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Executive Compensation Entire Fairness Standard

Jones Day

Delaware Court Applies Traditional Entire Fairness Standard to Very Large Stockholder-Approved, Performance-Based Equity Award

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The Case: A Tesla stockholder sued Tesla's board of directors to rescind a performance-based stock option grant awarded to Elon Musk, Tesla's CEO. The option award was worth a total of $56 billion and offered the opportunity...more

BCLP

Tesla’s Super-charged Equity Award to Elon Musk Unplugged by Delaware Court Cautionary Tale for Boards and Executives

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The Delaware Chancery Court invalidated a substantial equity award to Elon Musk – the largest in history. It applied the entire fairness test instead of the more deferential business judgment rule, finding that Musk...more

Goodwin

Delaware Court of Chancery Rescinds Elon Musk’s $55.8 Billion Compensation Package in Cautionary Tale About Director Independence...

Goodwin on

On January 30, 2024, the Chancellor of the Delaware Court of Chancery struck down the $55.8 billion compensation plan that Tesla, Inc.’s board of directors had granted to Tesla’s well-known CEO, Elon Musk, finding that the...more

Jones Day

Chancery Court Requires Entire Fairness Review of Tesla CEO Compensation

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The Background: A shareholder challenged an extraordinary and extremely lucrative incentive-based compensation package awarded by Tesla to its chair, CEO, and controlling shareholder, claiming a breach of fiduciary duties. ...more

Womble Bond Dickinson

Recent Director and Executive Compensation Lawsuits Heighten Need for Robust Corporate Governance

Womble Bond Dickinson on

Over the past two years, there has been an uptick in the number of lawsuits challenging director and executive compensation. Cases such asIn Re: Investors Bancorp, Stein v. Blankfein, Hertz v. Frissora and, most recently,...more

Dechert LLP

Electricity in the Air: Court Decides that Stockholder Ratification Not Enough to Insulate Tesla CEO’s $55.8 Billion Compensation...

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The Delaware Chancery Court rejected an attempt by Tesla’s Board of Directors to dismiss a challenge to CEO Elon Musk’s “extraordinary” 2018 compensation package. Because Musk is also Tesla’s controlling stockholder, the...more

A&O Shearman

Delaware Court Of Chancery Finds Allegations Of Personal And Professional Relationships Sufficient To Excuse Pre-Suit Demand

A&O Shearman on

On September 30, 2019, Chancellor Andre G. Bouchard of the Delaware Court of Chancery denied defendants’ motion to dismiss a stockholder derivative action for breach of fiduciary duties in connection with BGC Partners, Inc.’s...more

Mintz - Employment Viewpoints

The Bubbler - July 2019

June was a busy month for state legislators, courts and the President. On May 31, 2019, in Stein v. Blankfein, et al., the Delaware Court of Chancery reaffirmed the Delaware Supreme Court’s holding in In re: Investors...more

Locke Lord LLP

Attempt to Limit Directors’ Liability for Setting Their Own Compensation is Rejected

Locke Lord LLP on

A recent Delaware Court of Chancery decision on a challenge to Goldman Sachs directors’ setting their own compensation is interesting because the court rejected the company’s attempt to make an end run around current law. The...more

Stinson - Corporate & Securities Law Blog

Delaware Reaffirms Entire Fairness Standard for Review of Director Compensation

Quoting both a nearly 70-year-old decision and a nearly 30-year-old SNL skit, the Delaware Court of Chancery, in Stein v. Blankfein et al, reaffirmed that in most circumstances decisions of directors awarding director...more

Bracewell LLP

Compensation Newsletter: Trends In Director Equity Compensation This Proxy Season

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The trend of including director-specific limits on the size of annual equity awards to non-employee directors under long-term incentive plans (“LTIPs”) continues to pick up steam, as evidenced by our survey of LTIPs filed...more

Cooley LLP

Alert: Delaware Supreme Court Changes Conversation on Director Compensation

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In recent years, there has been an increase in Delaware breach of fiduciary duty claims (including stockholder demands and actual cases) asserted against public company boards alleging that the directors engaged in...more

Skadden, Arps, Slate, Meagher & Flom LLP

SEC Reporting & Compliance and Corporate Governance Series

On February 13, 2018, Skadden hosted a webinar titled “ SEC Reporting & Compliance and Corporate Governance Series: Key Trends in Executive Compensation, Employment Law and Compensation Committee Practices.” Executive...more

Hogan Lovells

New considerations for director compensation awards in light of Delaware Supreme Court's recent decision in In re Investors...

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The subject of director compensation awards has been moving up the corporate governance agenda of many public companies since December 2017. ...more

Wilson Sonsini Goodrich & Rosati

Delaware Supreme Court Issues Significant Decision Addressing Board Compensation

In December 2017, the Delaware Supreme Court issued a significant decision addressing compensation for boards of directors. The opinion also addresses compensation of members of management who serve on the board of directors....more

Troutman Pepper

Hot Topic for 2018 Proxy Season: Director Compensation in Wake of New Delaware Supreme Court Ruling

Troutman Pepper on

In an important recent opinion, the Delaware Supreme Court ruled in In re Investors Bancorp, Inc. Stockholder Litigation that certain director compensation decisions would be reviewed under the “entire fairness” standard...more

Farrell Fritz, P.C.

Better Part of Valor: Delaware Supreme Court Rules No Ratification Defense for Director Grants under Discretionary Plans

Farrell Fritz, P.C. on

What happens when corporate directors approve their own awards under an equity incentive plan? Under Delaware law, so long as the plan is approved by a majority of the fully informed, uncoerced and disinterested stockholders,...more

Dorsey & Whitney LLP

Discretionary Equity Awards to Directors Subject to “Entire Fairness” Standard of Review

Dorsey & Whitney LLP on

Human nature being what it is, the law, in its wisdom, does not presume that directors will be competent judges of the fair treatment of their company where fairness must be at their own personal expense. According to the...more

Skadden, Arps, Slate, Meagher & Flom LLP

Boards Beware: Delaware Supreme Court Limits Application of Deferential Standard for Reviewing Director Equity Awards

On December 13, 2017, the Delaware Supreme Court issued an opinion, In re Investors Bancorp, Inc. Stockholder Litigation, Case No. 169, holding that, except under limited circumstances, the court will not apply the...more

Stinson LLP

Director Discretionary Compensation Subject to Entire Fairness Standard According to Delaware Supreme Court

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In a recent decision by the Delaware Supreme Court in In re Investors Bancorp Stockholders Litigation, the court found that director equity grants based on director discretion are subject to an entire fairness standard of...more

Skadden, Arps, Slate, Meagher & Flom LLP

"Key Takeaways: Corporate Governance Series — Key Trends in Executive Compensation, Employment Law and Compensation Committee...

On February 28, 2017, Skadden hosted a webinar titled “Key Trends in Executive Compensation, Employment Law and Compensation Committee Practices.” The Skadden panelists were labor and employment law partner David Schwartz,...more

Parker Poe Adams & Bernstein LLP

Beefing Up Director Compensation Disclosures

With calendar year companies currently in the midst of drafting their proxy statements, it is time to consider the often overlooked director compensation disclosures. Changes in director compensation arrangements. ...more

Skadden, Arps, Slate, Meagher & Flom LLP

"Director Compensation in the Spotlight"

Individuals serving on company boards of directors should carefully examine director compensation programs and decisions involving their own compensation following an April 30, 2015, ruling by the Delaware Court of Chancery....more

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