The opinion of the court was delivered by: Judge Blanche M. Manning
After Bank One merged with defendant JPMorgan Chase, plaintiff Val Rajic contends that JPMorgan not only terminated him, but also wrongfully denied him stock options to which he was entitled. He has sued to recover the value of the stock options he was allegedly denied. Both Rajic and JPMorgan have filed motions for summary judgment. For the reasons detailed below, Rajic's motion is denied, while JPMorgan's motion is granted.
The following facts are undisputed except where noted. Rajic began working as a relationship manager for Bank One's insurance division in 2003. The terms and conditions of his employment were set forth in an Offer Packet dated February 6, 2003. Under the terms of the Offer Packet, Rajic's compensation included 15,000 Bank One stock options, which were set to vest at a rate of 20% annually. See Offer Packet, attached to Appendix to Joint Statements of Material Fact [53-1], at A033-34.
The options were governed by terms and conditions set out in both the Bank One Corporation Stock Performance Plan, as well as the Bank One Corporation Terms and Conditions of March 3, 2003 Stock Option Award ("Award Summary"). Under the Change in Control provision of the Award Summary, the options would vest fully (rather than at a rate of 20% annually) in the event that both of the following events occurred: (1) the control of Bank One changed through a merger or similar event, and (2) "the termination of the employee's employment initiated by the Corporation for any reason other than cause (as defined in the Termination for Cause section above) within two years following the Change in Control." Award Summary, attached to Appendix to Joint Statements of Material Facts [53-1], at A041. According to the Award Summary, "'[t]ermination of employment' occurs on the date the employee ceases to be classified by the Corporation as an employee." Id. at A009. For purposes of determining whether an employee had been terminated within two years of a Change of Control, JPMorgan considered an employee terminated on "the last date an employee receives his or her regulatory salary and benefits before beginning to receive severance benefits." Plaintiff's Response to Defendant's Rule 56.1(a) Statement of Material Facts [50-1] at 1.*fn1
The Award Summary also gave the CEO of Bank One the authority to make "final and binding" determinations about employees' vesting rights under the Stock Performance Plan. Specifically, the Award Summary stated that:
The Plan is administered by the Committee, which has delegated its authority to the Chief Executive Officer of the Corporation to administer this Award, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Summary; (ii) determine the reason for termination of employment and application of the restrictive covenants; and (iii) decide all claims arising with respect to this Award. Any determination by the Chief Executive Officer will be final and binding on all parties.
On July 1, 2004, the control of Bank One changed when it merged with JPMorgan Chase. Nearly two years later in April 2006, Steve Hague (who appears to have been Rajic's supervisor, though Rajic never identified Hague's title) told Rajic that JPMorgan was selling the insurance division in which Rajic worked and, therefore, JPMorgan was eliminating his position.*fn2 Rajic contends that beginning in April 2006, his job duties dwindled and, ultimately, Hague directed him to surrender all company owned items in his possession. Consistent with Hague's directive, on June 27, 2006, Rajic returned all of the company equipment in his possession, including his laptop computer, his Blackberry, his office keys, his employee badge, and his company credit card. His last day at work was June 27, 2006, and he never returned to the office or performed any of his job duties after that date.
On July 3, 2006, Rajic received written notice from JPMorgan that his "position will be eliminated and your employment will be terminated on 08/31/2006." Letter of July 3, 2006, attached to Appendix to Joint Statement of Material Facts [53-1], at A043. Rajic continued receiving his regular salary and other benefits through August 31, 2006.
At the time of the events at issue, Rajic had 7,920 outstanding unvested stock options. On August 9, 2006, Rajic wrote to JPMorgan to request that those 7,920 options vest immediately. Despite his request, on August 31, 2006, JPMorgan cancelled all of Rajic's outstanding options. On September 11, 2006, Rajic contends that he received a telephone call from Stephen Cerrone (Rajic does not identify Cerrone's job title) telling him that the options would not be restored and would remain cancelled. On May 1, 2007, JPMorgan director of human resources John Bradley sent Rajic a letter to confirm that the CEO of JPMorgan had determined that the conditions of the Change in Control provision of the Summary Award had not been met and, therefore, Rajic's options had not fully vested. Rajic then sued JPMorgan for breach of contract for violating the terms and conditions of the Offer Packet, seeking the value of the cancelled options which, according to Rajic, is $195,263.64.
The parties have filed cross-motions for summary judgment. Rajic argues that he is entitled to summary judgment because JPMorgan breached the Offer Packet by failing to fully vest his options when it terminated him on June 27, 2006, less than two years after Bank One merged with JPMorgan. For its part, JPMorgan argues that it is entitled to summary judgment because under the terms of the Award Summary, Rajic was not terminated until August 31, 2006, and, therefore, it did not breach the Offer Packet by failing to fully vest Rajic's options.