Gordon v. Goodyear

2012 WL 2885695 (Ill. 2012)

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Nature of the Case

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Facts

P owns Navigant common stock, and in her shareholder derivative suit alleges that the Board awarded 'excessive executive compensation despite the fact that Navigant shareholders have seen the value of their investment plummet.' P alleges that Ds breached their duties and financial obligations and failed to act in the best interests of Navigant and its shareholders. P alleges that, from January 2006 until December 2010, Navigant's share price fell from over $21 per share to $9.20 per share. P alleges that Navigant significantly underperformed both the S&P 500 Total Returns Index and the 'Business Services' industry performance between 2006 and 2010. P alleges that the Board members approved pay increases and or cash bonuses for Navigant's top executive officers in 2010 'despite Navigant's dismal financial results, which included a negative 38.1 percent shareholder return over the past year.' Pursuant to recently-enacted Section 14A, in a Proxy Statement, the Board recommended that the shareholders approve the compensation that Navigant paid to its executive officers in 2010. The Proxy informed the shareholders that their vote on the compensation was non-binding on both Navigant and its Board. This advisory vote on executive compensation is commonly referred to as a 'say-on-pay' vote. Navigant held its 2011 Annual Meeting of Shareholders. At that meeting, over 55% of Navigant's voting shareholders rejected the compensation package for Navigant's executive management for fiscal year 2010. P alleges that the shareholders' rejection of the 2010 compensation package is 'direct and probative evidence that the 2010 executive compensation was not in the best interests of Navigant shareholders, and correspondingly that the Board did not act in the best interests of Navigant shareholders when approving it.' Ds moved to dismiss.