Victory for Board of Directors in Executive Pay Lawsuit


Plaintiffs’ lawyers have recently attempted to convert a negative shareholder advisory “say on pay” vote under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) into a breach of fiduciary duty where the board of directors implements a compensation program and awards thereunder. A U.S. district court in Oregon has rejected such a claim on procedural grounds, applying Delaware corporate law in affirming the business judgment presumption for the directors’ vote. Plumbers Local No. 137 Pension Fund v. Davis.

While the “say on pay” rules issued by the Securities and Exchange Commission are mandated by Dodd-Frank, it is those SEC rules that require companies to have such a vote. More importantly, the vote is on ALL executive compensation and its elements, not any specific aspect thereof.

The company in question, Umpqua Holdings Corp., indicated in its corporate proxy statement that its executives had met their independent and collective goals for 2010 and were rewarded with incentive pay. The board approved the compensation program and awards thereunder and then submitted the program and awards to shareholders for an advisory vote under Dodd-Frank. A majority of the shareholders rejected the entire package – not any specific aspect thereof.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Katten Muchin Rosenman LLP | Attorney Advertising

Written by:


Katten Muchin Rosenman LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.