Quote of the day, 2-18-07

By Lee Russ

Sunday, February 18, 2007 at 04:46 PM

A director who approves the backdating of options faces at the very least a substantial likelihood of liability, if only because it is difficult to conceive of a context in which a director may simultaneously lie to his shareholders ... and yet satisfy his duty of loyalty.

Chancellor William B. Chandler III, in a Delaware Chancery Court decision allowing a shareholder derivative lawsuit to go forward against Maxim Integrated Products, based on that company allegedly backdating stock options granted to executives,  thus guaranteeing that the options would be valuable.