The US Court of Appeals for the Ninth Circuit affirmed the lower court’s decision to remand to state court two “say-on-pay” cases, finding no questions of federal law had been raised. In the shareholder derivative actions, which were initially filed in California state court, plaintiffs asserted a host of state law claims, including breach of fiduciary duty and gross mismanagement, alleging that defendants, PICO Holdings and its board of directors, acted wrongly when they increased executive compensation despite poor financial results and the disapproval of 61 percent of shareholders. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires a public company to hold a shareholder vote on executive compensation at least once every three years. These votes, however, are not binding and the provision of Dodd-Frank explicitly provides that the votes do not “create or imply” additional fiduciary duties.
Continue Reading Ninth Circuit Remands “Say-on-Pay” Cases Back to State Court for Lack of Jurisdiction