“[W]e must not let our desire to blame someone for our losses make us lose sight of the purpose of our law.” – Chancellor William B. Chandler III, Delaware Court of Chancery1
On February 24, 2009, the Delaware Court of Chancery issued an opinion in In Re Citigroup Inc. Shareholder Derivative Litigation, a consolidated stockholders’ derivative action brought against current and former directors and officers of Citigroup.2 While the Citigroup opinion does not establish any significant new law, the court’s affirmation and application of existing Delaware law is notable for two reasons which are particularly poignant in the current economic downturn:
- First, the court signaled that large executive compensation packages paid by corporations that lose money may not survive corporate waste analysis
- Second, the court refused to hold directors and officers personally liable for breach of fiduciary duty based on taking business risks that resulted in substantial losses for the corporation
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