June 20, 2013
Shareholder Suit Challenging Simon CEO’s $120 Million Payday Survives Motion to Dismiss
– Broc Romanek, CompensationStandards.com
As noted in this WSJ article, a shareholder lawsuit challenging a $120 million stock award to Simon Property Group’s CEO David Simon was given a green light recently to proceed to trial in the Delaware Chancery Court. Due primarily to the stock grant, the CEO was the 2nd highest paid US executive in 2011. Grant & Eisenhofer filed the suit against Simon and its board on behalf of the Louisiana Municipal Employees’ Retirement System (LAMPERS). The company failed its say-on-pay vote last year, but passed this year.
As reflected in this hearing transcript, Chancellor Leo Strine allowed Simon shareholders to bring evidence that the company’s board rubber-stamped the pay package in 2011 without first putting the matter to a shareholder vote – as allegedly required by NYSE rules when compensation plans undergo a material change. Through this motion to dismiss, Simon sought to have the suit thrown out but Chancellor Strine ruled otherwise, questioning the process that the company undertook. The pleadings for this case – including the complaint – are posted in our “Compensation Litigation Portal.”