Fight or Settle – “Say on Pay” Suits

By Dennis McCarthy – (213) 222-8260 – dennis@mbsecurities.com – 

If public company executives didn’t already have enough to deal with, now there’s one more item.

Corporate Counsel magazine reports a significant rise in lawsuits by plaintiff’s attorneys claiming inadequate disclosure in company’s “say on pay” proxy disclosure.

These “say on pay” lawsuits are filed by the same law firms which show up filing suit claiming M&A proxy disclosure is inadequate.

These suits also follow the pattern of M&A litigation in which plaintiffs seek an injunction to prevent a shareholder vote.

To date, most companies have chosen to settle these “say on pay” suits requiring the companies to revise their proxy materials plus pay several hundred thousand dollars to plaintiff’s attorneys.

So far, the absolute number of these “say on pay” lawsuits is small but unless companies choose to fight them, I suspect the number will grow.

I’ve attached a link to the Corporate Counsel magazine article which itself has links to several helpful sources.

As always, please contact me to help your company with any capital market transaction.

Link to the article or paste this:

http://www.law.com/corporatecounsel/PubArticleCC.jsp?id=1202590630080

My friend and colleague, Roger Zickfeld at Columbia Capital sent me an additional article from CFO Magazine which provides more color on the topic (Link)

Katten Muchin Rosenman also prepared a valuable background slide deck (link).  


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