Open Access. Powered by Scholars. Published by Universities.®
- Discipline
Articles 1 - 2 of 2
Full-Text Articles in Law
Cash Of The Titans: Arbitrating Challenges To Executive Compensation, Kenneth Davis
Cash Of The Titans: Arbitrating Challenges To Executive Compensation, Kenneth Davis
Kenneth R. Davis
Excessive executive compensation is endemic to U.S. corporations, and the trend is spiraling out of control. To challenge excessive pay packages, shareholders sometimes institute derivative suits. This approach has had limited success, however, because several principles of law – most notably the business judgment rule – shield directors from liability for awarding exorbitant pay to high-level managers. The business judgment rule removes the unreasonableness of compensation packages from the reach of judicial review. This Article proposes that corporations duly approve procedures to arbitrate shareholder challenges to excessive compensation agreements. Arbitration is uniquely suited for this purpose. Arbitrators are not bound …
The End Of An Error: Replacing "Manifest Disregard" With A New Framework For Reviewing Arbitration Awards, Kenneth R. Davis
The End Of An Error: Replacing "Manifest Disregard" With A New Framework For Reviewing Arbitration Awards, Kenneth R. Davis
Kenneth R. Davis
Abstract For over fifty years, the Supreme Court has declined to establish a standard of review for errors of law in arbitration awards. Decided in 1953, Wilko v. Swan confused the courts with a cryptic statement suggesting that a court could not vacate an award for errors “in the interpretations of the law by arbitrators” unless the arbitrator manifestly disregarded the law. Despite this statement’s ambiguity, the federal courts recognized the “manifest disregard” standard, which the courts interpreted to permit vacatur when the arbitrator knew the law and deliberately flouted it. Thirty-four years after Wilko, the Supreme Court in McMahon …