Espinoza v. Zuckerberg
Delaware Court of Chancery
124 A.3d 47 (2015)
Espinoza (plaintiff) brought a derivative suit challenging the Facebook board's (defendants) decision to approve compensation for outside directors; Mark Zuckerberg (defendant), Facebook's controlling stockholder holding over 61% of shares, did not receive the contested compensation himself but, after the suit was filed, approved it via deposition testimony and affidavit. The board moved for summary judgment, arguing Zuckerberg's after-the-fact approval constituted valid stockholder ratification cleansing the otherwise interested board decision.
Whether a controlling stockholder of a Delaware corporation can ratify an interested board's decision without adhering to the corporate formalities required for stockholder action.