Arbitrator Rules for Executive Who Was Ousted by National Education
H. David Bright, who was ousted as chief executive of troubled National Education Corp. last year, may be in line for millions of dollars in severance payments and other benefits following an arbitrator’s ruling that he was not terminated for cause.
NEC said Wednesday that an American Arbitration Assn. arbitrator had ruled that Bright, once the second highest-paid executive in Orange County, “was not terminated for ‘cause’ as defined by his employment contract and that Mr. Bright has a claim under his contract for compensation.” The exact amount of the compensation will be determined at a hearing in May, and NEC general counsel Jeffery Brill said the company’s potential liability was “definitely material and definitely in the millions of dollars.” Bright earned nearly $1.5 million in 1988, the last full year he worked for the vocational education company.
Bright’s contract called for any disputes to be settled by an arbitrator rather than in court, Brill said. Such provisions are “by no means out of the ordinary” and are becoming more attractive to many companies, said Bruce May, a Newport Beach labor lawyer.
But other aspects of Bright’s contract may be less common. Brill said the employment agreement was a so-called “evergreen” contract with a five-year term, meaning that the contract automatically renewed for five years.
May said such self-renewing contracts are not unusual but that five years is a long term. Such deals provide “quite a bit of security” to the executive, he added. Bright joined NEC in 1972 and was named president and chief executive in 1978, and chairman in 1988.
Brill would not discuss details of the contract or the issues in dispute before the arbitrator. Bright said in an interview that he was “pleased the arbitrator ruled in my favor” but declined further comment on the dispute. He also declined to comment on his current employment status.
A one-time highflier, NEC lost $29.3 million on revenue of $400.8 million in 1989, largely as a result of problems at its Chicago-based Applied Learning subsidiary. Last month, the company agreed to pay $11.8 million to settle class-action lawsuits brought by shareholders who said they were misled about the firm’s condition.
When NEC announced that settlement, Jeff Kessler, an analyst with Shearson Lehman Hutton, said the issue of Bright’s employment contract was the firm’s “one remaining loose end.” Settling that problem could cost NEC as much as $9 million, he said.
