Compensation for Republic Services Directors Limited by Derivative Action Settlement

2/19/2014 - BR&B served as counsel for plaintiff Frank David Seinfeld in Seinfeld v. Slager, a stockholder derivative action claiming that the board of directors of Republic Services, Inc. violated their fiduciary duties in awarding themselves excessive compensation.  After full briefing and argument on the defendants’ motions to dismiss, the Court sustained the complaint, finding that “[i]n reading the Complaint and the Stock Plan, I find no effective limits on the total amount of pay that can be awarded through time-vesting restricted stock units. The plan before me confers on the Defendant Directors the theoretical ability to award themselves as much as tens of millions of dollars per year, with few limitations….”

The parties undertook discovery on the sustained claims, and thereafter negotiated a settlement that set an effective limit on the amount of compensation that Republic’s directors could award themselves under the compensation plan at issue.  This limit was overwhelmingly approved by Republic’s shareholders in a vote held on May 9, 2013.  In approving the settlement, Vice Chancellor Glasscock of the Delaware Court of Chancery praised the settlement and BR&B’s litigation of the action, as follows:

The settlement, as I've already noted, works a benefit on the corporation and its stockholders.  I think actually it works a benefit on the directors as well because now they have sufficient guidance to be able to award themselves reasonable compensation.  It's clearly in the interests of the corporation….  There were difficult issues tried here.  There was a significant amount of effort put into the case.  The standing and ability of counsel on both sides is very high, with very fine firms and the attorneys that were involved here….  So with congratulations to both sides for the work that you have done both in litigating not only the issue that was settled but all the issues in the case and achieving the result that I think is manifestly in the best interests of the corporation and the stockholders.