Personal Relationships and Director Independence

In In re Oracle Corp. Derivative Litig., 824 A.2d 917  (Del. Ch. 2003), the Delaware Chancery Court for the first time found that directors on a Special Litigation Committee lacked independence because of non-family, non-financial relationships.  The case invovled two professors at Stanford University and their consideration of a derivative suit brought against, among others, another professor from the same university and an individual who had apparently considered significant donations to the university in the past. 

Whether the reasoning survives the analysis in Beam v. Stewart, 845 A.2d 1040 (Del. 2004), is an open question.  This case forced corporations to recognize the importance of corporate governance. More importantly, the case spoke directly to corporate director accountability to shareholders. To learn more about the case please see the link to the following article. The primary material for this case may be found on the DU Corporate Governance website.