Vernon W. Hill 2nd, the former chairman and chief executive of Commerce Bancorp Inc. in Cherry Hill, N.J., is suing the company he founded, and its board of directors, claiming they have not honored several compensation provisions in his employment agreement.
Mr. Hill resigned abruptly last summer amid regulatory pressure over alleged conflicts of interest between the $50 billion-asset Commerce and other companies operated by him and his family. In October, the company agreed to sell itself to Toronto-Dominion Bank for $8.5 billion in a deal scheduled to close this quarter.
In the suit filed Monday in U.S. District Court in Washington, Mr. Hill alleges that he is owed $50 million in damages mainly related to payments and perks he says were in his employment agreement but not honored. Mr. Hill was not reached Wednesday, but his lawyer, Andrew L. Sandler of Skadden, Arps, Slate, Meagher & Flom LLP, said the bank failed to follow through on a promise to pay what he is owed, "requiring him to file a lawsuit that nobody wanted to file."
According to the complaint, Mr. Hill's employment agreement entitled him to a separation payment of $11.5 million, had he been employed until Dec. 31, 2011, plus an annual bonus estimated at $750,000. He would also have been entitled to certain benefits.
The suit also claims that Mr. Hill's wife, Shirley, is owed $7.5 million in payments to her interior design firm, InterArch Inc., which did design work for Commerce branches until the end of 2007. The InterArch part of the complaint also alleges that Commerce lured away a key InterArch employee who subsequently recruited more InterArch employees to Commerce. A call to Ms. Hill was not returned.
Commerce has countersued Ms. Hill. Mr. Sandler said he had not seen it yet but that it is seeking recovery of payments made to Ms. Hill by the company. He said the countersuit is "totally without merit." The countersuit, which was filed this week in New Jersey Superior Court, asked the court to reverse a previous decision by Commerce to indemnify InterArch in a dispute from the 1990s and let Commerce recoup the $1.6 million it paid by deducting that from what is owed InterArch and Ms. Hill.
Commerce declined to comment Wednesday. However, H. Rodgin Cohen, the chairman of Sullivan & Cromwell, the banking company's attorney, said Wednesday that "the company believes [Mr. Hill's] suit is without merit and intends to defend against it vigorously." A call to Mr. Cohen for comment on the countersuit was not returned by press time.
