# kaal:claim:5583610-013

**Claim.** If LER rewards are set so generously that they effectively purchase shareholder votes, the program becomes disproportionate or coercive and courts will invalidate it.

**Type.** failure  **Support.** argued

**Holds when.**

- reward size large enough to buy votes
- Delaware enhanced scrutiny

**Source quote.**

> If LERs are disproportionately or coercively implemented, such as for example overly generous voucher rewards that effectively buy stockholder votes, then LER would violate the applicable requirements and risk invalidation by courts.

**From.** Wulf A. Kaal, *Liquid Equity Rewards in Corporate America* (2025), 4.3. Legal Boundaries Under Delaware and SEC Rules, page 19

**Cite as.** Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610

**Verify.** sha256 of source PDF `2d73609d95ddb1573acc2a9e7af617fbe6283d6e591deb6317f6d5d804517c62` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202025%20-%20Liquid%20Equity%20Rewards%20in%20Corporate%20America.pdf

**Failure mode.** coercive over-rewarding  (family: investor-protection-gap)

**Topics.** institutional-design

**Keywords.** vote-buying, coercion, judicial-invalidation, proportionality

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