In Appel v. Berkman, No. 316, 2017 , a stockholder alleged the Board breached their fiduciary duty when they failed to disclose why a director abstained from a vote to approve a tender offer. The Chancery Court dismissed the challenge and the Supreme Court reversed. The director at issue was the founder, Chairman of the Board and former CEO. He believed that the mismanagement of the Company negatively affected its sale price. According to the Supreme Court, it “[was] no common thing’ when a Chairman and founder abstain[ed] from voting on the sale of the business he founded…” and this information should have been shared with the stockholders.
BOTTOM LINE: Do not disclose that “[t]o the company’s knowledge, the Chairman of the Board of Directors has not yet determined whether to tender . . . his shares” when the minutes of the board meeting provide otherwise.