HHGregg senior managers are not entitled to share in $40 million in life insurance proceeds from the 2012 death of executive chairman of the board Jerry Throgmartin, the Indiana Court of Appeals ruled Friday, reversing a trial court ruling in the managers’ favor.
Dwain Underwood brought a class action on behalf of senior managers at Indianapolis-based HHGregg, claiming Throgmartin’s life insurance proceeds should have factored in earnings that serve as the basis for various levels of bonuses under the company’s annual incentive plan.
Court of Appeals Judge Melissa May overturned a trial court ruling that the managers were entitled to a share of the proceeds under Gregg’s bonus scheme based on 2012 earnings before interest, taxes, depreciation and amortization (EBITDA).
“As the life insurance proceeds Gregg received that year were properly excluded from EBITBA, Gregg was not obligated to pay the bonuses. We reverse and direct entry of summary judgment for Gregg,” May wrote in Gregg Appliances, Inc., and HHGregg, Inc. v. Dwain Underwood, on behalf of himself and all others similarly situated,
“As the parties could not have intended the EBITDA on which the (Total Rewards Statement) was based would include a one-time event in the form of insurance proceeds that did not reflect the company’s performance, Gregg was entitled to summary judgment,” May wrote in a unanimous nine-page decision.
The order reverses a ruling by former Marion Superior Judge Robert Altice, who since has been appointed to the Court of Appeals.