Brehm v. Eisner, or Some Reflections above the Disney Case

Vladimir S. Korolev

This article analyzes the decision of the Delaware Supreme Court in Brehm v. Eisner. The author first discusses the different approaches taken by the court of chancery and the supreme court. Next, the author highlights the reasons advanced by the supreme court for permitting the plaintiffs to file an amended complaint. Finally, the author argues that this case represents an admonishment that lucrative executive compensation packages must be given appropriate consideration by boards of directors, and that shareholders bear some responsibility in encouraging appropriate corporate governance.