In a Dec. 19, 2017, decision, In re Investors Bancorp Stockholder Litigation, No. 169, 2017 (Del. Dec. 19, 2017), the Delaware Supreme Court considered the limits of a stockholder ratification defense when directors make equity awards to themselves under an equity incentive plan or “EIP.” Justice Collins J. Seitz Jr. wrote for a unanimous court that when “stockholders did not ratify the specific awards the directors made under the EIP,” and instead ratified only “general parameters” for director compensation, the proper standard for review of those awards is entire fairness. As the Supreme Court itself acknowledged, this was the first time it addressed ratification of director self-compensation decisions since its 1952 decision in Gottlieb v. Heyden Chemical, 90 A.2d 660 (Del. 1952).
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