Wednesday, August 19, 2009
Outrage over compensation paid to financial executives and their advisers has reached the point where even judges with free-market philosophies are calling pay levels excessive and out of control, leading to speculation as to how the U.S. Supreme Court will rule on a key case this fall. In Jones v. Harris Associates L.P., the high court will decide whether The Oakmark Funds overpaid their investment advisers, Harris Associates, as a group of investors are claiming.
The case was originally before the U.S. Court of Appeals for the Seventh Circuit, in Chicago, but two of the judges on the three-member panel threw the lawsuit out. The dissenting opinion was authored by Judge Richard Posner, a conservative with libertarian leanings and a leader of the law and economics movement associated with the University of Chicago. Even though Posner believes strongly that the marketplace should be left alone to sort itself out, he wrote in his dissent, “Executive compensation in large publicly traded firms often is excessive, because of the feeble incentives of boards of directors to police compensation.”
-Noel Brinkerhoff
Supreme Court to Hear Case on Executive Pay (by Adam Liptak, New York Times)
Docket for Jones v. Harris Associates L.P. (U.S. Supreme Court)
Comments