Calma v. Templeton
Delaware Court of Chancery
114 A.3d 563 (2015), 2015 WL 1951930 (2015)
- Written by Sean Carroll, JD
Facts
Citrix Systems, Inc. (Citrix) (defendant) paid its non-employee directors (defendants) pursuant to its Equity Incentive Plan (the Plan), which was approved by a majority of disinterested stockholders. The Plan did not directly specify compensation amounts for non-employee directors, but it established a compensation committee to determine such amounts. The Plan gave the compensation committee absolute authority to determine specific compensation amounts, with the exception that it established a generic limit on each person’s annual compensation. However, this limit was one million shares, which, during the relevant time period, was worth approximately $55 million. The compensation committee consisted of three of the non-employee-director defendants. From 2011 to 2013, the defendants’ compensation was generally in the range of $300,000 to $400,000. Citrix stockholders did not approve any of these specific compensation amounts. John Calma (plaintiff), a Citrix stockholder, brought a derivative suit against the defendants alleging, among other things, a breach of the fiduciary duty of loyalty. The defendants filed a motion to dismiss for failure to state a claim, arguing that the Citrix stockholders had ratified the Plan, and thus any compensation awarded thereunder.
Rule of Law
Issue
Holding and Reasoning (Bouchard, J.)
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