Eliasberg v. Standard Oil Co.

97 A.2d 437 (1953)

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Nature of the Case

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Facts

A shareholder meeting was held, and a stock option plan was voted on. A quorum of 78% was present and 97% of those shares voted in favor of the stock option plan, P owned 20 shares of the over 60,000,000 outstanding shares. P sued under a class action suit but has not been joined by any other stockholder. Under the plan adopted, the board could grant options of up to 600,000 shares of stock with no more than 1/3 of those eligible shares being granted to board members. More specific details are listed on page 152 second paragraph Choper 5th. The directors actually granted options to 80 executives for a total of 163,800 shares during 1951 at a strike price of $57.06 per share. The company purchased the shares for these options at $67.136 per share. The directors got 1/3 of the total shares. P urges that the plan in effect was ultra vires in that it was merely an attempt to grant directors and other executives additional compensation for their services without any increase in their duties or responsibilities or change in status making the options without consideration. D contends that the purpose of the stock plan was incentive to remain with the company, but there was no evidence at trial that any party was ready to leave employment without additional compensation.