Friedman v. Dolan
Delaware Court of Chancery
2015 WL 4040806 (2015)
Charles Dolan, Cablevision's executive chairman, and his son James, Cablevision's longtime director and CEO, received compensation packages worth more than $40 million each between 2010 and 2012, including special stock-option grants, as determined by Cablevision's compensation committee -- three long-tenured directors who set the amounts using peer-company comparisons in a process James participated in. Shareholder Julie Friedman (plaintiff) sued James, Charles, and the committee (defendants), claiming the committee acted in bad faith in setting unfair compensation and that James and Charles breached their fiduciary duties by accepting it, and the defendants moved to dismiss.
Whether executive compensation decisions made by an independent committee are protected by the business judgment rule where the challenging shareholder has not adequately alleged the committee lacked independence or acted in bad faith.