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In the case of In Re The Goldman Sachs Group, Inc. Shareholder Litigation, C.A. No. 5215-VCG (Oct. 12, 2011), read opinion here, Vice Chancellor Glasscock, in his first major corporate law decision, granted defendants' motion to dismiss a derivative action brought against Goldman's current and former directors for failure to make a pre-suit demand. At issue was Goldman's compensation structure which the plaintiffs said, "created a divergence of interest between Goldman's management and its stockholders in that compensation for the firm's management was based on a percentage of net revenue and without regard to risk."
Kevin F. Brady of Connolly Bove Lodge & Hutz LLP prepared this summary.
The plaintiffs alleged that the directors breached their fiduciary duties by: (i) failing to properly analyze and rationally set compensation levels for Goldman's employees; (ii) committing waste by "approving a compensation ratio to Goldman employees in an amount so disproportionately large to the contribution of management, as opposed to capital as to be unconscionable"; (iii) failing to adequately monitor Goldman's operations; and (iv) "allowing the Firm to manage and conduct the Firm's trading in a grossly unethical manner."
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Read more Delaware business litigation case summaries and commentary on Delaware Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X. Pileggi, of Eckert Seamans.
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