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Oct 30, 2015

Compliance with the Formal Approval Requirements of Delaware Law Required for Stockholder Ratification of Director Compensation

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On October 28th, the Delaware Chancery Court, in Espinoza v. Zuckerberg, et al., 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. 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 compensation in a deposition and affidavit.

View full memo, Compliance with the Formal Approval Requirements of Delaware Law Required for Stockholder Ratification of Director Compensation.

Authors and Contributors

John J. Cannon III

Partner

Compensation, Governance & ERISA

+1 212 848 8159

+1 212 848 8159

New York

Kenneth J. Laverriere

Partner

Compensation, Governance & ERISA

+1 212 848 8172

+1 212 848 8172

New York

Doreen Lilienfeld

Partner

Compensation, Governance & ERISA

+1 212 848 7171

+1 212 848 7171

New York

Linda Rappaport

Of Counsel

Compensation, Governance & ERISA

+1 212 848 7004

+1 212 848 7004

New York

George Spera, Jr.

Counsel

Compensation, Governance & ERISA

+1 212 848 7636

+1 212 848 7636

New York