How an Expert Witness Testimony Can Maximize and Protect Executive Compensation Structure

Posted: January 5, 2021

Executive leadership is generally a very sought after position and it definitely comes with perks or perquisites. These people are usually in charge of making important decisions for the company, directing the long-term, and are compensated very well for their work. However, being in senior management can also have a few potential drawbacks. As the expression goes, “heavy is the head that wears the crown.” One of the drawbacks is that you are almost always at risk of undergoing litigation due to the importance of your work and size of your compensation. This article will examine how an expert witness testimony can maximize and protect executive compensation structure

Why would you need an expert witness?

Executives are very prone to being the subject of litigation due to the size and complexity of their compensation. This is because executives can be compensated through a base salary, salary adjustments, bonuses, pensions, stock options, and more. When all is said and done, there are a lot of moving pieces in how executives are compensated as well as determining whether it is a reasonable amount and handling any objections/complaints that people have. A “reasonable amount” simply means that the amount you are receiving in compensation is considered standard within the industry and that there are no financial discrepancies. One common litigation example might be a dispute over a contract or litigation from shareholders in a publicly-traded company. Another example of how executives could come under litigation is from tax authorities in regards to the size and legality of how they receive compensation. Whatever the reason, it is important to be prepared for the worst. This is where expert witnesses can come into play.

How can an expert witness help?

An expert witness is defined as a person who is permitted to testify at a trial because of special knowledge or proficiency in a particular field that is relevant to the case. These people can be incredibly valuable due to their knowledge of certain topics and their ability to influence a courtroom’s decision. Since issues of executive compensation can get so complex, expert witnesses are brought in to bring clarity to the scenarios both for legal counsel as well as adjudicators. Expert witnesses are typically retained to consult on compliance issues or any potential financial abuse. Anyone is capable of being an expert witness but they usually have a background in employment consulting, marketing, business development, accounting, finance, higher education, etc., If you have an expert witness in your corner then they will be able to influence the court’s decision to help you get a more favorable ruling. Without an expert witness, the court’s decision could come down to hearsay or speculation.