A shareholder, Pinchus E. Raul, sued the Houston-based company in 2011 in federal court in Delaware saying the board wrongly ignored an investor vote for “say on pay” that rejected increases in executive compensation, including a raise to $2.5 million in 2010 from $1.3 million for Chief Executive Officer John T. Rynd.
The claims are based on “flawed premises,” U.S. District Judge Leonard P. Stark wrote in an opinion yesterday dismissing the case.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires publicly traded companies to request shareholder approval of compensation for executive officers, Stark said. The votes aren’t binding and shouldn’t be seen “as overruling a decision by a company or its board of directors,” he said.
Hercules Offshore operates a fleet of more than 100 utility boats and provides drilling, boat and barge services in the Gulf of Mexico, Latin America, the Middle East, Africa and Asia. The company said Feb. 27 that it agreed to buy a boat in Cameroon from KS Energy Ltd. for $42 million.
Son Vann, a Hercules spokesman, and Eduard Korsinsky, a plaintiff’s lawyer, didn’t immediately respond to requests for comment on the ruling.
The case is Raul v. Rynd, 11-cv-00560, U.S. District Court, District of Delaware (Wilmington).
– Phil Milford and Dawn McCarty, Copyright 2013 Bloomberg.