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Mauldin v. Leggett & Platt Inc.

United States District Court, D. South Carolina, Greenville Division

January 31, 2019

Keith Mauldin, Plaintiff,
Leggett & Platt, Inc., Defendant.


          Donald C. Coggins, Jr. United States District Judge

         This matter is before the Court for review of Defendant's decision to deny Plaintiff's claim for stock option benefits under a Deferred Compensation Program Plan (“the Plan”) governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132(a)(1) (“ERISA”). The parties have filed a joint stipulation and respective memoranda in support of judgment pursuant to the Court's Specialized Case Management Order for ERISA benefit cases. The parties agree that the Court may dispose of this matter consistent with the joint stipulation and memoranda. After a thorough review, the Court affirms the denial of benefits.


         Plaintiff was employed by Defendant as a Director of Consumer Sales for the Urethane Foam Division. ECF No. 20-1 at 9. On December 29, 2005, Plaintiff elected to defer $17, 614.00 of his compensation under the Plan. Id. at 37-38. This amount was used to acquire options to purchase 3, 835 shares of company stock at a proposed purchase price of $22.96 per share. Id. at 9. The options were granted as of December 29, 2005. See ECF No. 20-2 at 6 § 4.2. Pursuant to the terms of the Plan, the options vested and could be exercised any time after March 15, 2007, until the options expired. See id. at 7 § 4.4. According to the terms of the Plan, the options were valid for the ten years following the grant date, at which point the options expired. Id. at 6 § 4.3; 20-1 at 39-40. Thus, the o p t i o ns expired on December 29, 2015. EC F No. 20-1 at 6. The Plan allowed a participant 30 days after the expiration date to pay the exercise price and any other required amounts; when no action occurred on the part of Plaintiff, the exercise was void. ECF No. 20-2 at 7 § 4.4. Plaintiff failed to contact Defendant concerning the exercise of the options prior to the expiration date or within the 30-day period following the expiration date.

         In October 2015, Defendant sent Plaintiff written correspondence regarding the upcoming expiration of the options; however, it appears the mail was sent to an incorrect address. ECF No. 20-1 at 2, 6, 8. On or about July 27, 2016, one of Defendant's employees was able to reach Plaintiff by phone. Id. at 11. Defendant's employee informed Plaintiff that he was due compensation and would receive more information. Id. Plaintiff received a phone call from Annette Garner, Compensation Manager, who told him that the prior phone call was an error and that he was not due any compensation because the options had expired. Id. at 10-11.

         On August 9, 2016, Plaintiff sent correspondence to Garner's email address and addressed to the Committee Members informing that that he had received correctly addressed mail from Defendant's Retirement Plan.[1] 20-1 at 11. Thereafter, Defendant informed Plaintiff that his August 9, 2016, correspondence had been forwarded to the legal department and was construed as a claim for benefits. Id. at 9-11. Defendant denied Plaintiff's claim on August 18, 2016. Id. . a t 9 -10. P la i ntiff appealed, and Defendant issued a final denial letter on October 17, 2016. Id. at 6-7.

         THE PLAN

         The parties agree that the following terms, as defined by the Plan, are relevant to the curre nt a c ti o n:

3.2 Election. A Participant's Election must be made on or before December 31 for Compensation relating to the following calendar year, except that newly eligible Participants may make an Election during the calendar year within 30 days of first becoming eligible for participation for Compensation earned subsequent to the date of Election. Elections may be modified or withdrawn until such time as an original Election could no longer be made.
The Committee may provide for Elections at any other times with respect to all or any part of Compensation or Contributions to the extent that such Elections are consistent with the requirements of Section 409A.
4.2 Grant Date. Options will be granted as of the last business day in December of each year or such other date as the Committee determines (the "Grant Date").
4.3 Term of Options. The term of an Option will expire 10 years after the Grant Date (t he "Expiration Date").
4.4 Exercise of Options. Options will be exercisable on March 15th of the year following the year the compensation is earned and vested. However, despite any later specified date for exercise, any vested portion of an Option will become exercisable in full upon the death or Disability of the Participant.
An Option may be exercised by delivering a written notice to the Company accompanied by payment of the Exercise Price for the shares purchased. Such payment may be made in cash, by delivery of shares of L&P Common Stock (held for at least 6 months) or a combination of cash and Common Stock. Any such Common Stock will be valued at the per share closing price of the Company's common stock on the trading day immediately preceding the date of exercise or at such other time as determined by the Committee. No. shares will be delivered in connection ...

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