This blog post refers to two separate cases issued on Feb. 6, 2007 by Chancellor Chandler.
In Ryan v. Gifford, (Del. Ch., Feb. 6, 2007), 2007 WL 416162, read opinion here , Chancellor Chandler issued a 38 page opinion denying a motion to dismiss certain claims alleging that approving or accepting backdating of options was a violation of the duty of care and loyalty especially as they were in violation of a shareholder approved Stock Option Plan. Also addressed by the court was the important topic of the "internal affairs doctrine". The court refused to defer to similar pending litigation in California.
Prof. Bainbridge here, and Prof. Ribstein here, have already commented on the case in a more scholarly way than I can. This is the first authoritative decision on backdating of options, a topic about which much has been written in the mainstream and specialty press, including blogs of course.
The same day, Chancellor Chandler issued a separate 77-page decision in a separate case, titled:
In Re Tyson Foods, Inc. Consolidated Shareholder Litigation, (Del. Ch., Feb. 6, 2007), 2007 WL 416132, read opinion here, regarding "spring-loaded stock options" (and many other issues), that Prof. Bainbridge also discusses here. Prof. Ribstein also has scholarly commentary on the opinion here. Spring-loaded options are options granted prior to the public disclosure of material inside information.
The court cites to both Ribstein’s blog and Bainbridge’s blog in the opinion for their prior analysis of the issue.
For those with an appetite for this topic, like the writer of this blog that focuses on decisions from the Chancery Court, the commentary by 2 of the leading corporate law experts in the country, within 24 hours of a decision being published, is like an "all you can eat buffet". Moreover, in a sense, they are making the job of this blogger easier by providing expert analysis on these cases that I can simply link to, at least initially, instead of making the time (between paying clients) as soon as the opinion is published, to read over 120 pages of substantive legal reasoning by the court and then comment on it. The scholarly insights of Ribstein and Bainbridge on these 2 cases is more than the average reader has time to digest in a day or so anyway, and they provide exemplary insight on these cases until my schedule allows me to come back to provide my own commentary (if my comments are even necessary and if I have the time to do so at all.)
UPDATE: Prof. Ribstein provides more analysis on materiality as it relates to backdating here.
UPDATE II: The Harvard Corporate Governance Blog has on post here on Feb. 13 that links to a memo from the Wachtell Lipton firm "interpreting" the above 2 decisions by the Chancellor.