Friday, February 15, 2013

Seinfeld v. Verizon Communications., Inc. case brief

Seinfeld v. Verizon Communications., Inc. case brief summary 
909 A.2d 117

-Plaintiff, a stockholder, filed an action against defendant, a communications corporation, pursuant to Del. Code Ann. title 8, § 220, to compel the corporation to produce for inspection its books and records related to the compensation of three corporate officers from 2000 to 2002.
-The Court of Chancery of the State of Delaware, in and for New Castle County, granted the corporation's summary judgment motion. The stockholder appealed the judgment.

-The stockholder's stated purpose for seeking the corporation's books and records was to investigate mismanagement and corporate waste regarding the compensation of three corporate executives. 
-The stockholder alleged that the three executives were all performing in the same job and were paid amounts, including stock options, above the compensation provided for in their employment contracts. 

-The appellate court reaffirmed the rule that stockholders seeking inspection under Del. Code Ann. title 8, § 220, had to present some evidence to suggest a credible basis from which a court could infer that mismanagement, waste, or wrongdoing may have occurred. In his deposition, the stockholder acknowledged he had no factual support for his claim that mismanagement had taken place. 

-He admitted that the three executives did not perform any duplicative work. 
-The stockholder also admitted there was a possibility that the executive compensation amount he calculated was wrong. 
-The appellate court agreed with the trial court that the stockholder failed to state a reasonable ground for suspicion that the executives' compensation rose to the level of waste.

-There must be a “credible basis” from which the court can infer that there is possible mismanagement or wrongdoing such that further investigation is in order.

OUTCOME: The judgment was affirmed.
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