Investors Bancorp: The Roads Not Taken and How to Mitigate the Consequences

18 Wake Forest J. Bus. & Intell. Prop. L. 481

In In Re Investors Bancorp, Inc. Stockholder Litigation (“Investors
Bancorp”), the Delaware Supreme Court announced that director
compensation plans, in which directors have discretion to grant
themselves equity, will be reviewed under the exacting “entire fairness”
standard. Prior to the Delaware Supreme Court’s decision, the
Delaware Court of Chancery held that compensation plans which (i)
contained director-specific, “meaningful limits,” and (ii) were approved
by a majority of the fully informed, uncoerced, disinterested
stockholders were subject to the more deferential business judgment
standard of review. The Delaware Supreme Court’s decision
effectively rejects this precedent.