Fiduciary duties are implicated in this report of a lawsuit filed in State Court in Oklahoma. See Gretchen Morgenson, "Fair Game/Shareholders Who Act Like Owners" p. 1, col. 6 (New York Times Nat'l Ed., SundayBusiness Section, Sunday, March 29, 2009).
The plaintiffs in the lawsuit hold huge numbers of shares in Chesapeake Energy Corporation. The plaintiffs seek "books and records" or apparently an accounting. The reported plaintiffs include the Louisiana Municipal Police Employee Retirement System. The reason alleged to have an accounting reportedly is a large amount of money paid to "the company's chief executive" while the corporation reportedly lost money. According to the linked newspaper report, there may be allegations on the face of the Complaint that the Directors may have breached their fiduciary duties to the shareholders by paying out large amounts of 'compensation' to people who were in charge of the corporation -- and of the shareholders' investment -- during a time that the corporation lost much money in contrast.
It will be hard for Chesapeake to challenge the motivation of the police officers who have sued it for an accounting, to say the least.
In addition, this lawsuit and others like it are the appropriate response to the increasingly large number of commentators who seem to decry the lack of public outrage at those who allegedly caused or may have caused the Financial Collapse. Our judicial system was put in place over time precisely in order to channel public outrage away from violence and into acceptable vehicles such as holding alleged wrongdoers accountable at law and in equity, and providing people with the opportunity to defend themselves.
Separate and apart from any "books and records demand" or accounting relief which may be requested in the current Complaint, this lawsuit and others like it raise an interesting question: What are the Fiduciary Duties of Directors who vote to award Officers and other corporate executives large amounts of money from the coffers of corporations which performed poorly during the period covered by the new compensation award?
If anyone has a pdf copy of the publicly filed Complaint, I would appreciate a copy, with thanks. In the interim, time will tell what allegations and claims have been made and how they fare in the Oklahoma State Court lawsuit.
A related post can be found this day at www.insuranceclaimsissues.typepad.com.
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