Much ink will be spilled in the circles of corporate law about Chancellor McCormick’s blockbuster opinion in Tornetta v. Musk, C.A. No. 2018-0408-KSJM (Del. Ch. Jan. 31, 2023), in which the Court invalidated a CEO’s executive compensation package worth $55 billion. A full discussion of the over-200-page opinion is beyond the scope of this
Duane Morris Delaware Business Law
Blog Authors
Latest from Duane Morris Delaware Business Law
Circle of Trust: When can a Corporate Director Share Confidential Documents with a Stockholder-Plaintiff?
Stockholders who suspect mismanagement or other fiduciary misconduct generally begin by investigating via a books-and-records demand in order to articulate the allegations for the complaint in a so-called “plenary” action. But, what happens if the stockholders have allies on the board itself? In Icahn Partners LP et al. v. Francis deSouza et al., C.A.…
Chancery Acknowledges Non-Competes Treated More Skeptically in Recent Decisions
The case Sunder Energy, LLC v. Jackson, C.A. No. 2023-0988-JTL relates to non-compete covenants contained in an LLC operating agreement. In November, the Court of Chancery denied a preliminary injunction enforcing the covenants. In Delaware, appeals to the Supreme Court are as-of-right, but only when a case is fully decided — a party…
Duty of Oversight of Officers–Post-McDonald’s Action in Court of Chancery
Nearly one year ago we reported in this blog on the Court of Chancery’s decision in In re McDonald’s Corp. S’holder Litigation, 289 A.3d 343 (Del. Ch. 2023), in which the court affirmatively held that officers of Delaware corporations owe duties of oversight (often called, Caremark duties), and specifically for matters that would fall within…
Twice-Tested Corporate Democracy
In late June, the Delaware Supreme Court issued in its decision in the second appeal of Coster v. UIP Companies, 2023 WL 4239581 (Del. June 28, 2023). As with their prior decision (255 A.3d 952 (Del. 2021)), the Court was reviewing a judgment in favor of the defendants on a challenge…
Court of Chancery: Taking a Public Stance is a Business Decision
This past Tuesday, the Court of Chancery held that causing a corporation to take a public stance on a matter of public controversy is a business decision for which the Board of Directors is protected by the business judgment rule in Simeone v. The Walt Disney Company, C.A. No. 2022-1120-LWW (Del. Ch. June 27,…
More on the Enforceability of Anti-Suit Covenants
We wrote about Vice Chancellor Laster’s decision in New Enterprise Associates 14, L.P. v. Rich, C.A. No. 2022-0406-JTL a few weeks ago. For a more comprehensive discussion of this landmark decision, please find a full Alert on the Duane Morris website.
Chancery Finds Stockholders’ Covenant Not to Sue for Breach of Fiduciary Duty of Loyalty Partially Enforceable
The Court of Chancery on Tuesday held that stockholders’ covenants not to sue for breach of fiduciary duty are enforceable subject to public policy limitations in New Enterprise Associates 14, L.P. v. Rich, C.A. 2022-0406-JTL. Conducting a deep-dive into the history and philosophical underpinnings of fiduciary law, the Court reasoned that specific, limited, and…
Do New Delaware General Corporation Law Exculpation Amendments Trigger a Mandatory Class Vote for Changes to Charters?
In August 2022, a number of amendments to the provisions of the Delaware General Corporation Law (DGCL) went into effect. One amendment of note is the extension of Section 102(b)(7)’s exculpation provisions, which now permit corporations to eliminate or limit the personal liability of specified officers for direct claims of breach of the fiduciary duty…
Court of Chancery Refuses to Blue Pencil “Facially Unenforceable” Non-Compete Agreement
A few weeks ago, we wrote about a decision where the Court of Chancery denied injunctive enforcement to a non-compete agreement because the agreement was likely void under Alabama law, and Alabama’s much closer relationship to the labor market at issue overcame an otherwise-valid choice-of-law clause pointing to Delaware. This week, the Court of Chancery…