Calma v. Templeton
Delaware Court of Chancery
2015 WL 1951930 (2015)
Citrix's non-employee directors (defendants), including members of the compensation committee that set their own pay, awarded themselves compensation of roughly $300,000 to $400,000 annually under an Equity Incentive Plan that shareholders had approved, but which set only a nominal cap far exceeding actual awards (one million shares, worth about $55 million) and left specific compensation amounts entirely to the directors' own discretion; shareholders never separately approved the specific compensation figures. Shareholder Calma (plaintiff) sued derivatively for breach of the duty of loyalty, and the directors moved to dismiss, arguing shareholder ratification of the Plan shielded their compensation decisions.
Whether directors may invoke shareholder ratification as an affirmative defense to a self-compensation claim based on shareholders' approval of a broad equity plan, rather than approval of the specific compensation decision itself.