Dialogue

The latest reporting, opinion and research on executive compensation. We don’t necessarily agree with it all, but we provide it here for consideration.

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October 20, 2014

Quick Picks

Shareholder Scrutiny and Executive Compensation | The Harvard Law School Forum on Corporate Governance and Financial Regulation | October 22, 2014

Firms decrease CEO base salaries and increase stock awards during years in which they hold Say on Pay votes, according to a new paper from Mathias Kronlund of the University of Illinois and Shastri Sandy of the University of Missouri. Further, firms are less likely to grant golden parachutes when facing a Say on Pay vote, but are more likely to increase compensation through less scrutinized vehicles, such as pensions and deferred compensation. Despite increased equity awards during Say on Pay years, executives are less likely to exercise their options and thus report lower realizable pay. Read more

Shareholders, Disarmed by a Delaware Court | The New York Times (subscription required) | October 25, 2014

The Delaware Supreme Court ruled that companies can adopt bylaws — without shareholder approval — requiring investors who file lawsuits to pay the company's legal fees if the suit is unsuccessful. The court reasoned that a company's "intent to deter litigation" merited shifting legal fees to the plaintiff. While the decision should reduce the number of frivolous lawsuits, it may also discourage accusations of fraud, false disclosure, or violations of federal proxy rules, according to University of Denver law professor Jay Brown. S.E.C. officials have given no indication of a response. Read more

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