Court of Chancery Upholds Complaint Over Options
London v Tyrrell, C.A. 3321-CC (Del Ch. June 24, 2008)
One of the tests for whether a board of directors is interested in a transaction under attack in a derivative suit so as to excuse demand on them before suit is filed is if they have personally benefited from the transaction. This decision makes clear that in the case of the grant of a stock option, the directors who have received the option will always be deemed interested in the outcome of an attack on that grant, even without showing the amount of the option is material to their financial condition.
