Legal News

Executive Compensation Lawyers, Start Your Engines

By Dan Slater

The contours of the The Bailout Plan are like the weather in Colorado. If you don’t like what you see, just wait ten minutes. But whatever the $700 billion plan (is it really $700 billion?) winds up consisting of, one thing seems clear: a rather large raft of regulation will follow.

One piece of that potential regulation, the WSJ reports, is a proposal by Congressional Democrats to allow the government to set limits on executive pay. One of the first people who comes to mind is Lucian Bebchuk, the Harvard-law-prof-cum-shareholder-activist who wrote “Pay Without Performance,” a 2004 book that called for a new system of corporate pay more closely tied to performance. Last year, when Bebchuk testified about executive pay before the U.S. House of Representatives Committee on Financial Services, he said: “Flaws in pay arrangements have costs beyond the excess amounts paid to shareholders. Such flaws can dilute and distort the incentives of top executives.”

So vindication for Bebchuk could be in the offing, which could be good news for executive compensation lawyers. Richard Koppes, a Jones Day partner who sits on two boards and advises others, told the WSJ that directors at several companies have recently asked him whether their comp systems encouraged unnecessary risk.

He says boards are also bracing for complaints, and efforts to curb executive pay, at next year’s shareholder meetings. “This crisis brings home the reality of the anger of the public,” he says.

Full post as published by Law Blog - WSJ.com on September 24, 2008 (boomark / email).