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Program on Corporate Governance Advisory Board
- Peter Atkins
- David Bell
- Kerry E. Berchem
- Richard Brand
- Daniel Burch
- Paul Choi
- Jesse Cohn
- Arthur B. Crozier
- Renata J. Ferrari
- Andrew Freedman
- Ray Garcia
- Byron Georgiou
- Joseph Hall
- Jason M. Halper William P. Mills
- David Millstone
- Theodore Mirvis
- Philip Richter
- Elina Tetelbaum
- Sebastian Tiller
- Marc Trevino
- Steven J. Williams
HLS Faculty & Senior Fellows
The Delaware Law Series
Delaware’s First Read on the DGCL Section 144 Safe Harbor
Andre G. Bouchard, Michael Darby, and Carmen X. Lu are Partners at Paul, Weiss, Rifkind, Wharton & Garrison LLP. This post is based on a Paul Weiss memorandum by Mr. Bouchard, Mr. Darby, Ms. Lu, Frances F. Mi, Laura C. Turano, and Cara Fay, and is part of the Delaware law series; links to other posts in the series are available here.
Recently in Ayers v. Foley, the Delaware Court of Chancery issued an opinion (by Vice Chancellor Will) interpreting for the first time certain provisions in the 2025 amendments to Section 144 of the Delaware General Corporation Law (“DGCL”), the landmark statutory reforms that provide safe harbor protections for certain conflicted transactions. The practical takeaway of Ayers is that Section 144 has raised the bar materially for rebutting the presumption of director independence at the pleading stage for publicly listed corporations when the board has determined that a director satisfies the exchange’s independence requirements because of the statute’s “substantial and particularized facts” pleading requirement. Significantly, the court reached this conclusion in the context of determining the issue of demand futility, reasoning that the heightened pleading standard in Section 144 is not confined to the safe harbors in Section 144 and was intended to apply broadly to other contexts as well. Ayers also reaffirms that when directors approve their own compensation, they are necessarily interested and their actions continue to be subject to entire fairness review.
Strategy’s Bitcoin Treasury Model: Corporate Omphaloskepsis, Polypharmacy of Risk, and Shareholder and Societal Welfare
Henry T. C. Hu is the Allan Shivers Chair in the Law of Banking and Finance at the University of Texas Law School. This paper is based on his recent article, forthcoming in the Journal of Corporation Law.
Strategy Inc (MSTR), formerly MicroStrategy Incorporated, functions differently from other public companies. At its core, the firm produces no goods or services, has no operating cash flow, and does not compete with other companies. Yet, by early 2025, its share price had risen 27-fold since it began its transformation to a new corporate model less than five years earlier. Its stock’s 110% annualized return was multiples higher than any S&P 500 stock. In a Financial Times film released that spring, Michael Saylor, its chairman and co-founder, stated that the firm’s stock market capitalization of $100 billion “can grow” 100-fold to $10 trillion by 2045—i.e., the current combined market capitalization of Amazon, Apple, and Microsoft.
MSTR styles itself as the first and largest “bitcoin treasury company” (BTCo). Corporations worldwide began imitating its BTCo model. With 4% of all outstanding bitcoins, MSTR is the largest known institutional holder. In 2025 it issued more equity capital than any other U.S. company.
This Article is the first academic work on the law and economics of the MSTR model. It introduces two concepts: “corporate omphaloskepsis,” which helps capture the model’s ends and means, and “polypharmacy of financial risk,” which frames some key consequences for shareholders. MSTR’s path to shareholder wealth maximization departs from longstanding financial and legal understandings. For ordinary public companies, the animating engine of shareholder wealth management rests on the production of goods and services. Perhaps the foremost task of management is to produce new or better goods and services or ones at lower cost than competitors. The overarching pecuniary corporate end is to maximize the fundamental value of its shares, relying on a convergence of share price to fundamental value to maximize shareholder wealth. READ MORE
Court of Chancery Imposes Sanctions for Spoliation of Signal Messages
Mallory Tosch Hoggatt, Alan Goudiss, and Jeffrey Hoschander are Partners at A&O Shearman. This post is based on an A&O Shearman memorandum by Ms. Tosch Hoggatt, Mr. Goudiss, Mr. Hoschander, Henessy Guerrero, and Jessie Donegan, and is part of the Delaware law series; links to other posts in the series are available here.
On May 26, 2026, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery imposed sanctions for the spoliation of evidence in a fiduciary duty case arising from the merger of a wrestling entertainment company (the “Company”) with a global sports and entertainment company (the “Acquiror”). In re World Wrestling Ent., Inc. Merger Litig., C.A. No. 2023-1166-JTL (Del. Ch. May 26, 2026). The Court found that the Company’s controlling stockholder and senior officers—at a minimum, recklessly— destroyed Signal chats and messages after receiving legal hold notices and that plaintiffs were prejudiced thereby because “context suggests” that the lost evidence was relevant. As a result, the Court ordered a shift of the burden of proof from plaintiffs to defendants by presuming the truth of a limited set of facts in favor of plaintiffs, subject to rebuttal only by clear and convincing evidence.
First Court of Chancery Decision Interpreting New DGCL Amendments Provides Greater Certainty for Boards and M&A
Rick Horvath and Eric Siegel are Partners, and Molly Wang is an Associate at Dechert LLP. This post is based on their Dechert memorandum and is part of the Delaware law series; links to other posts in the series are available here.
Key Takeaways
- In 2025, sweeping amendments to the Delaware General Corporation Law (the “DGCL”) were adopted, including a new Section 144 safe harbor for conflicted transactions and a heightened presumption of director disinterestedness.
- The Court of Chancery recently applied this presumption of director disinterestedness to a derivative complaint outside of the Section 144 safe harbor, and made clear that bare allegations of director compensation, overlapping board service, business relationships, and minority co-investments in professional sports teams will not suffice to rebut the presumption of director disinterestedness.
- While addressed in the context of a derivative complaint, the Court’s analysis provides helpful guidance and, if applied in future cases, would remove much of the uncertainty related to conflicted transactions.
Delaware Court of Chancery Interprets New Section 144 and Applies Heightened Presumption of Director Independence
Amy Simmerman and Brad Sorrels are Partners and Jordan Cramer is an Associate at Wilson Sonsini Goodrich & Rosati. This post is based on a Wilson Sonsini memorandum by Ms. Simmerman, Mr. Sorrels, Ms. Cramer, Daniyal Iqbal, and Shannon German, and is part of the Delaware law series; links to other posts in the series are available here.
On June 15, 2026, the Delaware Court of Chancery issued an Opinion interpreting Section 144 of the Delaware General Corporation Law (the DGCL), the landmark statutory measure adopted last year to provide safe harbors for certain conflicted transactions and address director independence, among other reforms.[1] The Opinion arose in a common context in Delaware stockholder litigation: claims over director and management compensation. In the decision, Vice Chancellor Lori W. Will applied, for the first time, the statute’s heightened presumption of independence for directors of public companies determined by the board to be independent under the relevant NYSE or Nasdaq listing standards to dismiss derivative claims on demand futility grounds.
Chancery Finds Funds Liable for Aiding Directors’ Fiduciary Breaches
Gail Weinstein is a Senior Counsel, Philip Richter is a Partner, and Steven Epstein is the Managing Partner at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, Steven Steinman, Maxwell Yim, and Hannah Reiner; and is part of the Delaware law series; links to other posts in the series are available here.
In Guilbeau v. Footprint (May 11, 2026), the Court of Chancery held, at the pleading stage of litigation, that it was reasonable to infer that certain directors of Footprint International Holdco, Inc., a non-controlled Delaware corporation (the “Company”), breached their fiduciary duties when they approved a Company financing (the “Financing”) that was proposed, and largely funded, by three institutional investors (the “Funds”) that were among the Company’s largest stockholders. The court also held that the Funds may have aided and abetted the directors’ breaches, acting through their designees on the Company’s board.
The Financing raised $500 million ($450 million of it from the Funds) through the issuance of a new class of preferred stock (the “Class F Stock”), at a time the Company was verging on insolvency. The Financing was recommended by a three-member special committee of independent directors (the “Committee”) and approved by the full ten-person board of directors (the “Board”) (which included one designee from each of the three Funds—collectively, the “Fund Designees). As would be typical in connection with this type of financing, the Company provided special benefits to the Funds and to two large stockholders (“ZenCap” and “Koch”) who had blocking rights.
Lessons from ExxonMobil
Katherine Terrell Frank and Meredith Jeanes Lyons are Partners and Robert L. Kimball is a Senior Partner at Vinson & Elkins LLP.
After 144 years of legal domicile in New Jersey, ExxonMobil Corporation, which has been physically headquartered in Texas since 1989, is consolidating its legal and physical homes to Texas. With approximately 71 percent of votes cast in favor at its 2026 annual meeting, Exxon’s reincorporation to Texas reflects the Lone Star State’s growing competitiveness as a corporate law jurisdiction and demonstrates that reincorporation into Texas may be an achievable result for widely-held public companies. Exxon Chairman and Chief Executive Officer Darren Woods explained that Texas has cultivated a policy and regulatory environment that enables companies to focus on creating shareholder value rather than navigating unnecessary red tape and political interference.[1]
Boards considering reincorporation into Texas should carefully consider the corporate governance and shareholder outreach strategies employed by Exxon and other successfully redomiciled public companies. Because proxy advisors have generally opposed reincorporation to Texas, favorable votes for reincorporation are not guaranteed for corporations that lack a controlling shareholder or a large, friendly voting block. Successful reincorporations will require companies to work well in advance of shareholder meetings to solicit investor feedback, determine an acceptable Texas corporate governance structure, and educate voters on the benefits of reincorporation.
Special Committees in Conflict Transactions: A Practical Guide
Maeve O’Connor and William D. Regner are Partners, and Amy Zimmerman is an Associate at Debevoise & Plimpton LLP. This post is based on a Debevoise memorandum by Ms. O’Connor, Mr. Regner, Ms. Zimmerman, and Hadel Alfagir.
Key Takeaways:
- Special committees can be important tools for boards facing actual or potential conflicts of interest.
- To realize their benefits, special committees should consist of only disinterested and independent directors, receive a clear and comprehensive mandate, function independently, and ensure that their work is well documented.
- This article offers practical guidance about when to form a special committee, committee composition, advisors to the committee, and documenting the committee’s work, with a focus on Delaware law.
Delaware Supreme Court Reverses Moelis
Walter Davis and Marjorie Duffy are Partners, and Randi Lesnick is a Co-Chair of the Corporate Practice at Jones Day. This post is based on a Jones Day memorandum by Mr. Davis, Ms. Duffy, Ms. Lesnick, Joel May, and Jennifer Lewis, and is part of the Delaware law series; links to other posts in the series are available here.
In Short
The Situation: A stockholder sought a judgment declaring that certain provisions of a stockholders agreement were facially invalid and unenforceable under 8 Del. C. § 141(a). The Court of Chancery found that the plaintiff’s claims were timely and that the stockholders agreement violated Delaware law.
The Result: The Delaware Supreme Court held that the challenged provisions, to the extent they conflict with the managerial authority of the board conferred by § 141(a), were voidable (not void) and that the plaintiff unreasonably delayed in asserting its challenge to those provisions.
Looking Ahead: The Court of Chancery’s decision was the catalyst for the 2024 amendments to § 122(18), which resolved market uncertainty in the wake of that decision. The Delaware Supreme Court’s decision provides another measure of certainty by making clear that a plaintiff’s facial challenges to voidable acts must be timely brought.
The Art of Indemnifying Attorneys’ Fees for M&A Disputes
Frank Favia and Jonathan Dhanawade are Partners, and Andrew Stanger is Knowledge Counsel at Mayer Brown. This post is based on their Mayer Brown memorandum, and is part of the Delaware law series; links to other posts in the series are available here.
Buyers in M&A transactions often assume that they will be able to recover reasonable attorneys’ fees in connection with a successful indemnification claim if the purchase agreement generally includes attorneys’ fees in the definition of indemnifiable losses. However, buyers may be surprised to learn that Delaware law presumes that attorneys’ fees incurred by a buyer in pursuing an indemnification claim against a seller (often referred to as a “first-party” claim) are not recoverable unless the purchase agreement includes a “clear and unequivocal articulation” of the parties’ intent to require fee shifting.
This Legal Update examines two recent Delaware opinions that illustrate this legal principle. It also discusses drafting nuances for parties that wish to include attorneys’ fees for first-party claims among indemnifiable losses.