Senior Public Relations Manager
Senior Public Relations Coordinator
Say-on-Pay Litigation on the Rise, Pillsbury ReportsAs mentioned in: Fox Business, Reuters, CNBC, Business Insider, The Wall Street Journal
November 30, 2012
Senior associate Ana Damonte and partner Sarah Good, both members of Pillsbury’s litigation practice in San Francisco, along with partner Cindy Schlaefer, a member of Pillsbury’s executive compensation and benefits practice in Silicon Valley, discuss recent developments relating to litigation stemming from changes prompted by the Dodd-Frank Act.
According to the Pillsbury lawyers, plaintiffs’ attorneys are now finding new ways to generate lawsuits over executive pay, leading to several legal settlements. However, the settlements so far haven’t produced money for investors or changes in executive compensation. A small New York based law firm, Faruqi & Faruqi, has been the main financial beneficiary and has brought the bulk of the cases. The law firm said the settlements benefit shareholder by giving them the information they need to make investment decisions.
Instituted in 2010, the Dodd-Frank Act requires companies in the United States to hold shareholder votes on the compensation of top executives at least every three years. These nonbinding votes are also known as, “say-on-pay” votes and while many of them pass, there are a few that fail and result in shareholder lawsuits against company directors.
Good said there was little companies could do to avoid being hit with these lawsuits.
“Where the plaintiffs’ securities bar see that they will get a return on their investment, they’re going to keep filing them,” Good said.
To read a Pillsbury client alert on “say-on-pay,” click here.
To read the full Reuters article, click here.