Court Speaks On Spring-Loading, Backdating

Law360, New York (February 15, 2007, 12:00 AM EST) -- On Feb. 6, 2007, the Delaware Court of Chancery issued two significant decisions in derivative cases involving allegations of stock option backdating and spring-loading.

In the first decision, involving allegations of backdating at Maxim Integrated Products Inc., the Chancellor recognized that stock option backdating is inherently deceptive and that “[a] director who approves the backdating of options faces at the very least a substantial likelihood of liability” for breaching the fiduciary duty of loyalty.

In the second case, involving allegations of stock option spring-loading at Tyson...
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