A familiar cast of characters, led by former Harvard law professor Alan Dershowitz, is set to return to Wilmington Thursday afternoon for a contempt hearing in a bitter billing dispute with the custodian appointed to oversee TransPerfect's forced sale in 2015.
Stockholder Challenges to Executive Compensation
Corporate Litigation columnists Joseph M. McLaughlin and Shannon K. McGovern write: The Delaware Supreme Court recently clarified the limits of the stockholder ratification defense in litigation challenging director compensation awarded under the parameters of a stockholder-approved compensation plan.
Investors, proxy advisory services and corporate governance watchdogs closely monitor executive compensation, and express their views on executive pay in diverse fora, ranging from advisory Say on Pay votes required under the Dodd-Frank Act to a CEO Salary Watchdog Facebook page. In the absence of stockholder approval, if a stockholder adequately alleges that directors breached their fiduciary duties by awarding themselves equity pursuant to an incentive plan, the directors must prove that the awards are entirely fair to the corporation. In litigation challenging compensation awarded by the board under an equity incentive plan that has been approved by a majority of informed and disinterested stockholders, however, the affirmative defense of stockholder ratification becomes relevant. Otherwise self-interested director compensation awards made within the confines of a fixed plan approved by fully informed stockholders may be subject to the deferential business judgment rule, not the entire fairness standard. The Delaware Supreme Court recently clarified the limits of the stockholder ratification defense in litigation challenging director compensation awarded under the parameters of a stockholder-approved compensation plan. In In re Inv’rs Bancorp Stockholder Litig., 177 A.3d 1208 (Del. 2017), the court recognized a business-judgment safe harbor for directors where the equity awards approved by stockholders are sufficiently specific as to amounts and terms. But when stockholders have approved an equity incentive plan that gives directors discretion to grant themselves awards within general parameters, and a stockholder adequately alleges that the directors inequitably exercised that discretion, a ratification defense is unavailable and the directors must prove the fairness of the awards to the corporation.
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In December, Gov. Andrew Cuomo signed a series of amendments that made significant changes to the requirements for statutory powers of attorney in the state of New York. The changes, as discussed by C. Raymond Radigan and David Milner in this edition of their Trusts and Estates Law column, are an effort on the part of the New York Legislature to address issues that had become problematic with the use of the existing statutory power of attorney.
A protective order cannot guarantee the abuse will stop and the victim and children will be safe. Nonetheless, it is a critical step to take because it helps to legally document the abusive experience.
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