What’s So "Special" About A "Special Committee"?

The importance of context when evaluating the need to establish a special committee

In a recent bench ruling in Re Plains Exploration, the Delaware Courtheld that a special committee was not required to take the lead in merger negotiations in circumstances where almost all of the members of the board were independent and free from conflict in connection with the transaction.

In Re Plains Exploration, the Delaware Court denied the plaintiff shareholders' request to enjoin a merger between Plains Exploration & Production Company and Freeport-McMoRan Copper & Gold even though the Plains' board (a) did not shop Plains before agreeing to merge with Freeport, (b) did not conduct a "pre" and "post" market check, and (c) allowed the Plains' CEO to lead negotiations with Freeport, who then agreed to retain the CEO post-closing.