Brehm v. Eisner case brief summary
906 A.2d 27 (2006)
Appellant shareholders brought derivative
actions on behalf of appellee corporation against appellees, the
corporation's former president and directors who served at the time
of the events complained of. The Court of Chancery of the State of
Delaware, in and for New Castle County, ruled in favor of appellees,
finding that the director defendants did not breach their fiduciary
duties or commit waste. Appellants challenged that judgment.
CASE FACTS The shareholders claimed that a decision
to approve the president's employment agreement and a decision to
terminate him on a non-fault basis resulted from various breaches of
fiduciary duty by the president and the corporate directors.
supreme court disagreed.
No reasonably prudent fiduciary in the
president's position would have unilaterally called a board meeting
to force the corporation's chief executive officer to reconsider his
termination and the terms thereof, with that reconsideration for the
benefit of shareholders and potentially to the president's detriment.
The decisions to approve the president's employment agreement, to
hire him as president, and then to terminate him on a no-fault basis
were protected business judgments, made without any violations of
Having so concluded, it was unnecessary to reach the
shareholders' contention that the directors were required to prove
that the payment of severance was entirely fair.
shareholders failed to show that the approval of the no-fault
termination terms of the employment agreement was not a rational
business decision, their corporate waste claim failed.
The judgment was affirmed. Recommended Supplements for Corporations and Business Associations Law
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