A U.S. District Court judge recently awarded $5 million to the former chief operating officer of Crain Automotive Holdings LLC of Sherwood for money owed under a deferred compensation plan.
U.S. District Court Judge Brian S. Miller found that Crain Automotive owed Barton Hankins of Little Rock the money under the contract he signed in 2019, when he joined the company. He resigned from the company in January 2023.
According to the plan, if Hankins left Crain Automotive, his deferred compensation would be equal to 5% of the fair market value of the company, the lawsuit said.
Crain Automotive offered Hankins the plan as an incentive to work to grow the company, according to the Oct. 30 lawsuit.
“I oversee the operations and performance of 22 dealerships, a stand-alone collision center and a used car super center,” Hankins said on his LinkedIn profile. He also was the COO of Crain Media Group LLC, a subsidiary of Crain.
Crain Management Group is one of Arkansas’ largest private companies. It was ranked No. 21 on Arkansas Business’ list of the largest private companies with an estimated $800 million in revenue in 2022.
On Jan. 17, 2023, Hankins quit. “He had decided it was his time to leave,” Hankins’ attorney, Michael Thompson of Wright Lindsey Jennings of Little Rock, told Arkansas Business. Hankins calculated he was owed $4.977 million under the deferred compensation plan, and the deadline to pay was April 1.
Crain didn’t dispute the amount but denied that the contract was enforceable.
During the dispute, Larry Crain Sr., the president of Crain Management Group, died in April 2023, at the age of 81.
Hankins appealed Crain’s denial to U.S. District Court because the matter is governed by the Employee Retirement Income Security Act of 1974. In the case, Judge Miller reviewed the record of Crain’s denial.
Crain Automotive argued that for the plan to be enforced, it required Hankins to have signed an employment agreement or confidentiality, noncompete and nonsolicitation agreement.
Crain argued in its filing that without an employment agreement, the deferred compensation plan would allow Hankins to “resign one day then rob the company of trade secrets the next, without any repercussions under the terms of the DCP,” Crain’s attorney, Michael Moore of Friday Eldredge & Clark of Little Rock, wrote in a filing. “It would allow Hankins to walk across the street, open a competing dealership, disparage Crain, solicit employees and customers, and all on the springboard of a nearly 5-million-dollar payout from Crain.”
Moore also said it “strains credulity” to believe that such a large benefits package would be offered without those protections. Moore didn’t return a call for comment.
But Thompson said that those other agreements didn’t exist.
“Our argument was that since they didn’t exist, Hankins could not possibly have breached them,” Thompson said. “And the judge sided with us on that one.”
Miller wrote that both sides operated under the terms of the deferred compensation plan for four years.
“At no time did Crain object to the terms of the DCP based on the lack of a written employment agreement or confidentiality agreement,” Miller wrote. “Indeed, Crain did not raise this issue until Hankins resigned and sought compensation under the DCP. These facts indicate that Crain is simply looking for a way to avoid its obligation to Hankins.”
Thompson, Hankins’ attorney, said that Hankins is retired.
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