Were the payments to Alan protected by the business judgment rule?

Years ago, Harry Lippman purchased Despatch Industries, Inc., which manufactured hardware for cabinets. His son, James, worked for the company. Later, James’s son, Wade, and son-in-law, Alan Shaffer, also went on the company payroll. Both young men signed identical employment contracts. After Wade and James had a falling out, Wade resigned from the company. The Despatch board agreed to pay $1.3 million to both Wade and Alan. Company tax returns referred to these as “severance” payments, although Alan continued to work for the company and receive a salary.

Wade filed suit against Alan and Despatch, alleging that the payments to Alan were improper and should be returned. The defendants argued that the payments were protected by the business judgment rule. Wade filed amotion for summary judgment.