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Court of Chancery Protects Certain Materials Obtained Through Section 220 Action as Confidential

Roy E. Disney v. The Walt Disney Company, C.A. No. 234-N, 2005 WL 1538336 (Del. Ch. June 20, 2005). The Court of Chancery considered the confidentiality of certain documents on remand from the Supreme Court. Plaintiff moved to lift a confidentiality designation placed on ten documents. The Court of Chnacery, pursuant to the Supreme Court's instructions, reviewed the ten documents at issue and reevaluated their confidentiality in light of the "the potential benefits and potential harm from disclosing the documents[.]" The documents included: (1) a letter from Stanley P. Gold, a long-time associate of Mr. Disney and former director of the Company, to Judith Estrin and John Bryson, dated September 12, 2003, detailing Mr. Gold's thoughts and assessments of the Company's proposed director compensation plan; (2)an excerpt of a presentation of financial results and internal targets in connection with the Company's tax-qualified compensation plan setting out non-public targets established for the compensation plan; (3) an email from Michael Breckinridge to Ms. Estrin, relating to year-end compensation issues for FY 2002; (4) a letter from Mr. Eisner to Mr. Gold, dated December 11, 2002, referring to "the overall book that describes the bonus levels for each individual in the company that is to receive a bonus" which was given to Mr. Gold and the entire Compensation Committee; (5) a memorandum from Mr. Eisner's personal attorney) to Mr. Eisner, dated November 21, 2003, commenting on the materials sent to the Compensation Committee regarding bonuses for Mr. Eisner and another executive; (6) a series of emails between and among Mr. Eisner, John England, and Ms. Estrin, dated December 9 and 10, 2003, discussing Mr. Eisner's bonus for FY 2003; (7) an email from Ms. Estrin addressed to, and copied to, certain directors, members of senior management, and their advisors, advising the recipients of the issues that were going to be discussed at upcoming Compensation Committee meetings; (8) a letter from Mr. Eisner to Ms. Estrin, describing in great detail the Company's performance in 2002, and the Company's business strategy for 2003 and describing the performance of several top Disney executives; (9) the minutes of a Special Meeting of the Compensation Committee of the Board of Directors dealing with the Company's Executive Performance Plan; and (10) an email from Robin Coleman addressed to, and copied to, certain directors, members of senior management, and their advisors, describing materials that had been sent to the email's recipients in anticipation of certain Compensation Committee meetings. The Court again concluded that these ten documents "are of an intrinsically confidential nature and that the Company is justified in demanding that they remain confidential, subject to the possibility of disclosure, as discussed in the Opinion." The Court then engaged in a blancing test to determine if the potential harm from disclosure was outwighed by the potential benefit. Finding that disclosure of the contents of these documents could have a chilling effect on future board deliberations, the Court found that For all of the above reasons, I must conclude that the potential harm of disclosure outweighed the potential benefit. To be sent a PDF copy of this opionion, please click here. Authored by: Liza Haley Sherman 302.888.6940 lsherman@morrisjames.com