recent case offers a fresh reminder that directors must satisfy
their fiduciary obligations when setting their own
compensation.
In a derivative action against the non-employee directors of
OvaScience, Inc., a stockholder alleged that the non-employee
directors had breached their fiduciary duties and wasted corporate
assets by paying themselves excessive compensation. In 2015, for
example, all of OvaScience's non-employee directors received
compensation of at least $300,000 (substantially all of which
represented the fair value of equity awards granted during the
year), and two directors received more than $500,000.
Under Delaware law, OvaScience's directors had the authority
to set their own compensation, but they were nonetheless required
to satisfy the heightened fiduciary standards applicable to
transactions in which they have a conflict of interest. In such a
case, interested directors bear the burden of proving that the
transaction is "entirely fair" to the
