Opinion ID: 783603
Heading Depth: 3
Heading Rank: 4

Heading: Phansalkar's Compensation from AW

Text: 48 There were two components to Phansalkar's compensation in 1999: salary and Partner Allocations. He received $250,000 in salary, in monthly installments, and was awarded his share of the Partner Allocations in December 1999. The latter consisted of 20% of the warrants that AW received from the Zip transaction; 17.5% of the carried interest in the Osicom private placement; and 7.5% of AW's interest in Treasure Master, a transaction that AW completed in 1999 but on which Phansalkar did not work. 49 Around the time Andersen and Weinroth told Phansalkar what his share of the 1999 Partner Allocations would be, they also told Phansalkar that his salary would be discontinued in 2000. Phansalkar expressed dissatisfaction at both his share of the Partner Allocations and the decision to discontinue his salary. He told Andersen and Weinroth that he was considering leaving AW. Soon after this discussion, Andersen and Weinroth offered Phansalkar the opportunity to invest in MCEL (as discussed above). Although Weinroth testified that he did not recall the MCEL offer being made in response to Phansalkar's dissatisfaction at his 1999 compensation, both Andersen and Weinroth testified that they made the offer to provide Phansalkar with an incentive to stay at AW and in contemplation of Phansalkar staying on at the firm. Phansalkar II, at , 2001 WL 1524479 at .
50 In 2000, Phansalkar received neither salary nor Partner Allocations. Instead, his compensation consisted of the three Investment Opportunities discussed above and a $100,000 loan from AW. The district court reviewed each Investment Opportunity separately and made a specific finding that each was compensation, because each was offered to Phansalkar at a discounted price. See Phansalkar II, at -99, 2001 WL 1524479 at -30 ($60,000 MCEL investment); Phansalkar III, at , 2002 WL 1402297 at  ($60,000 Sorrento investment); id. at , 2002 WL 1402297 at  ($50,000 Headway investment).
51 At the start of this litigation, Phansalkar had already received his entire $250,000 salary for 1999, but had not yet received any of his share of the 1999 Partner Allocations, because AW had not monetized any of the relevant interests. In addition, Phansalkar had received (and sold) the 44,000 Headway shares from his Headway investment. He had not received the MCEL Shares or any return on his Sorrento investment, and he had not repaid the $100,000 loan.