Paul, Weiss is widely recognized as having one of the nation’s preeminent securities litigation and regulatory practices. For two decades, our lawyers have guided global corporations and financial institutions through a series of “bet-the-company” securities-related crises, consistently reducing or eliminating their most damaging claims and negotiating favorable resolutions.
Carrier Global Wins Dismissal of Putative Class Action Over Executive Compensation Plan Conversion
- Client News
- September 30, 2022
Paul, Weiss won the dismissal, with prejudice, of a putative class action against Carrier Global Corporation filed by former executives of Carrier’s former parent company, United Technologies Corporation (UTC). The former executives disputed the way that employee compensation plans were converted when UTC spun off Carrier and Otis Worldwide Corporation and then merged with Raytheon Corporation to form Raytheon Technologies Corporation in April 2020.
In their lawsuit filed in August 2020 in the District of Connecticut against Carrier, Otis and Raytheon, the former executives took aim at the formula that UTC used to convert awards in its employee compensation plans. The awards were converted using a formula based on the volume-weighted average trading prices of Carrier, Otis and Raytheon stock on the fourth and fifth days after the transaction, but because the stock prices rose sharply during the week after the spinoff, employees’ holdings were converted into far fewer shares of the new plans than if the conversion had been based on the stock prices the first day after the transaction. Subsequently, 12 former UTC executives who had become Raytheon, Carrier and Otis executives filed a class action complaint on behalf of themselves and other UTC plan participants asserting a variety of claims against the three companies, including breach of contract.
In dismissing all claims, U.S. District Judge Stephen Underhill ruled that, under the plans, UTC had discretion in deciding how to convert the plans, and that the plaintiffs had not adequately alleged that UTC selected the formula arbitrarily or that it violated any plan provision.
The Paul, Weiss team was led by litigation partner Audra Soloway, who argued the motion on behalf of Carrier, and also included partners Ted Wells and Daniel Kramer and counsel Robert Kravitz; and executive compensation partners Jean McLoughlin and Jarrett Hoffman.