The law firm Katten Muchin Rosenman LLP released an Advisory, A New Wave of Say-on-Pay and Executive Compensation Proxy Litigation, on October 29, 2012 that warns of changing tactics of the plaintiffs’ shareholder bar.

Since the say-on-pay lawsuits have been largely unsuccessful, thanks to the specific language in the Dodd-Frank Act, the plaintiffs’ shareholder bars’ new tactic is “filing class action lawsuits against companies before the shareholder meeting to enjoin the say-on-pay vote based on alleged incomplete and misleading proxy disclosures. They also challenge disclosures in connection with any required vote in amending executive equity compensation plans, such as increasing the number of shares available for issuance.”

This is a very troubling development and one that could have repercussions to almost any management proposal placed on a proxy statement for a shareholder vote. I’ve learned that a few companies have already seen similar lawsuits concerning their equity plan proposals.

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