Calma v. Templeton, C.A. No. 9579-CB (Del. Ch. April 30, 2015). This Court of Chancery opinion addressed the standard of review that would apply to compensation decisions for non-employee directors. The claims were for breach of fiduciary duty, waste of corporate assets and unjust enrichment. The court determined that because they were self-dealing decisions, the operative standard of review is entire fairness. It was reasonably conceivable that the total compensation received by the non-employee directors was not entirely fair to the company. The Court found that it was also reasonably conceivable that the defendants were unjustly enriched by the compensation that was awarded to them, although the waste claim was dismissed.
Importantly, the court also found that stockholder ratification was not available because the stockholders were not asked to ratify the specific form and amount of compensation that was at issue. The opinion also features a thorough review of Delaware case law on the topic of shareholder ratification.