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California Court Dismisses Say-on-Pay Shareholder Derivative Lawsuit

A California Superior Court recently dismissed a say-on-pay shareholder derivative lawsuit that was based, in part, on statements made by the defendant in its Compensation Discussion and Analysis (CD&A) section of the proxy statement. The basis for the lawsuit against the defendant?ÇÖs board of directors was the approval of the compensation plan in January 2011, after a shareholder vote rejected that plan. Despite alleged poor performance results in 2010, and statements by the defendant that its pay for performance policy provided that compensation would be decreased for poor performance, the defendant?ÇÖs board of directors nevertheless increased executives?ÇÖ compensation for 2011. The court held that the plaintiffs had not overcome the presumption of the business judgment rule. Notwithstanding what appears to be boilerplate language in the CD&A, the court found the statements to be evidence that the defendant exercised valid business judgment. In finding so, the court held that the plaintiffs… Continue Reading

Cincinnati Bell Agrees to Say-on-Pay Settlement

Multiple news sources have reported that Cincinnati Bell has agreed to settlement terms in In re Cincinnati Bell, Inc. Derivative Litigation. The complaint in this case alleged that the board of directors breached its fiduciary duties by approving the company?ÇÖs 2010 executive compensation plan after certain shareholders voted against it in an advisory say-on-pay vote. The settlement terms include a variety of corporate governance changes that, among other things, will more clearly communicate the Company?ÇÖs executive compensation practices to its shareholders, and the payment of plaintiff?ÇÖs attorneys’ fees and expenses. A list of the corporate governance changes can be found in Section 2.1 here.

September 2022