Patrick Ayers v. William P. Foley

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE PATRICK AYERS, derivatively on ) behalf of Nominal Defendant FIDELITY ) NATIONAL FINANCIAL, INC., ) ) Plaintiff, ) ) v. ) C.A. No. 2025-0650-LWW ) WILLIAM P. FOLEY, DOUGLAS K. ) AMMERMAN, HALIM DHANIDINA, ) THOMAS M. HAGERTY, DANIEL D. ) LANE, HEATHER H. MILLER, ) SANDRA D. MORGAN, JOHN D. ) ROOD, PETER O. SHEA, JR., and ) CARY H. THOMPSON, ) ) Defendants, ) ) and ) ) FIDELITY NATIONAL FINANCIAL, ) INC., ) ) Nominal Defendant. ) OPINION Date Submitted: March 9, 2026 Date Decided: June 15, 2026 Stephen E. Jenkins & Tiffany Geyer Lydon, ASHBY & GEDDES, P.A., Wilmington, Delaware; Gregory Mark Nespole, Daniel Tepper, & Cinar Oney, LEVI & KORSINSKY, LLP, New York, New York; Counsel for Plaintiff Patrick Ayers Michael A. Barlow & Hayden J. Driscoll, QUINN EMANUEL URQUHART & SULLIVAN, LLP, Wilmington, Delaware; Michael Carlinsky, QUINN EMANUEL URQUHART & SULLIVAN, LLP, New York, New York; Counsel for Defendants William P. Foley, Douglas K. Ammerman, Halim Dhanidina, Thomas M. Hagerty, Daniel D. Lane, Heather H. Miller, Sandra D. Morgan, John D. Rood, Peter O. Shea, Jr., Cary H. Thompson, and Nominal Defendant Fidelity National Financial, Inc. WILL, Vice Chancellor  This derivative action contests two compensation decisions made by a board of directors: a one-time equity grant to the company’s founder and non-executive chairman, and compensation the directors awarded to themselves. The defendants have moved to dismiss the suit under Court of Chancery Rules 23.1 and 12(b)(6). At the center of the motion is the recently amended 8 Del. C. § 144. Applying the statute to the challenged awards highlights an important distinction between conflicted transactions entrusted to a disinterested committee and those approved by directors who are themselves parties to the transaction. Because the two committees that approved the chairman’s equity grant were composed of directors deemed to satisfy national stock exchange independence standards, the plaintiff had to overcome the heightened presumption of disinterestedness codified in Section 144(d)(2). In conjunction with Rule 23.1, this statutory mandate elevates the burden to rebut a director’s impartiality, requiring substantial and particularized allegations of a material interest or relationship. The complaint falls short of this demanding standard. The plaintiff also failed to plead that a majority of the board faces a substantial likelihood of liability for approving the grant. Given the interlocking protections of Section 144(a)(1)’s safe harbor and the company’s Section 102(b)(7) exculpatory provision, the plaintiff was required to plead particularized facts supporting a reasonable inference of bad faith. The complaint does not support such an inference. Demand is not excused as to the equity grant-related claims, which are dismissed. The directors’ self-compensation is a different matter because the approving committee members are inherently interested. Absent a stockholder vote compliant with Section 144(a)(2), the approval must meet the entire fairness standard. At the pleading stage, the plaintiff sufficiently alleged that the compensation was the product of unfair dealing and an unfair price. The breach of fiduciary duty claim is viable against the directors who approved the compensation, but not those who only passively received the awards. The related unjust enrichment claim concerning director compensation also survives against all director defendants. The motion to dismiss is therefore granted in part and denied in part. I. FACTUAL BACKGROUND The following facts are drawn from the Verified Stockholder Derivative Complaint (the “Complaint”) and the documents it incorporates by reference.1 A. Fidelity National Financial, Inc. and Its Board Nominal defendant Fidelity National Financial, Inc. (“FNF” or the “Company”) is a Nevada corporation that trades on the New York Stock Exchange 1 Verified S’holder Deriv. Compl. (Dkt. 1) (“Compl.”); see In re Gen. Motors (Hughes) S’holder Litig., 897 A.2d 162, 170 (Del. 2006). Documents attached to the Transmittal Affidavit of Hayden J. Driscoll in Support of Defendants’ Opening Brief in Support of Their Motion to Dismiss are cited as “Defs.’ Ex. __” unless otherwise defined. Trans. Aff. 2 (NYSE).2 It provides title insurance, mortgage loan servicing, and other real estate services. FNF was a Delaware corporation until June 11, 2025, when it re- domesticated to Nevada.3 The plaintiff filed this suit on June 10—one day before the re-domestication took effect.4 At the time this suit was filed, FNF’s Board of Directors (the “Board”) had eleven members. Nine are non-employee directors (“NEDs”) and were determined by the Board to qualify as independent under NYSE rules.5 The other two are William P. Foley and Raymond R. Quirk.6 Foley founded FNF in 1984, and previously served as its President, Chief Executive Officer, and Executive Chairman.7 He has been the Company’s Non-Executive Chairman since 2016, and currently owns 3.6% of its outstanding shares.8 Quirk is the Executive Vice Chairman of the Board, having assumed that role in February 2022. 9 Before then, of Hayden J. Driscoll in Supp. of Defs.’ Opening Br. in Supp. of Mot. to Dismiss Verified S’holder Deriv. Compl. (Dkt. 12). Certain documents were produced in response to a demand under 8 Del. C. § 220 and are deemed incorporated by reference into the Complaint. See 8 Del. C. § 220(b)(3). 2 Compl. ¶ 11; see Defs.’ Ex. 4. 3 See Defs.’ Ex. 4; see also Compl. ¶ 54. 4 See Dkt. 1. 5 Compl. ¶ 25; Defs.’ Ex. 2 (proxy statement) 14. 6 Compl. ¶¶ 2, 26. 7 Id. ¶ 12. 8 Id. ¶¶ 12, 88; see also Defs.’ Ex. 2 at 117. 9 Compl. ¶¶ 2, 26. 3 he was FNF’s Chief Executive Officer.10 All Board members except Quirk are named as defendants in this suit.11 B. The Incentive Plan and the Compensation Committee Under its charter, FNF’s Compensation Committee is tasked with setting salaries and approving incentive compensation and equity grants for officers and directors.12 Equity grants to Company directors and officers are subject to FNF’s Amended and Restated 2005 Omnibus Incentive Plan (the “Incentive Plan”), which was approved by FNF stockholders in 2016.13 The Incentive Plan’s objective is “to optimize the profitability and growth of the Company through incentives” that link the personal interests of participants “to those of the Company’s stockholders.”14 The Incentive Plan is meant “to provide flexibility to the Company . . . to motivate, attract and retain the services of [p]articipants who make or are expected to make 10 Id. ¶ 26. 11 See id. ¶¶ 25-26. 12 See Defs.’ Ex. 2 at 18. 13 Compl. ¶¶ 27-28; Defs.’ Ex. 1 (“Incentive Plan”) § 3.2. 14 Incentive Plan § 1.2. 4 significant contributions to the Company’s success.”15 It vests the Compensation Committee with plenary authority over awards, including the power to delegate.16 The Compensation Committee relies on outside advisors to fulfill its mandate. In August 2022, the Compensation Committee engaged Strategic Compensation Group LLC (“SCG”) as its compensation consultant.17 At a February 2023 meeting, the Compensation Committee determined that SCG qualified as independent under NYSE rules.18 But the plaintiff alleges that the engagement of SCG, which had ties to other Foley-affiliated entities, was an abrupt switch from a prior advisor.19 For equity awards granted under the Incentive Plan, the Compensation Committee established “title operating margin” as the operative performance metric.20 The title operating margin (or adjusted pre-tax title margin) measures the profitability of FNF’s title segment.21 The Compensation Committee chose this 15 Id. 16 Id. § 3.2. 17 Compl. ¶ 31; Defs.’ Ex. 8. 18 Defs.’ Ex. 12 at FNF_AYERS_220_00000121. 19 Compl. ¶ 31; Defs.’ Ex. 8 at FNF_AYERS_220_00000088. 20 Defs.’ Ex. 6 at FNF_AYERS_220_00000002; Defs.’ Ex. 9 at FNF_AYERS_220_00000090; Defs.’ Ex. 13 at FNF_AYERS_220_00000125-0126. 21 Defs.’ Ex. 2 at 102 n.10. FNF calculates adjusted pre-tax title margin by dividing the earnings before income taxes and non-controlling interests from its title segment, excluding recognized gains and losses, purchase accounting amortization, and other unusual items, by the total revenues of the title segment excluding recognized gains and losses. See id. 5 metric because it viewed it as “the best and most meaningful measurement goal to determine whether management has achieved superior performance when benchmarked against [FNF’s] title competitors.”22 Equity awards vest “if the title operating margin threshold is achieved in two of the next five fiscal quarters commencing in the fourth quarter of [each year] and ending in the fourth quarter of [the next].”23 C. 2022 and 2023 Director Compensation In November 2021, the Compensation Committee increased the title operating margin threshold for 2021 equity grants to 12%, evaluated based on performance from the fourth quarter of 2021 to the fourth quarter of 2022.24 In August 2022, the committee was informed that FNF had achieved a 22.4% title operating margin for the fourth quarter of 2021 and 17.1% for the first quarter of 2022.25 This exceeded the margin performance of FNF’s competitors.26 22 Defs.’ Exs. 6, 9, 13. 23 E.g., Defs.’ Ex. 6 at FNF_AYERS_220_00000002. 24 Id. 25 Defs.’ Ex. 8 at FNF_AYERS_220_00000088. 26 Defs.’ Ex. 7 at FNF_AYERS_220_00000010 (“Excluding FNF, the average 2020 full year adjusted pretax title margin for the national title insurers was 11.2%, and for the first half of 2021[,] the average was 12.9%.”). 6  Based on that performance, in November 2022, the Compensation Committee approved director compensation increases for 2022.27 Foley’s compensation remained flat at $500,000 in cash and $500,000 in equity.28 The NEDs’ annual cash retainer increased by $10,000 (from $80,000 to $90,000) and their annual equity grants increased by $16,675 (from $248,325 to $265,000).29 The plaintiff alleges that these increases were excessive because FNF’s revenue and net income placed it near median among its peer group.30 Citing “rising interest rates and economic recession expectations for 2023,” the Compensation Committee set the 2022 title operating margin goal at 7.5%.31 In early 2023, the Compensation Committee was informed that FNF achieved a margin of 12.3% in the fourth quarter of 2022.32 Later, in November 2023, the committee approved a $15,000 boost to the NEDs’ equity grants for 2023, and a $10,000 increase to their annual cash retainer starting in 2024.33 It also approved a $30,000 increase to Foley’s equity grant (raising it to $530,000); his cash 27 See Defs.’ Ex. 9 at FNF_AYERS_220_00000091-092. 28 Compl. ¶ 34; Defs.’ Ex. 10 at FNF_AYERS_220_00000095. 29 Compl. ¶ 34; Defs.’ Ex. 9 at FNF_AYERS_220_00000091-092. 30 Compl. ¶¶ 33, 40. 31 Defs.’ Ex. 11 at FNF_AYERS_220_00000111. 32 Defs.’ Ex. 12 at FNF_AYERS_220_00000120. 33 Defs.’ Ex. 13 at FNF_AYERS_220_00000126. 7 compensation remained unchanged.34 The plaintiff avers that the 2023 director compensation was again excessive and untethered to FNF’s financial performance compared to its peers.35 D. 2024 Director Compensation According to the Complaint, aspects of FNF’s 2024 performance—market capitalization, revenue, and net income—remained mediocre.36 Yet the Compensation Committee remained focused on the Company’s title operating margin when determining whether the performance conditions for restricted stock awards had been met.37 In the fourth quarter of 2023 and first quarter of 2024, FNF’s title operating margin was 11.8% and 10.7%, respectively, exceeding the Compensation Committee’s 7.5% goal.38 The Company’s 2025 proxy statement reported an industry-leading 15.1% pre-tax title margin for 2024.39 Overall performance was also buoyed by the financial success of F&G Annuities & Life, 34 Id. 35 Compl. ¶¶ 51-53. 36 See id. ¶ 59. 37 Defs.’ Ex. 15 at FNF_AYERS_220_00000155; Defs.’ Ex. 17 at FNF_AYERS_220_00000161. 38 Defs.’ Ex. 15 at FNF_AYERS_220_00000155; Defs.’ Ex. 17 at FNF_AYERS_220_00000161. 39 Defs.’ Ex. 2 at 66. 8 Inc., which had grown its market capitalization by $2.6 billion since FNF acquired it in 2020.40 At an October 14, 2024 meeting, the Compensation Committee approved a $20,000 increase to the NEDs’ annual cash retainer and a one-time special equity grant of $100,000 for each NED, vesting over three years.41 The committee’s stated rationale for the special grant was “FNF’s superior financial performance, including the success of the F&G acquisition in 2020.”42 Foley did not receive the $20,000 cash increase or the $100,000 special equity grant. E. The Equity Grant On October 8, 2024, an article published in MarketWatch quoted Foley as saying he was “going back to a private environment scenario and trying to move away from [his] public companies.”43 Around this time, Compensation Committee member Cary H. Thompson discussed with Foley a potential equity award to retain Foley as Chairman through 2027 and reward his contributions to FNF and F&G.44 40 Id. at 66, 106; see Compl. ¶¶ 13(a), 74. 41 Defs.’ Ex. 17 at FNF_AYERS_220_00000163; Defs.’ Ex. 2 at 111; see Compl. ¶ 60. 42 Defs.’ Ex. 17 at FNF_AYERS_220_00000163; see Compl. ¶ 62. 43 Defs.’ Ex. 16 at FNF_AYERS_220_00000189. 44 Defs.’ Ex. 18 at FNF_AYERS_220_00000175; see Compl. ¶ 66. 9  Initially, Foley requested a $60 million grant of restricted shares.45 Thompson and Compensation Committee Chair Thomas M. Hagerty discussed Foley’s ask and sought market research from SCG.46 After reviewing the material, Thompson and Hagerty determined that a $44 million grant aligned with market percentiles.47 Further discussions ensued, and Thompson negotiated the outline of a $50 million equity grant vesting over three years, with 25% vesting on the grant date and 75% vesting proportionately each subsequent year subject to Foley’s continued service as FNF’s Chairman (the “Equity Grant”).48 As part of this arrangement, Foley would not receive any additional FNF equity awards until 2027.49 On October 14, the Compensation Committee held a joint meeting with the Related Person Transaction (“RPT”) Committee to discuss the potential award to Foley.50 The directors sought to retain Foley as FNF’s Chairman “for at least the next three years, especially in light of anticipated market conditions.”51 The Compensation Committee reviewed SCG’s market research about comparable 45 Defs.’ Ex. 18 at FNF_AYERS_220_00000175. 46 Id. 47 Id. 48 Id. at FNF_AYERS_220_00000176; see Compl. ¶¶ 66, 85. 49 Compl. ¶ 66; Defs.’ Ex. 18 at FNF_AYERS_220_00000175; Defs.’ Ex. 2 at 107. 50 Compl. ¶ 58; Defs.’ Ex. 19 at FNF_AYERS_220_00000209. 51 Defs.’ Ex. 19 at FNF_AYERS_220_00000209; see Compl. ¶ 84. 10 awards granted to chairmen and executives at peer and other companies.52 It also noted Foley’s “integral role in FNF’s strategic acquisition of F&G in 2020, which has had a direct positive impact on FNF’s business performance and added over $2 billion to FNF’s market capitalization,” his “ongoing contributions to FNF and F&G,” and that he remained a “driving force behind . . . FNF’s strategic direction.”53 The Compensation Committee determined that “in light of the significance” of the Equity Grant, “the Compensation Committee’s approval would be subject to the approval, disapproval, or modification of the Equity Grant by the” RPT Committee.54 The Compensation Committee adopted a formal resolution to that effect.55 Thompson abstained from the vote due to his involvement in the negotiations with Foley and his role at Bank of America, which had a business relationship with FNF.56 F. The RPT Committee’s Approval The RPT Committee, consisting of the Honorable Halim Dhanidina (the committee’s Chair) and Sandra Morgan, held a special meeting on October 16, 2024 52 Defs.’ Ex. 19 at FNF_AYERS_220_00000209; Compl. ¶ 69. 53 Defs.’ Ex. 19 at FNF_AYERS_220_00000209; Compl. ¶ 73. 54 Defs.’ Ex. 19 at FNF_AYERS_220_00000210; see Compl. ¶ 91. 55 Defs.’ Ex. 19 at FNF_AYERS_220_00000210; Compl. ¶ 89. 56 Compl. ¶ 90; Defs.’ Ex. 19 at FNF_AYERS_220_00000210. 11 to discuss the proposed Equity Grant.57 The committee discussed SCG’s independence and requested the most recent copy of SCG’s independence report.58 It scheduled another meeting to review SCG’s materials and requested a legal memorandum from FNF’s in-house counsel on applicable Delaware law.59 On October 21, the RPT Committee reconvened, with SCG in attendance.60 The committee reviewed SCG’s independence report.61 SCG also summarized its market research and explained that the data supported the Equity Grant because “Foley’s services and functions for FNF put him in closer alignment with CEO/Executive Chairman peer group comparables than the Non-Executive Chairman peer group comparables.”62 On October 22, the RPT Committee received the legal memorandum it had requested from FNF’s General Counsel.63 On October 28, Dhanidina emailed FNF’s counsel, copying Morgan: On behalf of Sandra [Morgan] and myself, I wanted to thank you for the legal brief you provided last week and to let you know that after a review of the brief and our meeting with [SCG], the 57 Defs.’ Ex. 20 at FNF_AYERS_220_00000212; Compl. ¶¶ 17, 21, 91; Defs.’ Ex. 2 at 22. 58 Defs.’ Ex. 20 at FNF_AYERS_220_00000212. 59 Id. 60 Compl. ¶ 91. 61 Defs.’ Ex. 14; Defs.’ Ex. 21. 62 Defs.’ Ex. 21. 63 Defs.’ Ex. 22; Defs.’ Ex. 2 at 64. 12  RPT [C]ommittee concurs with the [C]ompensation [C]ommittee’s determination that the proposed equity grant to Mr. Foley of $50mm in stock over three years is appropriate and in the best interests of FNF.64 The plaintiff characterizes the RPT Committee’s review as an empty formality.65 He highlights that the RPT Committee’s approval of the Equity Grant was delivered by email rather than a formal resolution at a duly convened meeting or by written consent.66 G. This Litigation Patrick Ayers, a stockholder of FNF, filed suit on June 10, 2025, after receiving documents produced by the Company in response to his Section 220 demand.67 The parties agreed that the Company’s production could be considered by the court in resolving any motion to dismiss.68 Ayers’ Complaint advances two counts—breach of fiduciary duty and unjust enrichment—against the “Director Defendants” in connection with their 2022, 2023, and 2024 compensation.69 64 Defs.’ Ex. 23; see Compl. ¶ 93. 65 Compl. ¶¶ 93-94. 66 Id. ¶ 93. 67 See Dkt. 1. 68 Defs.’ Ex. 24 ¶ 10; see supra note 1. 69 Compl. ¶¶ 118-28; see id. ¶ 25 (defining the “Director Defendants” as “Foley and the 9 NEDs ([Douglas K.] Ammerman, Dhanidina, Hagerty, [Daniel D.] Lane, Morgan, [Heather H.] Miller, [John D.] Rood, [Peter O.] Shea[, Jr.], and Thompson)”). 13  The defendants moved to dismiss the Complaint on August 1, 2025. 70 The plaintiff opposed the motion on October 10, and the defendants filed a reply brief in further support of their motion on November 17.71 Oral argument was held on March 9, 2026, after which the matter was taken under advisement.72 II. ANALYSIS The defendants have moved to dismiss the Complaint under Court of Chancery Rule 23.1 for failure to plead demand excusal and under Rule 12(b)(6) for failure to state a claim upon which relief can be granted. In the analysis that follows, I first resolve whether the plaintiff has adequately pleaded that a demand on the Board would have been futile. I conclude that the Complaint lacks particularized facts demonstrating demand futility regarding Foley’s 2024 Equity Grant. I then turn to whether the plaintiff has stated a viable claim regarding the director compensation awarded in 2022, 2023, and 2024. I dismiss the claim as to the directors who only passively received the compensation but sustain it as to the Compensation Committee members who approved those awards. Finally, I address 70 See Defs.’ Opening Br. in Supp. of Mot. to Dismiss Verified S’holder Deriv. Compl. (Dkt. 12) (“Defs.’ Opening Br.”). 71 Pl.’s Answering Br. in Opp’n to Defs.’ Mot. to Dismiss the Verified S’holder Deriv. Compl. (Dkt. 19) (“Pl.’s Answering Br.”); Defs.’ Reply Br. in Further Supp. of Mot. to Dismiss Verified S’holder Deriv. Compl. (Dkt. 24) (“Defs.’ Reply Br.”). 72 See Tr. of Mar. 9, 2026 Oral Arg. on Defs.’ Mot. to Dismiss (Dkt. 32) (“Hr’g Tr.”). 14 the unjust enrichment claim, which survives against all director defendants who retained the challenged compensation. A. Whether Demand Is Futile Regarding the Equity Grant “The business and affairs of every corporation” is “managed by or under the direction of a board of directors.”73 This managerial authority includes whether the corporation should “initiate, or refrain from entering, litigation.”74 To preserve this substantive principle of Delaware law, a stockholder seeking to direct a corporate litigation asset must either make a pre-suit demand on the board to pursue the claims or plead with particularity why doing so would be futile.75 Because the plaintiff did not make a demand,76 he must show that demand should be excused. “Plaintiffs who forgo making a demand must ‘comply with stringent requirements of factual particularity’ when alleging demand futility.”77 Their pleading must demonstrate, through particularized facts “on a director-by-director basis,” that: 73 8 Del. C. § 141(a). 74 Zapata Corp. v. Maldonado, 430 A.2d 779, 782 (Del. 1981). 75 See United Food & Com. Workers Union & Participating Food Indus. Emps. Tri-State Pension Fund v. Zuckerberg, 262 A.3d 1034, 1047 (Del. 2021). 76 See Compl. ¶ 106. 77 In re Camping World Hldgs., Inc. S’holder Deriv. Litig., 2022 WL 288152, at *6 (Del. Ch. Jan. 31, 2022) (quoting Brehm v. Eisner, 746 A.2d 244, 254 (Del. 2000)), aff’d, 285 A.3d 1204 (Del. 2022). 15  (a) “the director received a material personal benefit from the alleged misconduct that is the subject of the litigation demand;” (b) “the director faces a substantial likelihood of liability on any of the claims that would be the subject of the litigation demand;” or (c) “the director lacks independence from someone who received a material personal benefit from the alleged misconduct that would be the subject of the litigation demand or who would face a substantial likelihood of liability on any of the claims that are the subject of the litigation demand.”78 “[I]f the answer to any of the questions is ‘yes’ for at least half of the members of the demand board,” then demand is excused as futile at the pleading stage.79 Before applying the Zuckerberg test, I consider the scope of the “alleged misconduct” at issue.80 The plaintiff asserts that the approvals of the 2024 director compensation and Foley’s Equity Grant should be reviewed as a single Board act.81 In doing so, he seeks to extend Delaware law’s skepticism that a director can “fairly and impartially consider” challenges to “his or her own compensation” to the approval of the Equity Grant.82 This approach is flawed. Because the 2024 director 78 Zuckerberg, 262 A.3d at 1059. 79 Firemen’s Ret. Sys. of St. Louis v. Sorenson, 2021 WL 4593777, at *7 (Del. Ch. Oct. 5, 2021) (confirming that the court “counts heads” to determine whether a board majority is “disinterested and independent” (citation omitted)). 80 Zuckerberg, 262 A.3d at 1059. 81 Pl.’s Answering Br. 17-20. 82 Calma v. Templeton, 114 A.3d 563, 576 (Del. Ch. 2015); see Pl.’s Answering Br. 35-36. 16 compensation and Foley’s Equity Grant are distinct transactions, they must be analyzed separately for purposes of demand futility. 1. The Scope of the Alleged Misconduct The plaintiff’s legal theory has shifted throughout this litigation. His Complaint framed the 2024 compensation awards as a “quid pro quo” in which “the NEDs agreed to Foley’s $50 million windfall, and Foley did not object to the NEDs giving themselves an unjustified $100,000 gratuity.”83 He has since walked that narrative back, conceding that Foley—a 3.4% stockholder—lacked the capacity to set NED compensation.84 There are no allegations that Foley controlled the Compensation Committee, that he had the power to award the NEDs $100,000, or that the NED awards and Equity Grant were linked.85 Absent particularized facts 83 Compl. ¶ 8 (italics removed); see also id. ¶¶ 97, 110. 84 See Hr’g Tr. 61-62 (Plaintiff’s Counsel: “We are not arguing that this was a quid pro quo in the sense that [the directors] gave something and Foley gave something . . . . Foley had no capacity to give anything. He was a 3.4% stockholder.”); see also Pl.’s Answering Br. 13 n.52 (noting that “the existence of a quid pro quo is not a prerequisite for denying Defendants’ motion”). 85 The sole case that the plaintiff relies on for this argument, Elburn v. Albanese, is inapposite. See Pl.’s Answering Br. 13 n.51. In Elburn, directors agreed to give up equity awards in a settlement to secure an undisclosed agreement for the provision of replacement awards in the future. 2020 WL 1929169, at *9 (Del. Ch. Apr. 21, 2020). Nothing similar is alleged here. 17 demonstrating a specific agreement or quid pro quo, separate compensation decisions cannot be conflated into a unitary transaction to excuse demand on both.86 The plaintiff now argues that because “everybody got something” in 2024, the NED compensation and the Equity Grant should be viewed as one transaction.87 In support, he relies on the Delaware Supreme Court’s decision in In re Investors Bancorp, Inc. Stockholder Litigation.88 But that case is fundamentally different. There, after a series of compensation committee meetings, “the entire board” met to receive from compensation advisors and “approve all the components of the incentive stock and stock option grants” to both executive and non-employee directors.89 Given the unified process, the court held that demand was futile on all compensation decisions because it “would require [non-employee] directors to call into question the grants they made to themselves.”90 Here, by contrast, the record reflects two discrete decisions. The first was the annual approval of the NEDs’ compensation.91 The second was a bespoke, 86 See In re Vaxart, Inc. S’holder Litig., 2022 WL 1837452, at *24-26 (Del. Ch. June 3, 2022) (rejecting a quid pro quo theory where compensation decisions were separate in time and process). 87 Hr’g Tr. 62; see also Pl.’s Answering Br. 17-20. 88 177 A.3d 1208, 1215 (Del. 2017). 89 Id. (citation omitted). 90 Id. at 1225-26. 91 See Vaxart, 2022 WL 1837452, at *26. 18 conditional grant to a differently situated director—the Company’s founder and Chairman—to ensure his continued dedication to FNF after he publicly stated an intention to shift his focus elsewhere. Although the Compensation Committee considered both matters during the same regularly scheduled October 14 meeting,92 the processes then diverged. The NED compensation was definitively approved by the Compensation Committee on October 14.93 But given the significance of the award, the Compensation Committee conditioned its approval of the Equity Grant on the RPT Committee’s approval.94 The RPT Committee subsequently held meetings without the Compensation Committee, reviewed SCG’s independence, evaluated the data provided by SCG, was advised by FNF’s General Counsel, and reached its own decision to approve the Equity Grant two weeks later.95 Because the NED compensation had already been approved when the RPT Committee evaluated Foley’s Equity Grant, its 92 Compl. ¶¶ 60, 66; Defs.’ Ex. 17 at FNF_AYERS_220_00000162-0163. 93 Compl. ¶ 60; Defs.’ Ex. 17 at FNF_AYERS_220_00000163. 94 Defs.’ Ex. 19 at FNF_AYERS_220_00000210; see also Defs.’ Ex. 18 at FNF_AYERS_220_00000180. 95 See Defs.’ Ex. 14; Defs.’ Exs. 21-23; see Vaxart, 2022 WL 1837452, at *26 (distinguishing Investors Bancorp when assessing contested compensation decisions because each decision “occurred on [a] different day”). 19 consideration of his award could not “call into question” the committee members’ own awards.96 The plaintiff insists that the RPT Committee’s approval was “ultra vires” and therefore irrelevant.97 Specifically, he contends that the Incentive Plan vests exclusive authority over equity awards in the Compensation Committee, precluding any delegation to the RPT Committee.98 The Incentive Plan says no such thing. Rather, it permits the Compensation Committee to delegate its authority “[a]s permitted by law.”99 There are also no particularized facts in the Complaint making it reasonable to infer that the Compensation Committee’s decision to involve the RPT Committee was “empty formalism.”100 Indeed, the referral was a business 96 Invs. Bancorp, 177 A.3d at 1226. 97 Hr’g Tr. 82; see also Pl.’s Answering Br. 14, 26 (calling the RPT Committee’s approval “invalid ab initio” and “void ab initio”). 98 See Pl.’s Answering Br. 14. 99 Incentive Plan § 3.2 (“As permitted by law, the Committee may delegate its authority as identified herein.”); see generally 8 Del. C. § 141(c). The plaintiff also alleges that the Incentive Plan “expressly forbids” granting equity awards as a reward for past service. Pl.’s Answering Br. 10. But the Incentive Plan contains no such express prohibition. And regardless, its stated purpose is to help the Company “motivate, attract, and retain the services” of participants. Incentive Plan § 1.2. That purpose is consistent with the rationale for Foley’s Equity Grant as stated in the Compensation Committee minutes. See Defs.’ Ex. 19 at FNF_AYERS_220_00000210 (noting that the Equity Grant’s purpose was to “incentivize and retain Mr. Foley’s services”). 100 Pl.’s Answering Br. 22. 20 judgment made by the Compensation Committee that reflects sound corporate governance. Finally, the plain text of 8 Del. C. § 144(a)(1) further supports treating the awards as distinct. The statute provides a safe harbor for a specific “act or transaction” authorized in good faith and without gross negligence by a majority of the disinterested directors after the disclosure of the material facts.101 The defendants invoke this provision regarding the approval of the Equity Grant.102 If I were to adopt the plaintiff’s logic, the “act or transaction” language would mean that a conflict in one action could disable the safe harbor for another action driven by different motivations and governed by an independent process. This broad reading would thwart the General Assembly’s intent that a single “act or transaction” approved in accordance with the safe harbor is shielded from equitable relief or an award of damages.103 The approval of the NED compensation and the adoption of Foley’s Equity Grant are separate transactions, and they must be analyzed as such. The defendants argue that demand is not excused regarding the Equity Grant; they do not contest 101 8 Del. C. § 144(a)(1). 102 See Defs.’ Opening Br. 47-48; infra Section II.A.4 (addressing Zuckerberg prong two). 103 See 8 Del. C. § 144(a)(1); see also infra notes 116-119 (discussing the principles of statutory interpretation). 21 that demand would have been futile for the NED compensation.104 Accordingly, I apply the Zuckerberg test solely to the approval of the Equity Grant. 2. Zuckerberg Prong One The first prong of Zuckerberg asks whether a director “received a material personal benefit from the alleged misconduct that is the subject of the litigation demand.”105 As addressed above, the specific “misconduct” at issue is the approval of the Equity Grant.106 The plaintiff has adequately pleaded—and the defendants do not dispute— that the $50 million Equity Grant was a material personal benefit to Foley, disabling him for demand purposes.107 But the plaintiff does not allege that any of the NEDs profited from the Equity Grant, and the plaintiff’s quid pro quo theory was abandoned and is meritless.108 Demand is not excused as to the nine NEDs on that basis. 104 See Defs.’ Opening Br. 25-47. 105 Zuckerberg, 262 A.3d at 1059. 106 See supra Section II.A.1. 107 See Invs. Bancorp, 177 A.3d at 1217 (“[W]hen the board fixes its compensation, it is self-interested in the decision because the directors are deciding how much they should reward themselves for board service.”); see also Hr’g Tr. 24 (defendants’ counsel stating that “Foley is in a spot by himself”). 108 See supra Section II.A.1. Because the NEDs are not parties to the Equity Grant and are independent under NYSE rules, they are entitled to a heightened statutory presumption of disinterestedness. See 8 Del. C. § 144(d)(2); infra notes 133-134. Had the plaintiff claimed that NEDs received a material personal benefit from the Equity Grant implicating the first 22  3. Zuckerberg Prong Three The third Zuckerberg prong asks whether “the director lacks independence from someone who received a material personal benefit from the alleged misconduct . . . or who would face a substantial likelihood of liability on any of the claims that are the subject of the litigation demand.”109 The plaintiff concedes that five of the Company’s eleven Board members (Dhanidina, Lane, Miller, Morgan, and Shea) are independent of Foley. He questions the independence of the other five directors (Ammerman, Hagerty, Rood, Thompson, and Quirk).110 If he were to succeed in impugning these directors’ impartiality, then—combined with Foley—he would have adequately pleaded demand futility under Rule 23.1. But he falls short of the high bar set by Section 144(d)(2) to plead that three of the five challenged directors—Ammerman, Hagerty, and Rood—have a material relationship with Foley. Because establishing the independence of these three directors leaves the plaintiff without a conflicted majority under the third prong, I decline to address the plaintiff’s allegations regarding Thompson and Quirk. Zuckerberg prong, he would have been required to plead “substantial and particularized facts” to rebut this heightened presumption. Id.; see infra Section II.A.3 (analyzing the heightened presumption of Section 144(d)(2) within the third Zuckerberg prong). 109 Zuckerberg, 262 A.3d at 1059. 110 Compl. ¶¶ 112-17. 23  a. Section 144(d)(2)’s Heightened Presumption of Disinterestedness Directors of Delaware corporations are “presumed to be independent,” including in the demand excusal context.111 To overcome that presumption for demand futility purposes, Rule 23.1 requires a plaintiff to plead particularized facts creating “reasonable doubt” that a director could exercise impartial judgment.112 Recent amendments to 8 Del. C. § 144 strengthen the presumption of independence and disinterestedness when a corporation has a class of stock listed on a national securities exchange and the board determines that a director satisfies the exchange’s independence criteria.113 Under Section 144(d)(2), the director is entitled to a “heightened” presumption of disinterestedness “with respect to an act 111 Beam v. Stewart, 845 A.2d 1040, 1055 (Del. 2004). 112 See, e.g., Aronson v. Lewis, 473 A.2d 805, 815 (Del. 1984), overruled on other grounds by Brehm, 746 A.2d 244; accord Invs. Bancorp, 177 A.3d at 1225; see also Zuckerberg, 262 A.3d at 1041 (explaining that Aronson “remain[s] good law”); Ct. Ch. R. 23.1. 113 8 Del. C. § 144(d)(2) (“Any director of a corporation that has a class of stock listed on a national securities exchange shall be presumed to be a disinterested director with respect to an act or transaction to which such director is not a party if the board of directors shall have determined that such director satisfies the applicable criteria for determining director independence from the corporation and, if applicable with respect to the act or transaction, the controlling stockholder or control group, under the rules (and interpretations thereof) promulgated by such exchange (treating the applicable controlling stockholder and control group as if the controlling stockholder and control group were the corporation for purposes of applying such criteria to determine independence from a controlling stockholder or control group), which presumption shall be heightened and may only be rebutted by substantial and particularized facts that such director has a material interest in such act or transaction or has a material relationship with a person with a material interest in such act or transaction.”). 24 or transaction to which such director is not a party.”114 This presumption “may only be rebutted by substantial and particularized facts that such director has a material interest in such ac