Mark Zuckerberg’s informal approval of a compensation plan for Facebook directors failed to invoke the business judgment rule, the Delaware Court of Chancery has ruled on a question of first impression.
The ruling impacts the standard of review in a shareholder derivative case where Facebook is defending against breach of fiduciary duty and unjust enrichment claims. Chancellor Andre G. Bouchard said that under the applicable standard of review, the court would have to weigh the entire fairness of the deal.
