Tuesday, December 31, 2002

an invitation?

Did Delaware Supreme Court Chief Justice Veasey extend an invitation for a case to challenge an unreasonably high CEO compensation package? Some commentators think so. In a Fortune article, by Jerry Useem, Chief Justice Veasey is credited with offering to break 60 years of legal tradition by allowing Court review of CEO compensation.

Was this just a warning to corporate executives, or will we now begin to police the boardroom? The latter would be a dramatic departure from current law. See, for example, this article from the New York Law Journal about the dismissal of the stockholder derivative suit concerning the severance package for the President of Disney. This brief article shows how the "business judgment rule" has been applied to these cases in the past.

Will it continue?

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