Executive Summary
Delaware has read the 2025 Section 144 safe harbor for the first time, and the result cuts two ways for boards. Conflicted transactions routed through genuinely independent committees now carry a statutory presumption of director disinterestedness that is hard to rebut at the pleading stage. That same shield does not cover directors who set their own pay, where a self-compensation claim survived dismissal.
The Signal at a Glance
PRIORITY 9 | SILO: JUDICIAL
In Ayers v. Foley, the Court of Chancery gave Section 144(d)(2) heightened disinterestedness presumption broad reach, including at demand futility, while holding it does not protect directors sitting on both sides of their own compensation.
The Deep Dive
The Signal
On June 15, 2026, Vice Chancellor Lori W. Will issued the first Court of Chancery opinion interpreting the 2025 amendments to Section 144 of the Delaware General Corporation Law, the Senate Bill 21 reforms that codified safe harbors for conflicted transactions. The case tested two decisions by the board of Fidelity National Financial: a one-time equity grant to founder and non-executive chairman William P. Foley, and the compensation the directors awarded to themselves.
The court split the two. The founder grant, approved by two committees of directors who satisfied stock-exchange independence standards, was shielded. The directors self-compensation was not.
The Evidence
Ayers v. Foley, C.A. No. 2025-0650-LWW (Del. Ch. June 15, 2026). Because the committees that approved the chairman grant were composed of exchange-independent directors, the plaintiff had to overcome the heightened presumption of disinterestedness codified in Section 144(d)(2). The court held that presumption applies broadly, not only inside the safe harbors, and reaches the demand-futility analysis under Rule 23.1. To rebut it, a plaintiff must plead "substantial and particularized facts" of a material interest. The complaint fell short, and the grant-related claims were dismissed.
The self-compensation claim went the other way. Directors who set their own pay are inherently interested in the outcome. Absent a stockholder vote compliant with Section 144(a)(2), that approval must satisfy entire fairness. The plaintiff pleaded enough to proceed, and the breach of fiduciary duty claim survived against the directors who approved the awards.
The Strategic Implication
Defensive Risk. The directors exposed are those who approve their own compensation and any board that reads Section 144 as blanket protection. The mechanism that breaks is the presumption itself: it does not reach directors sitting on both sides of a transaction, so self-set board pay, absent a compliant stockholder ratification, is tested under entire fairness, the standard that let the Ayers self-compensation claim survive. The window is the next director-pay cycle and the proxy that ratifies it. The defensive move is to route director compensation through a Section 144(a)(2) stockholder vote or an independent, documented benchmarking process built to withstand entire-fairness review, rather than leaning on the statutory presumption.
Offensive Advantage. The boards positioned to gain are those structuring founder, controller, or other conflicted transactions. Routing the transaction through a genuinely independent committee now earns a presumption that is difficult to dislodge before discovery, because the plaintiff must plead substantial and particularized facts of a disabling interest merely to survive a motion to dismiss. That advantage is available in the next conflicted deal, not after the complaint arrives. The move is to build and paper real independent-committee process at the front of the transaction. This is where the Declarative Board Failure Pattern bites: the protection follows boards that build genuine independence, not boards that declare a director independent and assume the label carries them.
The lesson underneath both holdings is the same. Section 144 rewards structural discipline, not labels. A board that builds independent committees and documents its conflict process inherits a governance system that holds when it is tested in court. A board that treats the safe harbor as automatic inherits exposure that stays invisible until a plaintiff finds the seam. The first board built its protection before the litigation. The second will build it during.
Board chairs and audit chairs: Take the Board Fiduciary AI Stress Test at touchstonepublishers.com/board-fiduciary-assessment
Touch Stone Publishers