Thursday, November 3, 2011

Nabors CEO to receive $100 Million as Severance Payout

If anything is a violation of the business judgment rule (the standard by which key decisions of officers or director are judged) it would be this Nabors matter. Delaware, where many corporations are incorporated, has a very deferential standard concerning the decisions that are made. Basically, and oversimplifying matters to make the point,  unless an officer or director engages in really egregious of foolish conduct,  Delaware courts will "bless" the decisions.

Many of these business judgment cases assess the appropriateness of rich salary and benefit packages provided to CEO's and other senior executives, but whereby in the majority of cases, the courts extend deference to the incumbent Board and Officer decisions (See, for example, Brehm v. Eisner). But, still, here, the facts in Nabors strike me as outrageous and in my opinion, present a strong case for a shareholder lawsuit.


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