RALEIGH, N.C. – In a groundbreaking new decision, the United States District Court for the Eastern District of North Carolina has dismissed “say on pay” claims against officers and directors of Smith Anderson client Dex One Corporation. The decision is one of the first in the nation to address the merits of “say on pay” claims.
Smith Anderson served as sole outside counsel for the defendants in the lawsuit, just one of several filed in the U.S. that accuses officers and directors of breaching their fiduciary duties in connection with the “say on pay” provisions of the Dodd-Frank Act. These provisions require public companies to periodically submit their executive compensation plans to their shareholders for an advisory vote.
About the Case
The complaint asserted breach of fiduciary duty and unjust enrichment claims against Dex One officers and directors based on the results of an advisory shareholder “say on pay” vote. In particular, the complaint alleged that the officers and directors breached their fiduciary duties by making false and misleading statements in proxy filings, failing to follow a “pay for performance” policy and failing to respond to a negative say on pay vote. In a lengthy decision, the court dismissed all claims, concluding that the plaintiff’s complaint mischaracterized Dex One’s proxy filings, presented “sensationalized and meritless allegations” and failed to state any valid legal claim. In addition, the court held that the Dodd-Frank Act does not impose a legal duty to respond to a negative “say on pay” vote.
For a copy of the court’s decision in the case Haberland ex rel. Dex One Corp. v. Bulkeley, No. 5:11-CV-464-D, click here.