The Court does not see the relevance of these non-Defendants or the benefits they received.In re Staples, Inc. S'holders Litig., 792 A.2d 934, 951 (Del.Ch. 2001) (quoting In re Gen. Motors Class H S'holders Litig., 734 A.2d 611, 618 (Del.Ch. 1999)). There is no bright-line rule for determining whether additional, merger-related compensation constitutes a disabling interest.
Otherwise this Court is forced to engage in an imprecise and inefficient method by which to remedy disclosure deficiencies. Especially where, as is the case here, the Court must "unscramble the eggs" and conduct a post-hoc reorganization of a standing board.In re Staples, Inc. S'holders Litig., 792 A.2d 934, 960 (Del.Ch. 2001). See also In re Pure Resources, Inc. S'holders Litig., 808 A.2d 421, 452 (Del.Ch. 2002); Gilmartin v. Adobe Resources Corp., 1992 WL 71510, *8-9 (Del.Ch. Apr. 6, 1992); Sonet v. Plum Creek Timber Co., 1999 WL 160174, at *11 (Del.Ch. Mar. 18, 1999); Sealy Mattress Co. of New Jersey v. Sealy, Inc., 532 A.2d 1324, 1340-41 (Del.Ch. 1987); Joseph v. Shell Oil Co., 482 A.2d 335, 344 (Del.Ch. 1984); Am. Pac. Corp. v. Super Food Serv., Inc., 1982 WL 8767, at *4 (Del.Ch. Dec. 6, 1982).
When disinterested, independent directors make the allocation, the business judgment rule applies. If conflicted fiduciaries make the determination, entire fairness typically applies.In re Staples, Inc. S'holders Litig., 792 A.2d 934, 950-51 (Del. Ch. 2001) (Strine, V.C.); In re Gen. Motors Class H S'holders Litig., 734 A.2d 611, 617-18 (Del. Ch. 1999) (Strine, V.C.); Solomon v. Armstrong, 747 A.2d 1098, 1117-18 (Del. Ch. 1999).
; Liebermann, 844 A.2d at 1004-05 (citing STAAR 588 A.2d at 1136) (noting that Delaware "case law has refused to overlook the statutory invalidity of stock even in situations when that might generate an inequitable result."); see also Superwire.Com, Inc. v. Hampton, 805 A.2d 904, 909 n. 17 (Del. Ch. 2002) (citing STAAR, 588 A.2d at 1137) (rejecting an equitable estoppel defense because the court "cannot give any effect to void shares even in the context of an equitable defense.") (emphasis in original). In an effort to have me excuse the invalidity of the split, the defendants point to a solitary case, In re Staples, Inc. S'holders Litig., 792 A.2d 934 (Del. Ch. 2001), to support their argument that "[t]his court has recognized that even where a corporation seeks to implement a stock split that may not have been permitted by its certificate of incorporation, a Delaware corporation may effect a de facto stock split through separate contracts with investors." Def. Ans. Post-Tr.
By this approach, the court also ensures that greater effect can be given to the resulting vote down the line, reducing future litigation costs and transactional and liability uncertainty. See, e.g., ODS Technologies, Inc. v. Marshall, 832 A.2d 1254, 1262 (Del.Ch. 2003) ("The threat of an uninformed stockholder vote constitutes irreparable harm."); Pure Resources, 808 A.2d at 452 ("[I]rreparable injury is threatened when a stockholder might make a tender or voting decision on the basis of materially misleading or inadequate information."); see also In re Staples, Inc. S'holders Litig., 792 A.2d 934, 960 (Del.Ch. 2001) ("[I]t is appropriate for the court to address material disclosure problems through the issuance of a preliminary injunction that persists until the problems are corrected.").See Staples, 792 A.2d at 960 ("An injunctive remedy . . . specifically vindicates the stockholder right at issue — the right to receive fair disclosure of the material facts necessary to cast a fully informed vote — in a manner that later monetary damages cannot and is therefore the preferred remedy, where practicable.").
Second, the plaintiffs contend that the defendants' disclosures relating to the Prairie Capital valuation and fair value were misleading.In re Staples, Inc. S'holders Litig., 792 A.2d 934, 953 (Del.Ch. 2001); see Malone v. Brincat, 722 A.2d 5, 10 (Del. 1998). The plaintiffs also raise another issue that warrants no textual discussion.
See, e.g., In re Staples, Inc. S'holders Litig., 792 A.2d 934, 954 (Del.Ch. 2001). Decisions tending towards this view include Matador Capital Mgmt. v. BRC Holdings, 729 A.2d 280, 297 (Del.Ch. 1998).
See, e.g., In re Staples, Inc. S'holders Litig., 792 A.2d 934, 954 (Del.Ch. 2001). Decisions tending towards this view include Matador Capital Mgt. v. BRC Holdings, 729 A.2d 280, 297 (Del.Ch. 1998).
The Court must determine whether the additional compensation is "so substantial as to have rendered it improbable that the board could discharge their fiduciary obligations in an even-handed manner." In re Staples, Inc. S'holders Litig. , 792 A.2d 934, 951 (Del.Ch.2001) (alteration omitted).The PHC directors, other than Shear, each owned only Class A shares of PHC stock so their incentives to maximize the value of those Class A shares were aligned with the public shareholders.
Investors, as a general matter, are not entitled to "disclosures sufficient to make [their] own independent assessment of a stock's value." Id.; see also Resnik v. Swartz, 303 F.3d 147, 154 (2d Cir. 2002) (stating, in the context of a challenge to a proxy statement, that "[d]isclosure of an item of information is not required . . . simply because it may be relevant or of interest to a reasonable investor"); Skeen v. Jo-Ann Stores, Inc., 750 A.2d 1170, 1174 (Del. 2000) (addressing parallel disclosure obligations under Delaware law); In re Staples, Inc. S'holders Litig., 792 A.2d 934, 954 (Del. Ch. 2001) (Strine, V.C.). "[Q]uibbles with a financial advisor's work simply cannot be the basis of a disclosure claim." In re 3Com S'holders Litig., Civ. A. No. 5067-CC, 2009 WL 5173804, at *6 (Del. Ch. Dec. 18, 2009) (Chandler, C.).