10,100 (according to the contract).
However, because the contract is “unconscionable,” it is unenforceable (in court, so far as I know). Which reminds me of another legal concept, which needs no explaining, known as “Fraudulent Contract.” There’s even the possibility that the party who drafts and presents you such an “unconscionable” or “fraudulent” contract to sign could, conceivably, be in deep legal trouble (for the act of doing so). Even when the contract is less than “unconscionable,” many jurisdictions have laws on the books that require disclosure of the foreseeable negative possibilities of one-sided deals.
So, logically, how does this come into play vis-a-vis FNC paying for a Golden Parachute?
1) We cannot afford it. Such compensation is “unconscionable,” given how little money we have in the bank.
2) Such compensation is “unconscionable,” given whose Death-Spiral Financing brainstorm it was that emptied our bank account and brought our share price down to lows not seen in twenty years.
3) Given the company’s limited financial resources and limited liquidity, “unconscionable” is the drafting and the enforcing of a contract designed to fleece, at their own unaffordable expense, the same very people who are obligated to be competently served instead.
In terms of moral equivalencies, and in terms of anybody’s knowledge of how this works legally, is a legal remedy feasible (or is it a surefire way to make things worse)? As follows is what came up (amongst much else) after a very brief Google search: “A severance multiplier of two times base salary and bonus is considered a best practice in Canada, but four times is excessive, ISS [Institutional Shareholder Services] said.”
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/augusta-says-proxy-firm-backs-keeping-shareholders-rights-plan/article18052287/
