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1.18.24
Delaware Supreme Court Affirms Important Ruling for Multi-Class Companies Concerning Class Votes
On January 17, 2024, the Delaware Supreme Court issued a significant decision affirming that the Delaware General Corporation Law (the DGCL) does not require companies with multiple classes of common stock to obtain separate class votes to amend their certificates of incorporation to provide for officer exculpation.1
News Articles
12.06.23
Nora Crawford Named Recipient of 2023 Attorney ad Litem Service Award
On December 5, 2023, Wilson Sonsini associate Nora Crawford was named the recipient of the Delaware Court of Chancery’s award for ad litem service to the court. Nora has worked on a pro bono basis as an attorney ad litem for three years, handling a total of nine cases.
Alerts
3.29.23
Delaware Court of Chancery Issues Important Ruling for Multi-Class Companies Addressing Class Votes
Earlier today, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery issued an important ruling concluding that two companies with multiple classes of common stock were not required, under the Delaware statute, to obtain separate class votes of their stockholders in order to amend their certificates of incorporation to provide for exculpation of their officers.1 Those charter amendments took advantage of the recent amendments to the Delaware General Corporation Law (the DGCL) permitting Delaware corporations to provide in their certificates of incorporation that, akin to protections long afforded to directors, specified officers of the corporation can be protected from monetary liability for certain breaches of fiduciary duty—specifically, direct, though not derivative, claims by stockholders asserting a breach of the duty of care. Today’s ruling, pending any appeal, is good news for dual-class companies seeking to amend their charters to implement officer exculpation and will also have broader implications for private and public companies assessing whether to seek a class or series vote of stockholders for other charter amendments. Wilson Sonsini is representing one of the defendant companies in the case.
Client Highlights
7.12.21
Delaware Court of Chancery Orders Specific Performance in Favor of Wilson Sonsini’s Client After Declining to Find Material Adverse Effect
On July 9, 2021, the Delaware Court of Chancery issued a post-trial opinion in Bardy Diagnostics, Inc. v. Hillrom, Inc., C.A. No. 2021-0175-JRS, ordering specific performance in favor of Wilson Sonsini Goodrich & Rosati’s client, Bardy Diagnostics, Inc. (BardyDx), the seller under a merger agreement with Hill-Rom, Inc. (Hillrom). The Wilson Sonsini team included partners David Berger, Steven Guggenheim, and Brad Sorrels; Of Counsel Andrew Cordo; senior counsel Jessica Hartwell; and associates Lindsay Faccenda, Ben Potts, Nora Crawford, Jeremy Gagas, and Leah León.
Alerts
11.05.19
Delaware Court Denies Section 220 Demand and Reinforces Judicial Deference on Exec Comp Decisions
The Delaware Court of Chancery recently denied two books and records demands made by stockholders of Facebook, Inc. that sought to investigate alleged wrongdoing surrounding Facebook's executive compensation practices at a time when its advertising revenues were declining. In Southeastern Pennsylvania Transportation Authority v. Facebook, Inc.,1 Vice Chancellor Joseph R. Slights III found that the stockholder plaintiffs lacked a proper purpose for the demands because they could not demonstrate a "credible basis" to suspect any disloyal conduct by the board. The court also found that—even if the plaintiffs had stated a proper purpose—Facebook had already turned over all "necessary and essential" information. The decision is instructive for companies faced with books and records demands seeking to investigate potential board misconduct. The case is also a useful reminder that decisions about executive compensation are—absent a board conflict, a controlling stockholder conflict, or waste—a classic business judgment to which the courts will defer.