A divided California Court of Appeal has rejected an attempt to punish a public company for ignoring a shareholder vote on executive compensation, in an early test of Dodd-Frank "Say on Pay" legislation.
The Dodd-Frank Wall Street Reform and Consumer Protection Act requires executive compensation to be approved by shareholders, but the vote is non-binding. Robbins Geller Rudman & Dowd and two other firms brought a shareholder derivative action against the leaders of Jacobs Engineering Group after the construction services company increased five executives' compensation from $13.5 million to $17 million in 2010. Some 55 percent of shareholders had voted against the plan.
