Defending Against Shareholder “Say-On-Pay” Suits

September 06, 2011
Nearly 2,200 issuers held “say-on-pay” votes in 2011. Shareholders have overwhelmingly voted in favor of the proposed compensation plans, rejecting management compensation proposals in only about 40 instances. The companies that lost the vote, however, have been frequent targets of shareholder derivative litigation and more cases are expected to be filed. This update examines the litigation risks posed by a non-binding shareholder vote disapproving executive compensation, which raises the stakes on say-on-pay votes in an unexpected way.

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