In Re Investors Bancorp, Inc. Stockholder Litigation

Summary

The court held that stockholder approval of an equity incentive plan's general parameters does not ratify later discretionary awards that directors grant to themselves. Because the complaint reasonably alleged that the awards were unfair and excessive, the directors could not invoke ratification to obtain dismissal and instead had to establish entire fairness. The court also held that demand was excused because the directors' contemporaneous participation in awarding themselves compensation created reasonable doubt about their independence in evaluating claims concerning the executive directors' awards.