Shareholders upset with ever-higher executive compensation packages are using new "say-on-pay" votes to challenge the payouts in court, a tactic raising eyebrows among legal experts.
The lawsuits are zeroing in on companies that lose these advisory votes by shareholders on top management compensation. The plaintiffs accuse the companies of waste or excessive pay and in some cases cite "no" votes as confirmation boards violated their duties to shareholders. ...
Stephen Bainbridge, a law professor at UCLA in Los Angeles, is among those who warned say-on-pay would trigger costly litigation. "I think they (plaintiffs' lawyers) are aggressively trying to use this as an opportunity to make new law on executive compensation," he said. The suits are unlikely to be successful, he said.
I blogged about why these suits are likely losers a couple of weeks ago.