Board Independence in the US: Delaware and a Close Look at Independence

KEY TAKEAWAYS:

•  A Delaware judge’s decision to void $55.8 billion in compensation for Elon Musk was a noteworthy event for shareholders and corporate issuers, not only regarding compensation, but also the complexities around evaluating director independence.
•  Traditional measurements used by major exchanges and proxy advisors seem to show that board independence in the U.S. is robust, but some less obvious non-independent traits may lurk beneath the surface.
• Our research indicates that Delaware courts could more frequently consider non-traditional/non-financial factors in evaluating board independence, process, and fair dealings with shareholders than widely believed.