Bloomberg BNA’s Corporate Law & Accountability Report is available on the Corporate Law Resource Center. This news service keeps corporate practitioners informed of legal developments of...
Aug. 31 — A Qualcomm Inc. investor will not be allowed to revive claims related to whether board members improperly submitted amendments to the company's long-term incentive plan for shareholder approval, the U.S. Court of Appeals for the Third Circuit ruled Aug. 28.
The investor asserted that the individual director defendants made material misstatements in two proxy statements and breached their fiduciary duties in connection with the incentive plan.
In a non-precedential opinion, a three-judge panel affirmed the U.S. District Court for the District of Delaware's dismissal of the claims, including direct claims related to whether the compensation committee had the authority to submit the amendments to the shareholders for a vote.
“The Board delegated broad powers to the Compensation Committee,” Judge Joseph Anthony Greenaway Jr. wrote. He added that there was nothing in the bylaws that explicitly required the full board to slate the vote.
“The Bylaws state that matters may be submitted to the shareholders ‘by or at the direction of the Board of Directors,'” he opined. “In light of the broad powers delegated to the Compensation Committee, it was acting ‘at the direction' of the Board when it slated the LTIP amendments for shareholder vote.”
The court also affirmed the dismissal of several derivative claims on the grounds that the plaintiff failed to show that a pre-suit demand on the board to take action was excused.
In doing so, the court rejected an argument that individual directors were interested because a majority of their compensation was awarded based on the shareholder votes.
“As noted by Appellees, there is no evidence that, had the LTIP amendments not been passed by shareholders, QualComm, Inc. would not have used an alternative compensation form to provide its Directors the compensation to which they were contractually entitled,” Greenaway wrote.
Additionally, the Third Circuit concluded that the plaintiff failed to establish a majority of the board was “interested” with regard to the actions generally of the Compensation Committee.
To contact the reporter on this story: Michael Greene in Washington at email@example.com
To contact the editor responsible for this story: Yin Wilczek at firstname.lastname@example.org
The opinion is available at http://www.bloomberglaw.com/public/document/JEFFREY_KAUFMAN_Appellant_v_BARBARA_T_ALEXANDER_STEPHEN_M_BENNETT.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)