Fifth Circuit Affirms Abuse-of-Discretion Review and Denial of Change-of-Control Severance Benefits

In Miller v. Anadarko Petroleum Corporation Change of Control Severance Plan, No. 25-20113, 2026 WL 542628 (5th Cir. Feb. 26, 2026), the Fifth Circuit affirmed summary judgment in favor of a change-of-control severance plan, holding that the plan conferred discretionary authority on the administrative committee and that the committee did not abuse its discretion in concluding that the plaintiff failed to establish “Good Reason” for resignation.

The plaintiff, a longtime Anadarko executive, sought separation benefits after Occidental Petroleum acquired Anadarko in a transaction that qualified as a “Change of Control” under the Plan. He remained employed following the merger but contended that his role was materially diminished. He alleged, among other things, a substantial reduction in spending authority, removal from key leadership functions, exclusion from certain meetings and decision-making processes, loss of authority over trade association relationships, and a 4.9% salary reduction. He also relied on comments from a supervisor encouraging retirement and referencing the potential vulnerability of his pension. After submitting a Good Reason inquiry and later resigning, the Plan’s administrative committee denied plaintiff’s claim for severance benefits. The district court applied abuse-of-discretion review and upheld the denial.

On appeal, the plaintiff argued that de novo review should have applied. The Fifth Circuit rejected that argument, concluding that the Plan’s language vested the committee with discretionary authority to interpret and construe the Plan’s terms. Although the plaintiff maintained that discretion applied only to ambiguous terms—and that “Good Reason” was unambiguous—the court emphasized that the Good Reason definition required evaluative judgments about whether duties were “materially and adversely diminished” and whether salary was “materially reduced.” Those determinations, the court reasoned, are inherently comparative and fact-intensive, bringing them within the scope of the committee’s discretionary authority. Accordingly, abuse-of-discretion review governed.

Applying that deferential standard, the court held that substantial evidence supported the committee’s determination that no “Good Reason” event occurred. The committee considered and rejected the plaintiff’s assertions regarding alleged age-related comments and pressure to retire, relying in part on information from human resources and concluding that further investigation was not required. The court held that this response fell within the range of reasonableness.

With respect to alleged diminutions in responsibility, the committee reviewed statements from both pre- and post-merger supervisors. Post-merger leadership explained that certain functions were realigned to other executives because they better fit within the reorganized structure and that the plaintiff’s participation in a newly formed executive leadership team provided broader exposure and input opportunities rather than a material reduction in authority. Although the record reflected competing accounts of the significance of the plaintiff’s prior responsibilities, the Fifth Circuit held that the committee’s choice among them was supported by substantial evidence and was not arbitrary or capricious.

The court likewise rejected the argument that the salary reduction and other asserted changes constituted a material adverse diminution under the Plan. Because the committee’s decision was supported by evidence that a reasonable mind could accept as adequate, the court concluded that it did not abuse its discretion and affirmed the judgment in favor of the Plan and committee.