D&O Compensation Limits and Challenges Post Delaware Supreme Court Decision on Director Compensation

Standards of Review, Shareholder Ratification Protection and More

This program has been cancelled

A live 90-minute CLE webinar with interactive Q&A


Tuesday, July 17, 2018

1:00pm-2:30pm EDT, 10:00am-11:30am PDT


This CLE webinar will guide corporate counsel on the limits and challenges associated with director and officer compensation along with methods for handling and avoiding shareholder lawsuits. The panel will discuss the Delaware Supreme Court’s recent decision regarding excessive executive compensation and shareholder ratification, defending challenges to equity incentive plans, court standards of review, and best practices in structuring director and officer compensation.

Description

The Delaware Supreme Court has refined Delaware law regarding shareholder ratification of director compensation plans in In re Investors Bancorp Inc., decided in Dec. 2017. Corporate boards and counsel must implement measures to limit challenges and potential lawsuits in developing compensation and equity incentive plans for directors and officers.

The increase in breach of fiduciary duty claims against public company boards, which allege that the directors engaged in self-dealing and corporate waste by approving and taking excessive compensation, forces companies to include pay limitations in shareholder-approved equity plans. Before Investors Bancorp, this strategy deterred or limited the success of breach claims against directors for excessive compensation. Now, shareholder ratification of equity and compensation plans may not be a defense to such claims.

The court in Investors Bancorp ruled that when directors make discretionary equity awards to themselves under the shareholder-approved equity incentive plan, the shareholder ratification defense is unavailable in lawsuits against said directors in exercising their discretion. This effectively removes or limits a director’s use of the business judgment rule as a defense to such claims. Counsel and corporate boards must develop preventative methods to limit claims by shareholders and avoid costly litigation.

Listen as our panel discusses current challenges and limitations in director and officer compensation, board considerations in structuring compensation or equity incentive plans, and best practices for counsel in reducing the risks of shareholder breach of fiduciary claims.

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Outline

  1. Overview of Delaware law and its recent state supreme court case regarding D&O compensation
  2. Board discretion and the “business judgment” versus “entire fairness” standard of review
  3. Managing shareholder breach of fiduciary duty claims
  4. Best practices in structuring bonus, compensation and equity incentive plans for directors and officers

Benefits

The panel will review these and other critical issues:

  • Shareholder ratification and business judgment after Delaware Supreme Court ruling in In re Investors Bancorp
  • Structuring and adopting shareholder-approved director compensation award limits
  • Court standards of review in breach of fiduciary duty claims challenging director and officer compensation
  • Available techniques to limit the risk of shareholder claims
  • Best practices for corporate boards and counsel in developing director compensation plans

Faculty

Adams, Meghan
Meghan A. Adams

Atty
Morris James
Allen, Michael D.
Michael D. Allen

Director
Richards Layton & Finger

Mr. Allen counsels corporations, officers, directors, boards and stockholders on transactional and advisory...  |  Read More

Davis, Gardner
Gardner F. Davis

Partner
Foley & Lardner

Mr. Davis focuses his practice on corporate law. He advises boards of directors and special committees in regard to...  |  Read More