In Shaev v. Adkerson, C.A. No. 10436-VCN (Del. Ch. Oct. 5, 2015), the Delaware Court of Chancery dismissed claims for breach of fiduciary duty including the disclosure obligations of the board which granted stock units valued at approximately $35 million in connection with its decision to settle potential claims that could have been brought for more than $46 million. The most noteworthy aspects of this opinion can be highlighted as follows:
- Unlike a legal decision that a board might make regarding enforceability of an agreement, the decision in this case to avoid a claim is entitled to the protection of the business judgment rule when the board is independent and well informed. See footnote 72.
- Acquiescence was not found merely because a director approved an amendment to a bylaw which triggered claims under his employment agreement. See footnote 71.
- The court relied on prior Delaware decisions for the truism that disclosure claims may be entitled to injunctive relief, but if a vote takes place without complete information such that there is no longer irreparable harm, at that point it is too late to seek a remedy. See page 30.
- The court was skeptical of a claim that a board authorized to amend bylaws could be subject to a claim for breach of contract resulting from an amendment to those bylaws.