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Disney judge warns that government may regulate executive pay

[JURIST] A Delaware Chancery Court [official website] judge on Tuesday warned that corporate directors may face US government regulation of executive pay unless they control soaring salaries and payoffs. Judge William Chandler [state court profile], who ruled [JURIST report] in August that Disney’s directors acted properly in paying $140 million to former president Michael Ovitz [Wikipedia backgrounder] when he resigned in 1996, delivered a stern warning that executive pay has become “spectacularly unhinged from the market for corporate talent.” With the average pay packet for US CEOs at $9.8 million, Chandler said that regulatory control of executive pay would be used as a "blunt instrument." Former US Securities and Exchange Commission [official website] Chairman William Donaldson [SEC profile] and Public Company Accounting Oversight Board Chairman William McDonough have also called for restraining executive pay. The warning from Chandler follows the resignation of Disney Chairman Michael Eisner [JURIST report] earlier this month. Reuters has more.

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Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

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