Delaware Court of Chancery.
In Stein v. Blankfein, No. 0354, 2017 (Del. Ch. May 31, 2019), the Delaware Court of Chancery reaffirmed that directors’ self-interested decisions regarding their own compensation are subject to review under the entire fairness standard. The entire fairness standard requires directors to demonstrate that both the amount of compensation and the process by which the compensation is determined is “entirely fair” to the company.
The complaint in Stein focuses on director compensation at Goldman Sachs via stock incentive plans, or SIPs. SIPs must be approved by a company’s stockholders under the rules of the New York Stock Exchange. The vast majority of compensation received by Goldman’s directors is paid pursuant to the company’s SIPs, at the board’s discretion.
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