Opinion ID: 754147
Heading Depth: 3
Heading Rank: 2

Heading: Mr. Berner's Authority to Amend the Plan Pursuant to

Text: Board Delegation 23 Beyond the board of directors, the corporation may validly act through its directors and officers as authorized corporate agents. In general, an officer's powers stem from the organic law of the corporation, or a board delegation of authority which may be express or implied. 2 William M. Fletcher, Fletcher Cyclopedia of the Law of Private Corporations § 434, at 339 (perm.rev. ed.1992). Express authority to act on behalf of the corporation is usually manifested through a statute, the certificate of corporation, the by-laws, or a board or shareholder action. Id. § 434, at 339-40; Petition of Mulco Prods., 123 A.2d 95, 103 (Del.Super.Ct.), aff'd sub nom., Mulco Prods., Inc. v. Black, 127 A.2d 851 (1956). Implied actual authority, which is express authority circumstantially proved, may be found through evidence as to the manner in which the business has operated in the past, the facts attending the transaction in question, circumstantial evidence of board declarations surrounding the given transaction, or the habitual usage or course of dealing common to the company. 2 Fletcher, supra, § 437.2, at 353; Mulco, 123 A.2d at 103. Similarly, authority will be implied when it is reasonably necessary and proper to effectuate the purpose of the office or the main authority conferred. 2 Fletcher, supra, § 434, at 340. 24 Pursuant to these principles of corporate law, the undisputed facts show that Mr. Berner, the CEO and President of CW possessed the express authority to amend the Plan without the board's prior approval. The corporate by-laws, adopted by the board, affirmatively bestow on the CEO the authority to take general and active control of [the corporation's] business and affairs, which specifically includes the power to fix employee compensation. App. at 441-43. Delaware courts have held that attendant to this unqualified grant of authority, the president as general manager commands the power to do anything the corporation could do in the general scope and operation of its business. Phoenix Finance Corp. v. Iowa-Wisconsin Bridge Co., 16 A.2d 789, 793 (Del.Super.Ct.1940); see also Mulco, 123 A.2d at 104. It certainly follows that the broad power to fix employee compensation subsumes the authority to amend a specific type of compensation--retirement health benefits governed by ERISA--and logic would consequently dictate that the board expressly approved the CEO's authority to create, administer, or amend CW's retirement plan. Indeed, Delaware courts have been receptive to this line of reasoning, and have generally upheld a general manager's action on behalf of the corporation unless it is unusual or extraordinary. See 1 Ernest L. Folk, Folk on the Delaware General Corporation Law § 142.6, at 6-7 (3d ed.1997). 25 We once again pause to address plaintiffs' arguments against finding express authority vested in Mr. Berner pursuant to an express delegation by the board. Plaintiffs assert that although Mr. Berner expressly commands the authority to fix employee compensation, the termination of medical benefits would be an extraordinary exercise of authority that would require explicit board approval. Plaintiffs do not point to any record support for this contention other than the allegation that it would be outside the ordinary course of business for the CEO to undertake such an action. This argument is unavailing particularly in view of the board mandate allowing the CEO to fix employee compensation and the complete absence of any suggestion that the board intended Plan amendments to be subject to its prior approval. In fact, the board adopted the by-laws well before the Plan's creation and acted in a manner perfectly consistent with the assumption that the Plan was valid. If the board had considered the Plan's creation as a reasonable act without its prior authorization, then surely the board would not have considered the Plan's amendment to be so extraordinary that it was outside Mr. Berner's authority. 26