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Court Of Chancery Explains When Entire Fairness Applies To Option Grants And Voting Agreements

Posted In Fiduciary Duty

Williams v. Ji, C.A. No. 12729-VCMR (June 28, 2017)

While directors have the right to issue options, when the grant is to themselves and there are specific facts suggesting unfairness, those directors will have the burden of proving the grants were entirely fair in a stockholder challenge. The same is true when stock is issued conditioned on an agreement to vote that stock as the directors wish.