Stacking Remedies Against Disloyal Agents and Employees
Four cases against outlaw CEO’s who defrauded their companies are reviewed to show the major impact that compensation forfeiture contributes to the total package of remedies awarded. The dual goals of remedies for breach of fiduciary duty of compensation and deterrence result in multiple remedies, generally including a remedy at law to compensate and a remedy in equity to disgorge any benefit from the breach. For claims that the fiduciary or agent breached her duty of loyalty, a third remedy of compensation forfeiture can be added or ‘stacked’ on top of the first two as well possible punitive damages. As a remedy in equity, compensation forfeiture is not difficult to prove as it requires no proof of damages to the principal and minimal or no proof of causation. Evidence of multiple disloyal acts establishes a ‘disloyalty period’ over which the agent or employee’s compensation is in jeopardy for forfeiture especially when the disloyalty is egregious. The exact standards for which employees are vulnerable and which acts qualify as disloyalty vary by state. Despite some similarities between forfeiture and punitive damages, the two forms of remedy are generally not lumped together to review for excessiveness.
- Compensation Forfeiture,
- Faithless Servant,
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