On June 15, 2026, the Delaware Court of Chancery issued its first decision interpreting the 2025 amendments to Section 144 of the Delaware General Corporation Law, enacted through Senate Bill 21 (SB 21). In Ayers v. Foley, Vice Chancellor Will applied the statute’s heightened presumption of director disinterestedness and independence, providing critical early guidance on what plaintiffs must plead to overcome that presumption. The decision offers meaningful comfort to directors of listed companies—and a roadmap for practitioners navigating the post-SB 21 landscape.

Background

Fidelity National Financial, Inc. (FNF) is a publicly traded provider of title insurance, mortgage servicing, and related real estate services. The plaintiff, an FNF stockholder, filed a derivative action challenging two compensation decisions: (i) a $50 million one-time equity grant to FNF’s founder and non-executive chairman, William P. Foley; and (ii) the approval of non-employee director compensation packages for 2022–2024.

FNF’s Compensation Committee had conditioned approval of the equity grant on review and sign-off by the company’s Related Person Transaction (RPT) Committee. The RPT Committee evaluated the independence of the compensation consultant, reviewed market research, obtained legal advice, and ultimately approved the grant. FNF’s Board had also determined that nine non-employee directors satisfied NYSE independence standards.

The plaintiff challenged these compensation decisions, alleging that the directors were not disinterested due to various personal and professional relationships with Foley, including overlapping board service, co-investments in professional sports teams, and business dealings between Foley-affiliated entities and private equity firms where certain directors worked. The suit was filed just one day before FNF’s redomestication from Delaware to Nevada took effect.

The Court’s Decision

The Court held that Section 144(d)(2)’s presumption of disinterestedness applies broadly—not just within the Section 144(a)–(c) safe harbors for conflicted transactions. Because the statute contains no language limiting the presumption to the safe harbors, the Court treated that omission as purposeful. Critically, this means the presumption applies at the demand-futility stage: when a listed company’s board has determined that a director meets exchange independence standards, a plaintiff must plead substantial and particularized facts of a material interest or material relationship to overcome the presumption.

The Court interpreted the statutory term “substantial” in a qualitative sense, explaining that the facts pleaded must be significant enough to evidence a disabling conflict. A purely quantitative approach—piling up allegations of social, professional, or investment connections—will not suffice if no single allegation is material. Bare allegations of overlapping board service, a decade of board fees without personal materiality, and co-investments in sports teams—absent allegations about voting rights, financial exposure, or dependence—were all held insufficient to overcome the presumption.

However, the Court declined to dismiss the claims entirely. While the claims related to the chairman’s equity grant were dismissed for failure to plead demand futility, the directors’ self-compensation claims survived in part. The breach of fiduciary duty claim survived against the Compensation Committee members who approved their own compensation, and the unjust enrichment claim survived against all director defendants who received the challenged compensation packages.

Key Takeaways

• Broad reach of the SB 21 presumption. Section 144(d)(2)'s presumption of disinterestedness extends beyond the safe harbors and applies at the demand-futility stage, significantly raising the bar for plaintiffs in derivative litigation.

• Quality over quantity. Plaintiffs cannot rely on a volume of loosely connected allegations to establish director interestedness. Each fact must be qualitatively material to demonstrate a disabling conflict.

• Board's independence determinations matter. A board’s determination that its directors meet stock exchange independence standards triggers the statutory presumption, making independence compliance more consequential than ever.

• Process still counts. The use of independent committees, outside legal counsel, and independent compensation consultants reinforced the Court’s conclusion that the process was adequate and that no material facts were withheld.

• Self-compensation remains vulnerable. Despite the new statutory protections, director self-compensation claims continue to present risk. Directors who approve their own pay remain inherently interested, and these claims are not shielded by SB 21’s presumption.

• Early signal for the SB 21 era. This decision validates the legislature’s intent to enhance predictability in Delaware corporate law and provides a strong first data point for companies that have remained in, or are considering incorporation in, Delaware.