MILTON PFEIFFER, Derivatively on Behalf of DeVry, Inc., Plaintiff-Appellant and Cross-Appellee,
CHRISTOPHER B. BEGLEY, DAVID S. BROWN, GARY BUTLER, CONNIE R. CURRAN, DANIEL HAMBURGER, DARREN R. HUSTON, WILLIAM T. KEEVAN, LYLE LOGAN, JULIA A. McGEE, FERNANDO RUIZ, HAROLD T. SHAPIRO, RONALD L. TAYLOR, and LISA W. WARDELL, Defendants-Appellees and Cross-Appellants DeVry, Inc., Nominal Defendant-Appellee and Cross-Appellant
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Appeal from the Circuit Court of Du Page County. No. 12-CH-5105. Honorable Paul M. Fullerton, Judge, Presiding.
In a shareholder derivative action against defendant corporation alleging breach of fiduciary duty, waste of corporate assets, and unjust enrichment based on the corporation's grant of more stock options to its chief executive officer as part of his compensation in 2010, 2011, and 2012 than were allowed in the corporation's 2005 shareholder-approved incentive plan, on appeal by both parties after the corporation provided the CEO with alternate compensation of equal value under a different incentive plan and granted plaintiff $75,000 in fees and $20,705 in costs, defendants failed to show that the trial court erred in finding that plaintiff was eligible for reimbursement of his fees and costs pursuant to the corporate-benefit doctrine after defendants resorted to a different incentive plan and he abandoned his suit, and a review of the record showed that the trial court's award was " based upon conscience and reason, as opposed to capriciousness or arbitrariness," and its factual findings were " the product of an orderly and logical deductive process" and were not an abuse of discretion.
For Appellant: Vincent L. DiTommaso, Peter S. Lubin, DiTommaso-Lubin, P.C., Oakbrook Terrace; Eduard Korsinsky, Steven J. Purcell, Levi & Korsinsky, LLP, New York, New York.
For Appellees: Michele L. Odorizzi, Mayer Brown LLP, Chicago; Timothy D. Elliott, Rathje & Woodward, LLC, Wheaton; Kenneth J. Nachbar, Morris, Nichols, Arsht & Tunnell LLP, Wilmington, Delaware.
JUSTICE McLAREN delivered the judgment of the court, with opinion. Justices Hudson and Spence concurred in the judgment and opinion.
[¶1] Plaintiff, Milton Pfeiffer, and defendants, Christopher B. Begley, David S. Brown, Gary Butler, Connie R. Curran, Daniel Hamburger, Darren R. Huston, William T. Keevan, Lyle Logan, Julia A. McGee, Fernando Ruiz, Harold T. Shapiro, Ronald L. Taylor, and Lisa W. Wardell (collectively, the Board), appeal from the trial court's order awarding $75,000 in attorney fees to Pfeiffer. We affirm.
[¶2] I. BACKGROUND
[¶3] On October 5, 2012, Pfeiffer, the owner of one share of DeVry, Inc., stock, filed a three-count shareholder derivative complaint against the Board (and, nominally, DeVry), alleging breach of fiduciary duty, waste of corporate assets, and unjust enrichment. According to Pfeiffer, the Board had granted to Hamburger (DeVry's chief executive officer and a member of the Board), as part of his compensation in 2010, 2011, and 2012, 159,725 more stock options, than were allowed pursuant to DeVry's 2005 shareholder-approved incentive plan. Pfeiffer did not make a demand on the Board prior to filing suit; such a demand was " futile" according to Pfeiffer, because the " transactions at issue in this Action did not result from a valid exercise of business judgment." In addition, Pfeiffer alleged that various members of the Board were incapable of objectively considering a demand, because of a lack of independence. Among other things, Pfeiffer sought (1) rescission of the excess stock options, (2) damages sustained by DeVry, (3) reform of corporate governance and internal procedures, and (4) an award to him of " costs and disbursements of this action, including reasonable allowance of fees and costs for Plaintiff's attorneys, experts, and accountants."
[¶4] Despite the claim that a demand would be futile, two months later, on December 17, 2012, DeVry filed amended forms with the Securities and Exchange Commission showing that any grants of stock options to Hamburger beyond the 150,000 per year under the 2005 plan were " ineffective" ; thus, the number of options shown to be held by Hamburger was reduced. ...