Last week I promised to include a graph showing the cost vs. litigation risk trade-off for the range of alternatives available to deal with the recent lawsuits over executives’ and directors’ compensation. (See “This Time Delaware Court Decides in Favor of Board in Director Compensation Lawsuit”). Here it is. Doing nothing would result in no immediate expense to a company, and there is a good chance the company will never get sued over executives’ or directors’ compensation. However, preparing and adopting a one-page amendment of the company’s stock plan also would be simple and inexpensive. A few other actions, including but not limited to seeking shareholder approval, are available to further enhance the protection.
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