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EXECUTIVE COMPENSATION BLOG
Welcome to Winston & Strawn's Executive Compensation Blog. This blog features updates and discussion on the most current executive compensation issues and developments, as well action item reminders and strategies. We hope you enjoy learning a little bit about our practice area interest and reading these articles.

My commitment to the reader is that I will keep the Blogs short and to the point. I only post 2 or 3 times each week, depending on what is new and important, so I won't clog your email with a bunch of lengthy newsletters that you never have time to read.

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About the Blogger
Michael S. Melbinger
Partner
Chair, Employee Benefits and Executive Compensation Practice
Chicago Office
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January 10, 2013
The Top Executive Compensation Issues for 2013

The New Year is still young but I am going on record with my prediction for the two top executive compensation issues of 2013; one that is a sure thing and one that I just feel in my bones.

Today, the sure thing.  By now everyone who reads this Blog is aware of the recent litigation wave against publicly traded companies. When I first Blogged on this in October, I hoped the strike suit lawyers would lose a few of these and give up. Bad news. The strike suit lawyers have been sending demand letters to many public companies shortly after they file their annual proxy statement (notice of annual shareholder meeting).The letters are often followed by a lawsuit seeking a preliminary injunction of the shareholder vote to be held at the Company's annual meeting (which is the equivalent of Armageddon to most public companies). The pattern of these demand letters/lawsuits is nearly identical to that following a company's announcement of an M&A transaction, except that these allege that the companies' disclosure of executive compensation information in the proxy was insufficient to allow an informed shareholder vote.

As usual, there is no merit whatsoever to 99% of these lawsuits. However, the consequences of postponing the annual shareholders meeting are so high and the period between the lawsuit and the meeting is so short, that many companies have paid settlements of between $250,000 - $650,000 and made an amended SEC filing just to make the lawsuit go away. (The fact that executive compensation disclosures are long, complicated, and unfamiliar to judges also helps.) Other companies, including some of our clients, have made them go away for nothing. 

However, the great mass of proxy statement filings is only just beginning. For all of you calendar year filers, we suggest looking at the allegation made in all of these lawsuits and drafting your disclosures pro-actively to try to head off a demand letter/lawsuit. (No guarantees here, but we can try.)

Stay tuned tomorrow for the less obvious prediction.



Michael S. Melbinger