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Shareholders say DeVry CEO received excess stock options

Shareholder disputes are a reality for businesses large and small. When disagreements arise between shareholders, parties on both sides of the dispute will need a legal strategy to mitigate risks to the company and keep profits up.

Our readers will be interested in a shareholder dispute over the excessive number of stock options made available to the CEO of DeVry Inc., the for-profit college likely familiar to many Los Angeles residents. According to a lawsuit filed on behalf of DeVry, the CEO was allowed to have an excess of 159,725 stock options, violating an incentive plan approved by shareholders.

The CEO and 12 company directors are named as defendants in the lawsuit. This complaint comes in the wake of a congressional investigation into for-profit chain colleges like DeVry. Many of these schools have been accused of using illegal recruiting methods in an effort to secure financial aid from sources backed by the government.

In particular, this latest lawsuit claims that, for three years, the DeVry CEO was given stock options exceeding the annual limit of 150,000. The company had drafted a document called the Incentive Plan of 2005, which stipulated the stock-option limit for shareholders.

The plaintiff says the CEO's stock options exceeded the limit by about 34,000 in 2010, 20,000 in 2011 and 150,500 in 2012.

Now the company representative wants to rescind the excess options, as well as pursue damages for waste of corporate assets, unjust enrichment and breach of fiduciary duty. These are all serious claims for any CEO to face, and shareholders are also right in protecting their business interests.

If Californians would like to learn more about the resolution of shareholder disputes and the drafting of business agreements, our Los Angeles business litigation site offers some helpful information.

Source: Courthouse News Service, "Can't Do That, Shareholder Tells DeVry," Jack Bouboushian, Oct. 24, 2012

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