New Delaware Court of Chancery Opinion Provides Guidance for Director Compensation Practices

June 2015

Publication| Corporate Transactions| Corporate & Chancery Litigation

A recent opinion of the Delaware Court ofChancery, Calma v. Templeton, has broughtrenewed attention to the issue of directorcompensation. The opinion holds that directorcompensation decisions may not be subject tothe presumption of the business judgment rule,but may instead be reviewed under the entirefairness standard. However, it also addresses thecircumstances under which stockholder ratification of director compensation decisions mayrestore the presumption of the business judgmentrule.

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