Say No More: The Latest Blow to Suits Challenging Proxy Disclosures About Say-On-Pay and Stock Incentive Plans

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Over the past eighteen months, public companies have drafted their annual proxy statements knowing that they could become the next target of a new wave of disclosure lawsuits. Those suits have challenged the adequacy of disclosures on executive compensation in connection with say-on-pay votes mandated by Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), as well as votes on amendments to stock incentive plans.

Public companies have been concerned that no matter the quality of disclosure, and regardless of a proxy statement’s compliance with federal law and best practices, the proxy statement would be attacked for not saying enough. These claims have been modeled on disclosure claims pursued under state law routinely asserted in merger and acquisition litigation. As in the M&A context, plaintiffs would seek an injunction...

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