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CALIFORNIA CORPORATE & SECURITIES LAW

When A Director May Not Be Interested In Director Compensation

Suppose that a corporation has three directors, A, B & C, each of whom is compensated by the corporation.  Is director A financially interested in a resolution fixing the compensation of director B?  Corporations Section 310(a) provides the following answer: A director is not interested within the meaning of this subdivision in a resolution fixing the…

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When It Comes To Director Compensation, California Is Not Delaware

Yesterday, I wrote about my disagreements with the approach to director compensation adopted by the Delaware Court of Chancery in Calma v. Templeton, 114 A.3d 563 (Del. Ch. 2015) and Seinfeld v. Slager, 2012 Del. Ch. LEXIS 139 (June 29, 2012).  In both cases, the Court ruled that the rigorous “entire fairness” standard of review applies to director’s who receive grants…

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No Calm In Delaware After Calma v. Templeton

In derivative suits, cases are essentially lost and won at the motion to dismiss stage.  Unless the defendants succeed in winning dismissal, they must confront an unhappy choice between continued litigation with all of its costs and risks or a settlement that “feeds the bulldog”.  Thus, the Delaware Court of Chancery’s rulings in Calma v. Templeton,…

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Does A Director Have A Contractual Right To Compensation?

Yesterday, I wrote about stockholder challenges to director compensation.  Today’s post considers what happens when a director joins a board.  When someone is invited to join a board, she may ask about compensation.  The company may refer the candidate to the disclosure regarding compensation in the company’s proxy statement.  When the candidate agrees to join…

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When It Comes To Director Compensation Claims, Nevada And Delaware Are Fundamentally Different

Since 1969, there has no question that directors of a Delaware corporation have the authority to set their own compensation.  8 DGCL § 141(h).  Having authority to do something, however, doesn’t mean that the use of that authority won’t be challenged, as was illustrated by newly appointed Chancellor Andre G. Bouchard’s ruling last month in Cambridge Ret. Sys.…

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