I would like to direct our readers to a recent post by my partner – Bill McGrath on our sister blog – Federal Securities Law Blog titled “Ohio Federal Judge Allows Say-on-Pay Lawsuit to Proceed.”  In his post, Bill discusses a “September 20, 2011 Opinion, where Judge Timothy Black of the Southern District of Ohio ruled that a lawsuit brought against senior executives and directors of Cincinnati Bell, Inc. alleging a breach of fiduciary duty regarding compensation would be allowed to proceed. The lawsuit focuses on the “say-on-pay” provisions of the Dodd-Frank Act: specifically, attacking the Board’s decision to increase 2010 executive compensation in light of the nonbinding vote by 66% of the voting shareholders to reject that increase.” 

This opinion was a denial of a motion to dismiss, not a decision on the merits.  But as with ERISA litigation, a motion to dismiss in a say-on-pay case is important because of the anticipated substantial cost of litigation beyond that point, and the resulting pressure to settle. If other courts allow pleadings this limited to survive the motion to dismiss stage, we could see a significant upswing in cases filed.