Los Angeles, CA. - Paul Hastings LLP, a leading global law firm, announced today that the firm secured the dismissal of a shareholder derivative action brought against the Board of Directors of Jacobs Engineering Group Inc, one of the world’s largest and most diverse providers of professional technical services, and the company’s independent compensation consultant, Frederic W. Cook & Co., Inc. Judge Kenneth Freeman of the Los Angeles Superior Court ruled that the plaintiffs’ allegations did not support viable claims for breach of fiduciary duty or breach of contract.
In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires an advisory shareholder say-on-pay vote at least once every three years to approve a company’s senior executive compensation. Jacobs’ shareholders voted against the Board’s recommended approval of the company’s executive compensation for 2010. Relying on the shareholder vote, plaintiffs alleged that Jacobs’ Board recommended and approved excessive executive compensation for 2010.
The Court, however, recognized that decisions regarding executive compensation fall squarely within the business judgment of a company’s board of directors. Rejecting the plaintiffs’ claims, the Court held that “[m]erely ignoring a non-binding vote of the shareholders and approving an increase in executive compensation is decidedly not a breach of fiduciary duty, by itself, under Dodd-Frank.” As a result, the Court dismissed all of the plaintiffs’ claims with prejudice.
The case is Jacobs Engineering Group Inc. Consolidated Shareholder Derivative Litigation
, Case No. BC454543, Superior Court of the State of California, County of Los Angeles.
The Paul Hastings team is led by global chair of the Litigation practice, Bill Sullivan
, and Los Angeles associate Scott Carlton
. Wachtell, Lipton, Rosen & Katz also represents the individual defendants and Frederic W. Cook & Co., Inc. Gibson, Dunn & Crutcher represents Jacobs. Paul Hastings is a leading global law firm with offices in Asia, Europe, and the United States. We provide innovative legal solutions to financial institutions and Fortune 500 companies. Please visit www.paulhastings.com for more information.