Hercules Offshore, Inc. (“Hercules” or “the Company
Pending before the Court are two motions to dismiss the complaint for failure to satisfy the pre-suit demand requirement for derivative suits, as well as fоr failure to state a claim upon which relief may be granted. (D.I. 24; D.I. 26) The Court heard oral argument on February 9, 2012. (D.I. 48) (“Tr.”)
For the reasons that follow, the Court will grant the motions to dismiss.
BACKGROUND
I. The Parties And The Complaint
Plaintiff is and has been a shareholder of Hercules at all relevant times, since at least October 2010. (D.I. 1 ¶ 17) He filed the instant lawsuit on June 22, 2011. (D.I. 1)
In the Verified Shareholder Derivative Complaint (the “Complaint”), Plaintiff names as defendants the individual members of Hercules’ board of directors (“Board”),
The Complaint generally alleges: (i) breaches of fiduciary duty in connection with the Board’s approval of the Company’s 2010 executive compensation plan; and (ii) violation of Section 14(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78n(a), due to false and misleading statements contained in the Company’s Definitive Proxy Statement distributed in сonnection with its May 10, 2011 Annual Meeting of Stockholders (the “Proxy Statement”). (Id. at 1) Specifically, five counts are alleged, as further described later in this Opinion.
II. The Motions To Dismiss
On July 25, 2011, the Board, Executives, and Hercules (collectively, the “Hercules Offshore Defendants” or “HOD”), filed a motion seeking dismissal of Counts I, II, and V of the Complaint, pursuant to Federal Rules of Civil Procedure 23.1(b)(3), 12(b)(6), and 9(b), for (i) failure to make a pre-suit demand on the Board and failure adequately to plead why demand would have been futile, and (ii) failure to state a claim upon which relief may be granted (the “HOD Motion”). (D.I. 24; see also D.I. 25; D.I. 34) On July 27, 2011, FWC filed a motion requesting dismissal of Counts III and IV, also based upon Plaintiffs failure to comply with the demand requirements and failure to state a claim (the “FWC Motion”). (D.I. 26; see also D.I. 27; D.I. 38)
III. The Dodd-Frank Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act, see 15 U.S.C. § 78n-l (“Dodd Frank”), was enacted on July 21, 2010. (See D.I. 1 ¶ 1; D.I. 25 at 1) Section 951 of Dodd-Frank requires that publicly-traded companies include a resolution in their proxy statements asking shareholders to approve, in a non-binding, “say-on-pay” shareholder vote, the compensation of their executive officers. (See D.I. 1 ¶¶ 2, 5 & n. 3; D.I. 25 at 1; 15 U.S.C. § 78n-l; 17 C.F.R. § 229.402) A separate resolution is required to determine whether this shareholder say-on-pay vote should occur every one, two, or three years. (See D.I. ¶ 2; 15 U.S.C. § 78n-l)
Dodd-Frank explicitly provides that say-on-pay votes “shall not be binding” on a company or its board of directors, and “may not be construed” in any of the following ways: (1) “as overruling a decision” by the company or its board of directors; (2) “to create or imply any change to the fiduciary duties” of the company or its board of directors; (3) “to create or imply any additional fiduciary duties” for the company or its board of directors; or (4) “to restrict or limit the ability of shareholders to make proposals for inclusion in proxy materials related to executive compensation.” 15 U.S.C. § 78n-l(c).
On October 18, 2010, the Securities and Exchange Commission (“SEC”) issued proposed rules under the Exchange Act to implement Section 951 of Dodd-Frank. (See D.I. 1 ¶ 5) On January 25, 2011, the SEC adopted rule changes relating to shareholder approval of executive compensation. (See id.; see also 15 U.S.C. § 78n-1)
IV.Hercules’ Proxy Statement and 2010 Executive Compensation Plan
On March 25, 2011, Hercules issued its Proxy Statement for its Annual Meeting
• to attract, retain, motivate, and reward executive officers who are capable of leading the Company in a complex, competitive, and changing industry;
• to align the interests of our executive officers with those of our stockholders;
• to pay for performance;
• to ensure that performance-based compensation does not encourage excessive risk taking; and
• to increase retention by requiring forfeiture of a substantial portion of an executive officer’s compensation upon voluntary termination of employment.
(Id.; see also D.I. 1 ¶ 49) The Proxy Statement further provides that the Company’s compensation committee (the “Compensation Committee”) “will continue to design compensation arrangements with the objectives of emphasizing pay for performance and aligning the financial interests of our executives with the interests of long-term stockholders, and require executives to retain ownership of a significant portion of our common stock they receive as compensation.” (D.I. 25 Ex. A at 43; see also D.I. 1 ¶ 50)
Hercules’ 2010 executive compensation plan, approved by Hercules’ Board, raised executive compensation by between 40 and 190%. (D.I. 1 ¶¶ 10, 20-32, 47, 67) CEO Rynd’s compensation was increased from approximately $1.3 million in 2009 to $2.5 million in 2010. (Id. ¶¶ 10, 19) Similarly, CFO Butz’s compensation increased from $333,000 in 2009 to $963,000 in 2010. (See id. ¶¶ 10, 21) Senior V.P. and General Counsel Noe’s compensation increased by 108% to $1.23 million. (Id. ¶ 20) Chief Accounting Officer Carson’s compensation increased 160% to more than $800,000. (Id. ¶ 22) Vice President of Worldwide Operations Carr’s compensation increased 150% to just over $1 million. (Id. ¶23) Vice President of Human Resources Rodriguez’s compensation increased 40% to approximately $950,000. (Id. ¶ 124)
This increased compensation was awarded at a time that Hercules was not performing well. In 2010, the Company posted a net operating loss of $1.17 per share, which represented an $85.4 million, or 11%, decline in total revenue compared .to the prior year. (Id. ¶¶ 41-44) The Company also experienced a $300 million decrease in total assets, a $100 million decrease in net cash from operating activities, an almost 13% (more than $100 million) decrease in stockholder equity, and a drop in stock price to $3.48 per share, a decline of more than $1 per share. (Id. ¶¶ 45-46)
As required by Dodd-Frank, the Company’s 2011 Proxy Statement included a resolution asking for shareholder approval — in a “nonbinding advisory vote ... on an advisory basis” — of the Company’s 2010 executive compensation. (D.I. 25 Ex. A at 43; see also D.I. 1 ¶ 2) The Board had unanimously approved the executive compensation package for 2010; in the Proxy Statement, the Board had likewise unanimously recommended that shareholders vote to approve that compensation plan. (D.I. 1 ¶¶ 7, 48, 51; see D.I. 25 Ex. A at 43)
However, at the May 10, 2011 Annual Meeting, Hercules’ stockholders rejected the Company’s 2010 executive compensation package, with approximately 59% of Hercules’ shares voting against approval.
On May 22, 2012, Plaintiff submitted a letter to the Court indicating that on May 15, 2012, the Hercules shareholders again voted down the Company’s executive compensation plan, this time by a 52-48% margin. (D.I. 51)
LEGAL STANDARDS
I. FedR.Civ.P. 23.1
Federal Rule of Civil Procedure 23.1(a) applies “when one or more shareholders or members of a corporation or an unincorporated association bring a derivative action to enforce a right that the corporation or association may properly assert but has failed to enforce. The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of shareholders or members who are similarly situated in enforcing the right of the corporation or association.” In order to maintain suсh a derivative suit, the plaintiff must have owned shares in the company at the time of the disputed transaction. See id.
Additionally, the complaint must “state with particularity”
(A) any effort by the plaintiff to obtain the desired action from the directors or comparable authority and, if necessary, from the shareholders or members; and
(B) the reasons for not obtaining the action or not making the effort.
Fed.R.Civ.P. 23.1(b)(1), (3). In this way, Rule 23.1 imposes a requirement that a shareholder plaintiff make a pre-suit demand on the board of directors prior to filing a derivative suit on behalf of the company, or to provide a satisfactory explanation for why the plaintiff has not done so. This demand requirement allows the corporate machinery to self-correct problems and to safeguard against frivolous lawsuits. See Ryan v. Gifford,
When it is clear that making a demand upon the company’s board of directors would be futile, the demand requirement may be excused. See Aronson v. Lewis,
Evaluating a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) requires the Court to accept as true all material allegations of the complaint. See Spruill v. Gillis,
However, “[t]o survive a motion to dismiss, a civil plaintiff must allege facts that ‘raise a right to relief above the speculative level on the assumption that the allegations in the complaint are true (even if doubtful in fact).’ ” Victaulic Co. v. Tieman,
III. Fed.R.Civ.P. 9(b)
Federal Rule of Civil Procedure 9(b) requires a complaint to plead “with particularity the circumstances constituting fraud or mistake.” “Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” Fed.R.Civ.P. 9(b). “Although a plaintiff is not required to allege every material detail — such as date, location, or time — a plaintiff must plead the circumstances of the fraud with sufficient particularity ‘to place defendants on notice of the precise misconduct with which they are charged.’ ” Eames v. Nationwide Mut. Ins. Co.,
Hence, an allegation of securities fraud must be supported “with all of the essential factual background that would accompany ‘the first paragraph of any newspaper story’[-]that is, the ‘who, what, when, where, and how of the events at issue.’ ” Snowstorm Acquisition Corp. v. Tecumseh Prods. Co.,
PARTIES’ CONTENTIONS
I. Defendants’ Contentions
A. Hercules Offshore Defendants
The Hercules Offshore Defendants argue that Plaintiff has not alleged the particularized facts required by Rule 23.1 to excuse him from making a pre-suit demand on the Hercules Board to sue for the acts alleged in his Complaint. (See D.I. 25 at 2-3, 7-18) Plaintiff claims generally that demand would have been futile — and is, therefore, excused — because (i) “each of the directors has been named as' a defendant in this action and was a director when the excessive 2010 executive compensation was issued;” (ii) “each director participated in issuing materially false and/or misleading statements” contained in the Proxy Statement; and (iii) each оf the directors, by virtue of having approved the 2010 executive compensation plan and making allegedly false and misleading statements in the Proxy Statement, “face[s] a substantial likelihood of liability and [is] interested in the outcome of this action.” (D.I. 1 ¶¶ 66, 67, 68) The Hercules Offshore Defendants contend that these allegations are inadequate to excuse demand.
In the view of the Hercules Offshore Defendants, Plaintiff has failed to allege facts raising a reasonable doubt that a majority of the Board is independent and disinterested. The mere fact of Board approval of the 2010 compensation plan does not excuse demand. Moreover, because the Complaint fails to establish that the Company had a strict pay-for-performance policy, the Board Defеndants face no substantial likelihood of liability. (See D.I. 34 at 2-8)
The Hercules Offshore Defendants additionally argue that Plaintiff has failed to allege facts raising a reasonable doubt as to whether the 2010 executive compensation was the product of a valid business judgment. While Plaintiff relies heavily on the fact that a majority of the shares that voted on the “say-on-pay” resolution at the 2011 Annual Meeting disapproved the 2010 compensation (see D.I. 1 ¶ 8; D.I. 25 at 5), there is no basis for Plaintiff to make the conclusory leap that such “adverse shareholder vote rebuts the presumption that the Hercules Board’s 2010 executive compensation decisions were the product of a valid exercise of business judgment.” (D.I. 1 ¶ 53; see also D.I. 25 at 5)
Even if demand were excused, the Hercules Offshore Defendants contend that the Complaint fails to stаte a claim on which relief may be granted. Because the Proxy Statement contains no material false or misleading statements about the Company’s executive compensation practices, Plaintiff has not stated a claim for violation of Section 14(a) of the Exchange Act. (See D.I. 25 at 1, 13-15, 18-19; D.I. 34 at 6) Nor does the Complaint adequately state a claim for breach of the fiduciary duty of loyalty in the Board’s approval of the 2010 executive compensation and issuance of the Proxy Statement. (See D.I. 25 at 3, 19) Similarly, the Complaint fails to state a claim for “unjust enrichment.” (Id. at 5, 19-20; D.I. 34 at 10; see D.I. 1 ¶53)
B. FWC
FWC has likewise moved to dismiss the claims against it based on Plaintiffs purported failure to satisfy the demand requirements of Rule 23.1. FWC further moves to dismiss for failure to state a claim pursuant to Rule 12(b)(6). (D.I. 26; see also D.I. 27; D.I. 38) In addition to echoing the points made by the Hercules Offshore Defendants, FWC makes other points as well.
For instance, Plaintiffs claim that FWC aided and abetted a breach of fiduciary
II. Plaintiff’s Contentions
A. Relating To Hercules Offshore Defendants
Plaintiff emphasizes that the Board and Executives owed fiduciary duties of care and loyalty to the Company. (D.I. 1 ¶ 56) Plaintiff alleges that the Board’s approval of the 2010 executive compensation: (i) violated the Company’s рay-for-performance policy, (ii) was not the product of a valid exercise of business judgment, and (iii) caused the Company’s Proxy Statement to be materially false and misleading, because the Board failed to disclose that the 2010 executive compensation had no meaningful relationship to the Company’s performance. (Id. ¶¶ 12, 62) On this last point, Plaintiff specifically argues that the Hercules Offshore Defendants knew or should have known that increasing executive compensation by 40-190% in light of the Company’s performance violated the Hercules pay-for-performance executive compensation philosophy as outlined in the Proxy Statement. (See id. ¶¶ 49, 59) Moreover, the shareholders’ rejection of the 2010 executive compensation plan strongly evidences thаt the compensation is not in the best interest of Hercules and was not the product of business judgment. (See id. ¶¶ 60-61)
Moreover, continues Plaintiff, the Proxy Statement “falsely stated that the Board ‘emphasiz[ed] pay for performance and aligned the financial interests of long-term stockholders.’ ” (Id. ¶¶ 14, 50) The distribution of the Proxy Statement by the Hercules Offshore Defendants violated Section 14(a). Additionally, the Executives were unjustly enriched, as the 2010 pay increases violated Hercules’ pay-for-performance policy and were unwarranted in light of Hercules’ poor 2010 financial performance. (See id. ¶¶ 91-92)
Finally, Plaintiff contends that making a pre-suit demand upon the Hercules Board would have been a useless and futile endeavor, and, therefore, Plaintiffs failure to make such a demand is excused. (See id. ¶ 65) Each of the Bоard members has been named as a defendant, voted in favor of adopting the 2010 executive compensation plan, participated in issuing false and misleading statements in the Proxy Statement, and was a director when the shareholders disapproved of that compensation plan. (See id. ¶ 66) “[E]ach of the directors is interested in the outcome of this litigation” and, consequently, “facets] a substantial likelihood of liability;” “the directors are not entitled to business judgment protection for their decisions relating to the 2010 executive compensation, for the adverse shareholder vote rebuts that presumption;” and “the directors have exhibited antipathy towards the relief sought herein by first recommending approval of the 2010 executive compensation and then thwarting the will of the shareholders by failing to rescind the 2010 executive compensation after the shareholders overwhelming voted against it.” (Id. ¶¶ 67-70; see also D.I. 32)
B. Relating To FWC
Plaintiff contends that FWC, as the Board’s compensation consultant, aided and abetted and rendered substantial assistance to the Board in its breach of fiduciary duty, resulting in injury to share
DISCUSSION
1. Plaintiff’s Claims Are Based On Flawed Premises
Before turning to the specific issues presented by the pending motions to dismiss, it is necessary to observe that Plaintiffs claims are based on two flawed premises. Plaintiff misconstrues the effect of the shareholder vote against the Hercules 2010 executive compensation plan. Plaintiff also mischaracterizes that compensation plan.
A. The Effect Of A Say-On-Pay Vote
Plaintiff relies heavily on the fact that the Hercules shareholders voted against the 2010 executive compensation plan yet the Board thereafter did nothing to rescind or modify that plan in response. However, as noted above, Dodd-Frank explicitly states that say-on-pay votes “shall not be binding” on a company or its board of directors. 15 U.S.C. § 78n-l(c). Dodd-Frank аlso explicitly states that the results of say-on-pay votes “may not be construed” in any of the following ways: (1) “as overruling a decision” by a company or its board of directors; (2) “to create or imply any change to the fiduciary duties” of a company or its board of directors; (3) “to create or imply any additional fiduciary duties” for a company or its board of directors; or (4) “to restrict or limit the ability of shareholders to make proposals for inclusion in proxy materials related to executive compensation.” Id.; see also, e.g., Jacobs Eng’g Group, Inc. Consol. S’holder Deriv. Litig., C.A. No. BC454543, at 8,
B. Hercules’2010 Executive Compensation Plan
Plaintiff also relies heavily on his view that Hercules has adopted a strict pay-for-performance policy. In support of this contention, Plaintiff points to the Proxy Statement. As Plaintiff alleges, that statement discloses:
Our compensation committee will continue to design compensation arrangements with the objectives of emphasizing pay for performance and aligning the financial interests of our executives with the interests of long-term stockholders.
(D.I. 25 Ex. A at 20-21, 43) Yet Plaintiff has been selective in his characterization of the Company’s compensation plan. A fuller understanding of that plan, as disclosed in the Proxy Statement on which Plaintiff relies for his claim, reveals serious flaws in Plaintiffs case.
It is true that Hercules’ Proxy Statement explains that “pay for performance” is part of the “philosophy and objectives” of the Company’s compensation programs. (D.I. 25 Ex. A at 20) However, the same statement also' identifies other goals. (See D.I. 25 at 5, 14; D.I. 34 at 2-3, 5, 7) In fact, the Proxy Statement states that the Company’s executive compensation policy is designed to achieve five goals, of which
• to attract, retain, motivate, and reward executive officers who are capable of leading the Company in a complex, competitive, and changing industry;
• to align the interests of our executive officers with those of our stockholders;
• to pay for performance;
• to ensure that performance-based compensation does not encourage excessive risk taking; and
• to increase retention by requiring forfeiture of a substantial portion of an executive officer’s compensation upon voluntary termination of employment.
(Id.; see also id. at 20-26 (setting forth compensation philosophy and performance objectives))
One of these goals merits particular discussion in light of Plaintiffs allegations. This is the Company’s goal of retaining its executive officers, a goal that may have taken on increased importance precisely because of the difficult financial circumstances in which the Company found itself in and around 2010. As the Proxy Statement explains:
The Board of Directors and its Compensation Committee ... remain committed to retaining the existing management team, and as a result, have offered cash retention incentives to recover some of the shortfall in long-term incentive compensation levels. While a portion of the awards are delivered solely upon continued еmployment, the majority of such awards are earned only if the company achieves specific performance goals during the year. This “Incentive and Retention Plan” was implemented in 2010, and covers both the 2010 and 2011 físcal years. The committee believes that the implementation of this plan has been critical in deflecting efforts by competitors that can offer attractive compensation opportunities, and in keeping the management team focused on executing the current business strategy for future shareholder value creation.
(D.I. 25 Ex. A at 18) (emphasis added) The goal of retaining an executive could, under certain circumstances, lead to increased executive compensation even if the Company is experiencing poor financiаl performance.
Moreover, the Proxy Statement explains that total executive compensation is based not only on the Company’s performance, but also on factors including “advice from a compensation consultant, established corporate goals and objectives, company performance targets, personal performance objectives, and the compensation paid by the company’s competitors.” (D.I. 25 Ex. A at 9; see also id. at 17-18 (linking 2011 pay for performance to, inter alia, achievement of safety goals); id. at 23 (explaining that Company’s plan includes both financial and safety objectives as well as personal goals)) In addition, as Defendants observe, Plaintiffs allegations “incorrectly presume that executive compensation is solely awarded retrospectively.... As is common practice in executive compensation, the Proxy Statement makes clear that much of the Company’s executive compensation is prospective.” (D.I. 34 at 7)
Hence, Plaintiffs characterization of the Hercules executive compensation policy as essentially mandating a strong correlation between certain financial aspects of the Company’s performance and the compensation of the Company’s executives is incorrect.
II. Dismissal For Failure To Adequately Alleye Demand Futility
Plaintiff did not make a pre-suit demand on the Board. Consequently, his
Delaware law presumes that a corporation’s boаrd of directors is disinterested and independent. See FLI Deep Marine LLC v. McKim,
Nor has Plaintiff shown that demand would have been futile duе to a majority of the Board having faced a “substantial likelihood of liability.” Plaintiffs have failed to allege particularized facts showing a “substantial likelihood” of such personal liability. See Aronson,
Much of the force of Plaintiffs contentions derives from Plaintiffs insistence that the Board “ran afoul of the shareholders’ will ... by proceeding with a compensation plan that directly contravened the shareholders’ express demand as communicated by their resounding vote ‘against’ that plan.” (See D.I. 32 at 15-16) As explained above, however, this contention fails because it misconstrues the effect of a say-on-pay vote under Dodd-Frank. Under Dodd-Frank, the Board had no obligation to reevaluate its executive compensation plan in light of the shareholders’ vote. Additionally, Dodd-Frank explicitly prohibits construing the shareholder vote as “overruling” the Board’s compensation decision. Accordingly, the Board’s failure to change course in light of the say-on-pay vote does not give rise to a substantial likelihood of personal liability, nor demonstrate that the Board would have been unable objectively to evaluate a demand to bring suit. See Aronson,
Other courts reviewing similar allegations have reached conflicting conclusions regarding the futility of pre-suit demand. In NECA-IBEW Pension Fund ex rel.
Thus, the motions to dismiss based on lack of demand will be granted. All claims against all defendants will be dismissed.
III. Dismissal For Failure To State A Claim On Which Relief May Be Granted
Although not necessary to do so in light of the Court’s conclusion that the Complaint must be dismissed pursuant to Rule 23.1, in the interest of completeness the Court will also analyze whether the Complaint should also be dismissed pursuant to Rules 9(b) and 12(b)(6).
Count 1 of the Complaint alleges that the Board and Defendants Rynd and Noe violated Section 14(a) of the Exchange Act by causing to be issued materially false and misleading statements contained in the Hercules Proxy Statement. To prevail on his Section 14(a) claim, Plaintiff must show that: (1) the Proxy Statement contains a material misrepresentation or omission, (2) which caused plaintiff injury, and (3) that the proxy solicitation itself was “an essential link in the accomplishment of the transaction.” In re NAHC, Inc. Sec. Litig.,
Count II of the Complaint alleges that the Board breached its fiduciary duty of loyalty.
Count III alleges that FWC aided and abetted the Board’s breach its fiduciary duties owed to Hercules. A cause of action for aiding and abetting a breach of fiduciary duty requires: “(i) the existence of a fiduciary relationship, (ii) a breach of that relationship, (iii) knowing pаrticipation in the breach by a defendant who is not a fiduciary, and (iv) damages proximately caused by the breach.” McGowan v. Ferro,
As explained above, Plaintiff has failed to state a claim for breach of fiduciary duty by the Board. Consequently, Plaintiff has also failed to state a claim that FWC aided and abetted any breach.
Count IV of the Complaint alleges that FWC breached its contract with Hercules. Under Delaware law, a breach of contract claim requires the existence of a contract, a breach of that contract, and damages suffered from the breach. See Millett v. TrueLink, Inc.,
Here, Plaintiff fails to identify any contractual provision that FWC allegedly breached. Plaintiffs general allegation that “FWC breached its contract with Hercules to render competent and sound advice and services regarding Hercules’ 2010 executive compensation” (D.I. 1 ¶ 88) is conclusory. It is also predicated on inferences — such as that the 2010 executive compensation was unlawful or otherwise illegitimate and cannot have been the result of a proper process or exercise of business judgment — which, for reasons al
Likewise, to the extent Plaintiffs claim against FWC sounds in professional negligence, Plaintiff must establish not only that FWC owed a duty to Hercules and breached that duty, causing damages, but also must identify the applicable standard of care allegedly breached. See Brown v. Interbay Funding, LLC,
Finally, in Count V, Plaintiff alleges the Executives were unjustly enriched. Unjust enrichment is “the unjust retention of a benefit to the loss of аnother, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience.” Schock v. Nash,
CONCLUSION
For the reasons set forth above, the Court will grant the motions to dismiss and dismiss the Complaint in its entirety. A separate Order will be entered.
ORDER
At Wilmington this 14th day of March, 2013:
For the reasons set forth in the Memorandum Opinion issued this same date,
IT IS HEREBY ORDERED that:
1. The Hercules Offshore Defendants’ Motion to Dismiss (D.I. 24) is GRANTED.
2. Frederick W. Cook & Co., Inc.’s Motion to Dismiss (D.I. A) is GRANTED.
Notes
. On a motion to dismiss, the Cоurt must accept all factual allegations contained in the complaint as true and draw all reasonable inferences in favor of the non-moving party. See Oshiver v. Levin, Fishbein, Sedran & Berman,
. The Company’s Board consists of at least the following eight individuals, none of whom are Hercules employees: Thomas N. Amonett ("Amonett”); Suzanne V. Baer ("Baer”); Thomas R. Bates, Jr. ("Bates”); Thomas M. Hamilton ("Hamilton”); Thomas J. Madonna (“Madonna”); F. Gardner Parker ("Parker”); Thierry Pilenko (“Pilenko”); and Steven A. Webster ("Webster”). (See D.I. 1 ¶¶ 25-32; D.I. 25 at 3; see also D.I. 27 at 3) Although some papers indicate that John T. Rynd ("Rynd”) is also a director, the Complaint does not specifically make such an allegation. (See D.I. 25 at 3, 9 & n. 9, 10; see also D.I. 1 ¶ 19)
. The Executives are: Rynd, Hercules' CEO and President; James W. Noe ("Noe”), Senior Vice President and General Counsel; Stephen M. Butz ("Butz”), CFO; Troy L. Carson ("Carson”), Chief Accounting Officer; Terrell L. Carr ("Carr”), Vice President of Worldwide Operations; and Lisa W. Rodriguez ("Rodriguez”), Vice President of Human Resources. (See D.I. 1 ¶ 19-24; D.I. 25 at 4, Ex. A at 14; see also D.I. 27 at 3)
. FWC is an executive compensation advisory firm with whom Hercules entered into a consulting contract for the provision of advice and assistance with respect to the Company's 2010 executive compensation program. (See D.I. 1 ¶¶ 33, 85; see also D.I. 27 at 3-4)
. Further background concerning DoddFrank can be found in other recent judicial decisions. See, e.g., Gordon v. Goodyear,
. As Hercules is a Delaware corporatiоn, Delaware law governs the analysis of whether to excuse demand. See generally Kamen v. Kemper Fin. Servs.,
. To the extent Plaintiff is claiming a breach of the duty of loyalty based on false and misleading statements in the Proxy Statement (see D.I. 1 ¶¶ 57, 77), that claim fails given the failure to adequately allege such statements,
. In his May 22, 2012 letter to the Court (D.I. 51), Plaintiff requested leave to amend the Complaint to add claims arising from the Hercules shareholders’ vote in 2012 against the Company’s executive compensation plan. Defendants objected to this request. (D.I. 52) In addition to the fact that such relief must be sought by formal motion, see D. Del. LR 7.1.2, 15.1, which Plaintiff did not do, the Court finds that the amendment Plaintiff appears to be contemplating would be futile, as the proposed amended claims would suffer from the same defects that have led the Court to dismiss the operative Complaint. See Foman v. Davis,