Richards Layton & Finger

New Delaware Court of Chancery Opinion Provides Guidance for Director Compensation Practices

June 2015

A recent opinion of the Delaware Court of Chancery, Calma v. Templeton, has brought renewed attention to the issue of director compensation. The opinion holds that director compensation decisions may not be subject to the presumption of the business judgment rule, but may instead be reviewed under the entire fairness standard. However, it also addresses the circumstances under which stockholder ratification of director compensation decisions may restore the presumption of the business judgment rule.