Total Rewards Briefs

Recent settlements in two cases appear to have been heavily influenced by the Investors Bancorp decision in ways that do not bode well for directors who determine their own compensation under shareholder-approved plans that do not limit their discretion to amounts that would not make it worthwhile for the plaintiffs’ lawyers to sue, or could be protected by the business judgment rule.

A recent decision by the Delaware Supreme Court raises a question as to whether a plan limit allowing board discretion to grant awards within general parameters will be sufficient to ensure business judgment deference, rather than an entire fairness review.

Since companies can’t seem to solve the divisive problem of exorbitant CEO pay on their own, legislation may well turn out to be the best fix. Here’s how it’s starting to help in various parts of the world, though there’s still a lot of work to do.

No matter where you live, the difference between how much CEOs are paid and how much the average worker takes home is, well, big. Probably even bigger than most people think.

Michael Jensen wrote a landmark HBR article arguing that “It’s Not How Much You Pay CEOs, But How.” He wanted boards to adjust pay according to company performance as shown by stock price. V.G. Narayanan’s recent post in this debate goes a step further.