Gordon v. Goodyear
United States District Court for the Northern District of Illinois
2012 WL 2885695 (2012)
Facts
Navigant had a compensation committee charter that established the duties of its executive compensation committee. The charter required the committee to consider several factors when determining compensation for Navigant’s executives. From January 2006 to December 2010, Navigant’s stock price dropped from $21 per share to $9.20 per share. Navigant’s board of directors issued a proxy statement recommending pay increases or bonuses to Navigant’s executive officers for 2010. The proxy statement stated that the compensation vote was not binding on the board. Navigant shareholders voted against approving the recommended compensation. The board nevertheless approved the recommended compensation. William Goodyear (defendant) was on the board of directors, and he was the only member of the board that was also a Navigant executive officer. Natalie Gordon (plaintiff), a Navigant shareholder, filed a shareholder derivative action claiming that Navigant’s executive compensation for 2010 was excessive. Gordon did not make a demand on the board that it reverse its compensation decision prior to filing suit. Gordon claimed that demand was futile. Goodyear filed a motion to dismiss based on the lack of demand.
Rule of Law
Issue
Holding and Reasoning (St. Eve, J.)
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