Delaware Supreme Court Limits Ratification Defense for Director Compensation Awards

On December 13, the Delaware Supreme Court[1] reversed the Court of Chancery’s decision in In re Investors Bancorp, Inc. Stockholder Litigation,[2] and held that entire fairness will apply to any board’s decision to award director compensation unless the award is either (1) specifically approved after the fact “by fully informed, uncoerced, and disinterested stockholders,” or (2) effectively pre-approved, in the form of a “self-executing” plan that leaves no room for discretion with respect to specific awards.  This marks a change in Delaware law, and eliminates the discretion that boards previously could exercise safely under stockholder-approved compensation plans … Read more