The Delaware Supreme Court, applying Delaware law, held that a
bump-up provision in a D&O liability program did not preclude
coverage for the settlement of a proxy-related lawsuit by
shareholders against the insured and its directors.
Illinois Nat'l Ins. Co. v. Harman Int'l Indus.,
Inc., 2026 WL 204209 (Del. Jan. 27, 2026). The court held
that the shareholders' claim under Section 14(a) of the
Securities Exchange Act of 1934 constituted a Claim alleging
inadequate consideration. However, it held that the insurers did
not show that the settlement amount represented an increase in deal
consideration and that the bump-up provision did not apply.
The insured, an audio electronics company, disseminated proxy
materials to its shareholders describing a proposed acquisition of
the company (the “Transaction”). Its shareholders voted
to approve the Transaction, under which each share of outstanding
stock would be converted into the right to receive $112 in cash.
After the
