Ed Batts, Global Co-Head of Orrick's M&A and Private Equity team, has authored an article on how recent decisions by the Delaware courts have placed limits on director compensation.
The piece, published by the Harvard Law School Forum on Corporate Governance and Financial Regulation, discusses how in recent cases involving outside directors at Citrix and Facebook, the courts held it is an inherent conflict to have independent outside directors approve their own compensation. According to Ed, "This throws such determinations under the scrutiny of the harsh light of the entire fairness rule—where directors (and not plaintiff stockholders) bear the burden of proving that their compensation is fair in terms of both price and process."
To read the full article, which offers insights as to what public companies should now consider when approving director compensation, please click below.
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