Shearman & Sterling discusses “Veep:” The Evolving Law of Advancement and Indemnification

Companies confer the title of “Vice President” on a wide range of employees, from senior executives, in some cases, to line-level personnel, in others. While distinguishing someone functioning as a senior executive from someone in a lower-level position may be clear to a company insider, courts face a more complicated task when they are asked to draw the line, a common occurrence when employers and employees disagree over who must pay for legal fees arising out of an employee’s alleged misconduct. Company bylaws normally provide for the company to indemnify legal fees incurred by individual “officers and directors,” meaning that … Read more

Shearman & Sterling explains Compliance with the Formal Approval Requirements of Delaware Law Required for Stockholder Ratification of Director Compensation

On October 28th, the Delaware Chancery Court, in Espinoza v. Zuckerberg, et al. (“Espinoza”)[1], held that stockholder ratification of a transaction that was approved by an interested board of directors must be accomplished formally through a vote at a stockholders’ meeting, or by written consent in compliance with § 228 of the Delaware General Corporation Law (the “DGCL”).[2] In answering this question of first impression, the Court found that Facebook’s controlling stockholder, Mark Zuckerberg, did not provide valid ratification of what the parties agreed was a self-dealing transaction when he expressed his approval of Facebook’s non-employee director … Read more