In re Investors Bancorp, Inc. Stockholder Litigation
Delaware Supreme Court
177 A.3d 1208 (2017)
Bancorp's board (defendant) adopted a shareholder-approved equity incentive plan (EIP) capping certain allocation limits but leaving the board discretion over the specific amount, type, and recipients of awards; after shareholder approval, the board awarded itself and executives compensation vastly exceeding peer-company norms — non-employee directors received awards over six times the peer average, the CEO received compensation 1,759 percent above peer averages and seven times his own prior year's pay, and the COO received awards 2,571 percent above peer norms and nine times his prior pay. Shareholders (plaintiffs) sued challenging the awards, and the Court of Chancery dismissed the complaint based on the EIP's stated limits.
In awarding itself compensation pursuant to shareholder-approved general parameters of an equity incentive plan, must a board of directors exercise its authority consistently with equitable principles of fiduciary duty?