Last year I blogged on a disappointing ruling against Simon Properties Group, Inc. out of the Delaware Chancery Court (Surprising Victory in Delaware for Plaintiffs Alleging Excessive/Improper Compensation),Louisiana Municipal Police Employees Retirement System, et al. v. Melvyn E. Bergstein, et al. and Simon Property Group, Inc. The Court refused to dismiss plaintiff’s claims that the Simon Property’s directors had exceeded their authority under the company’s stock incentive plan. The Court’s decision came down to the narrow issue of whether the company’s amendment of its stock incentive plan to allow a different type of stock award required stockholder approval. However, the transcript of the bench ruling, the Court’s interpretation of the facts, and its willful refusal to distinguish between base salary and a time-vested RSU award may suggest a shift in some Delaware courts’ attitudes toward executive compensation lawsuits.
Apparently, the parties recently settled the case, with the following commitments by the company:
- The company revoked the challenged RSU award.
- The company agreed not to award non-performance based grants under the company's stock incentive plan without stockholder approval of an amendment to the plan authorizing such awards.
- The company agreed not to award more than 600,000 shares or performance units to any individual in any calendar year without stockholder approval of an amendment to the plan authorizing such awards.
- The company will amend the stock plan to reflect the foregoing.
- The company will pay certain legal fees.
The Chancery Court also appears to have dismissed at least one related suit alleging misleading proxy disclosures and ultra vires acts by the directors (in approving the stock award).