This is a “thinking out loud” post, which means I’m not sure
I’ve got the analysis correct, but feel it’s worth floating by readers in
draft form in an attempt to generate some discussion (which may include the
comment: “you are obviously wrong, and here’s why”).  I realize not all academic bloggers agree
this is an appropriate use of the blogosphere, but you now know my current
position on that issue.  (By the way, if
you do post a comment, please consider also emailing me directly at
spadfie@uakron.edu because I’m not clear on what sort of comment alerts we get
when comments are posted and I’d hate to miss one.)  So, with disclaimers firmly in place:

A few weeks ago, The CLS Blue Sky Blog posted a piece by
Pepper Hamilton on Round Two of Shareholder Say-on-Pay Litigation. Here is a relevant excerpt:

The third proxy season of the Dodd-Frank Act’s mandatory shareholder
“say-on-pay” advisory votes is well underway, and “round two” of shareholder
say-on-pay litigation is in full swing. Unlike the first round of say-on-pay
lawsuits, which were based on negative advisory votes that had already
occurred, this second wave of shareholder litigation, which began in 2012,
seeks to enjoin advisory votes on executive compensation based on allegedly
deficient proxy disclosures…. The Dodd-Frank Act expressly states that
shareholder say-on-pay votes … may not be construed as … (2) creating or
implying any change to the fiduciary duties of the company or its board; or (3)
creating or implying any additional fiduciary duties for the company or its
board…. Generally speaking, the complaints in these lawsuits do not allege that
the defendants violated any disclosure statute, rule or regulation. Instead,
the complaints aver that the directors breached their state law fiduciary
duties (e.g., duty of candor) ….

Further on, the piece quotes from a relatively recent
relevant case, Noble v. AAR Corp., 12 C 7973, 2013 WL 1324915 (N.D. Ill.
Apr. 3, 2013), wherein the court dismissed one of these cases:

Plaintiff does not dispute that Defendants have complied
with the federal disclosure requirements under the Dodd–Frank Act nor does he
point to any statutes, regulations, or case law that require corporations to
disclose more than the federal disclosure requirements. Indeed, Plaintiff does
not identify how the alleged omissions are even arguably covered under Item 402
or Item 407. Instead, Plaintiff attempts to create additional disclosure
obligations for “say on pay” votes without citing legal precedent other than
case law involving the required disclosures for shareholder actions outside of
the context of executive pay.

What strikes me as interesting about this analysis is that
it seems to suggest Dodd-Frank’s say-on-pay provision implicitly has preempted
state fiduciary duty law on what disclosures satisfy the duty of candor, which
seems wrong.  Cf. Robert E. Scully
Jr., Executive Compensation, the Business Judgment Rule, and the Dodd-Frank
Act: Back to the Future for Private Litigation?,  Fed. Law., January 2011, at 36, 38 (“the act
does not pre-empt state fiduciary duty law”). In other words, requiring
disclosures made in connection with say-on-pay votes to satisfy the duty of
candor should not be deemed to create improper additional disclosure
obligations, or change or add to existing fiduciary duties.  Rather, it should merely be understood as
applying existing duties to new disclosures, which strikes me as perfectly
consistent with the text of say-on-pay. 
In light of this, it should be possible to state a claim for a violation
of the duty of candor without alleging a violation of the federal disclosure
requirements.

HereHe