Paul Hastings Secures Dismissal of Say-on-pay Shareholder Derivative Action
Los Angeles, CA (March 14, 2012) - 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 worlds largest and most diverse providers of professional technical services, and the companys 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 companys senior executive compensation. Jacobs shareholders voted against the Boards recommended approval of the companys 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 companys 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,
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