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In Re Tyson Foods, Inc. (Tyson I)
Delaware Chancery Court
919 A.2d 563 (2007)
Tyson Foods, Inc. (Tyson) (defendant) is a Delaware corporation. Tyson’s shareholders approved a Stock Incentive Plan that allowed the board of directors to give stock options to employees, officers, and directors. Tyson vested authority over option awards to the Compensation Committee and Subcommittee. Shareholder Eric Meyer (plaintiff) filed suit in the Court of Chancery in 2005 against Tyson, the Tyson Limited Partnership, and various current and past directors and members of the compensation committee. This suit was joined with another shareholder action. Among other charges, the complaint alleged that the Compensation Committee “spring-loaded” the option awards, meaning options were granted right before important announcements likely to increase the stock prices were made. The directors moved to dismiss the complaint, arguing that the committee members were disinterested and independent directors and are therefore protected by the business-judgment rule.
Rule of Law
Holding and Reasoning (Chandler, J.)
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