When Is A Director Independent?

In a decision rendered last Friday, the Delaware Supreme Court addressed when a director may be considered "independent,", as contrasted with "interested," consequent to a long-standing personal relationship.  This is an important decision in that it explicates facts upon which a close friendship was found to render a director interested.  Delaware County Employees Retirement Fund v. Sanchez, No. 702, 2014, 2015 WL 5766264 (Del. Oct. 2, 2015).

Sanchez Energy Corporation, which is publicly traded, has as a 16% shareholder members of the Sanchez family.  In turn, that same family controlled Sanchez Resources LLC. The transaction at issue involved Sanchez Energy paying $78 million to allow Sanchez Resources to cash out a private equity investor, acquire certain properties, capitalize a joint venture with Sanchez Energy and fund a cash payment of $14.4 million to Sanchez Resources.  Challenged in a derivative action, it was alleged that these transactions were improper