Opinion ID: 2831977
Heading Depth: 2
Heading Rank: 2

Heading: Claim VIII

Text: Throughout the course of this litigation Appellant has changed the articulation of Claim VIII. In his complaint, Claim VIII concerned the Directors’ alleged abdication of their duties under the corporate documents and sought injunctive relief “in the form of a meeting of the board to consider and vote upon amending the 2006 LTIP and recommending it to the stockholders for a new vote.” J.A. 114. The District Court analyzed the claim as one alleging that the Individual Directors utilized the incorrect procedure for slating the LTIP amendments for shareholder vote. Kaufman, 62 F. Supp. 3d at 403 (“Claim VIII is a direct claim based upon the Plaintiff’s theory that the Defendants failed to properly approve the 2006 LTIP . . . for a shareholder vote. . . .” (internal quotation marks omitted)). On appeal, Appellant appears to present Claim VIII as a breach of contract claim, conflating it with Claim XI. See Appellant’s Br. at 20, 25–26 (arguing that “Claims VIII and XI allege similar violations of the Bylaws, Compensation Committee Charter and 2006 LTIP as direct claims because Plaintiff has suffered harm in the violation of a 10 Based on the Board minutes, it appears that at all relevant times there were twelve Members of the Board. The Compensation Committee never had more than three members. 11 Though the District Court resolved Claims II and III on other grounds, expressly avoiding a determination of demand excuse as to these claims, we can affirm on any ground supported by the record. Hildebrand, 757 F.3d at 104. 8 contract right, and a wrong involving a contractual right of a shareholder. . . .” (internal quotation marks omitted)). Appellee correctly notes that this is the first time Appellant has made this argument as to Claim VIII, a fact that explains why the District Court did not analyze Claim VIII in tandem with Claim XI. “Absent exceptional circumstances, this Court will not consider issues raised for the first time on appeal.” Del. Nation v. Pennsylvania, 446 F.3d 410, 416 (3d Cir. 2006) (citation omitted). As such, we need not engage in a breach of contract analysis as to Claim VIII. That being said, the analysis, infra, regarding Claim XI applies equally to Claim VIII. Assuming, arguendo, that this claim is direct rather than derivative,12 we agree with the District Court that the “Compensation Committee had been expressly provided authority to effectuate amendments to the LTIP and thus had implied authority to submit these amendments for a shareholder vote.” Kaufman, 62 F. Supp. 3d at 405. At bottom, Appellant’s argument is that the Compensation Committee did not have authority to submit the LTIP amendments to the shareholders for a vote. The Board delegated broad powers to the Compensation Committee including the “responsib[ility] for the design, implementation and administration of all Company-wide benefit plans, including equitybased compensation programs,” J.A. 529, and “other powers as it shall deem necessary to the efficient discharge,” id. at 530, of its responsibilities including “the exclusive 12 If Claim VIII is understood as a contract claim, it is direct. If it is understood as a breach of fiduciary duty claim, whether it is direct or derivative depends on whether Appellant’s success on the claim requires a showing that there was harm to QualComm, Inc. Because the Board did not, in fact, fail to follow the procedures set forth in the relevant corporate documents, we need not determine whether Claim VIII is direct or derivative. 9 authority to administer the [LTIP] . . . and the power to amend or terminate the [LTIP] at any time,” id. at 464. While section 16 of the LTIP requires that increases in share allotment be approved by shareholders, nothing in the corporate documents explicitly requires the full Board to slate those shareholder votes. The Bylaws state that matters may be submitted to the shareholders “by or at the direction of the Board of Directors.” J.A. 839 (§ 5(b)(A)). In light of the broad powers delegated to the Compensation Committee, it was acting “at the direction” of the Board when it slated the LTIP amendments for shareholder vote. Id. at 839. The Committee’s implied authority to slate the amendments for shareholder vote is also supported by the fact that the Committee was responsible for amending the LTIP, but, in order to effectuate share increases, shareholder approval was required. Therefore, the LTIP granted the Committee “such other powers as it shall deem necessary to the efficient discharge” of its responsibilities, J.A. 530, which includes the implied authority to seek shareholder approval of amendments to the LTIP. Nor does our reading of the Bylaws as authorizing the Compensation Committee to slate shareholder votes “at the direction of the Board of Directors” render superfluous the Charter provision granting the Committee the authority to “[r]eview provisions of all compensation and benefit plans requiring approval by Company stockholders, including new plans and amendments to continuing plans, and make appropriate recommendations to the Board regarding such approval.” J.A. 530. Rather, the broad delegation of power by the Board of Directors, the Bylaws, and the Charter authorizes the Committee to slate 10 a shareholder vote regarding any new plans or amendments where necessary to implement the LTIP and, at the same time, authorizes the Committee to make recommendations to the Board regarding the adoption of any proposed plans or amendments. Our conclusion is buttressed by other statements in the Charter including that the Committee is “responsible for the design, implementation and administration of all Company-wide benefit plans,” id. at 529 ¶ 1, and that the Committee has the power to “[p]erform such other functions and have such other powers as it shall deem necessary to the efficient discharge” of the LTIP, id. at 530 ¶ 6. Finally, the very act of including the proposed LTIP amendments in the draft proxy statements served as a “recommendation” of the amendments to the Board. The record reflects that the Board had an opportunity to review and comment on the draft proxy statements before they were submitted for shareholder vote.