board’s approval of compensation, including its own, be upheld unless it cannot be “will to any rational business purpose.’” ‘attributed Plaintiff further argued that McClendon’s relationships with the directors compromised their independence. The Court wrote that the law on this issue is also well established. The mere proof of a relationship is insufficient. The facts must show that a director is to the other to prove a lack of independence. Plaintiff had not “beholden” made that showing. To attack the board’s good faith and reasonableness, Plaintiff argued that the board conducted no investigation, it did not appoint a special litigation committee, and it did not excuse McClendon and certain former Board members from the discussions although allegations of wrongdoing were made again these persons. The Court replied that no specific procedures are required to respond to a demand. In this instance, the board was familiar with the allegations since the allegations were the same as those in earlier legal proceedings and investigations. The board was sufficiently informed to act. The Court also held that the board’s decision to defer action was supported by valid purposes. Since the same allegations were already contested, deferring action would avoid duplication and conserve resources. In fact, the Court noted, the failure to defer could have compromised the corporation’s position in the other proceedings. For these reasons, the Court found the board’s decision to defer was a exercise of “reasonable business judgment.” The last two Oklahoma cases are easier to digest. Southlake Equipment Co., Inc. deals with charging orders in limited liability companies. v. Henson Gravel & Sand, LLC In LLCs, the judgment creditor of an LLC member cannot attach and execute on the interest. In a corporation, the judgment creditor of a shareholder can attach and execute on a shareholder’s stock. This distinction between LLCs and corporations rests on the venerable notion that LLC interests, like partnership interests, are presumed to be while corporate stock is presumed to be transferable. If execution were permitted, judicial transfers of the LLC interests could occur and the remaining members might face a new member whom they had not anticipated and did not want. To protect these members, the statute provides that the exclusive remedy of a creditor holding a
board’s approval of compensation, including its own, “will be upheld unless it cannot be ‘attributed to any rational business purpose.’” Plaintiff further argued that McClendon’s relationships with the directors compromised their independence. The Court wrote that the law on this issue is also well established. The mere proof of a relationship is insufficient. The facts must show that a director is “beholden” to the other to prove a lack of independence. Plaintiff had not made that showing. To attack the board’s good faith and reasonableness, Plaintiff argued that the board conducted no investigation, it did not appoint a special litigation committee, and it did not excuse McClendon and certain former Board members from the discussions although allegations of wrongdoing were made again these persons. The Court replied that no specific procedures are required to respond to a demand. In this instance, the board was familiar with the allegations since the allegations were the same as those in earlier legal proceedings and investigations. The board was sufficiently informed to act. The Court also held that the board’s decision to defer action was supported by valid purposes. Since the same allegations were already contested, deferring action would avoid duplication and conserve resources. In fact, the Court noted, the failure to defer could have compromised the corporation’s position in the other proceedings. For these reasons, the Court found the board’s decision to defer was a “reasonable exercise of business judgment.” The last two Oklahoma cases are easier to digest. Southlake Equipment Co., Inc. v. Henson Gravel & Sand, LLC deals with charging orders in limited liability companies. In LLCs, the judgment creditor of an LLC member cannot attach and execute on the interest. In a corporation, the judgment creditor of a shareholder can attach and execute on a shareholder’s stock. This distinction between LLCs and corporations rests on the venerable notion that LLC interests, like partnership interests, are presumed to be while corporate stock is presumed to be transferable. If execution were permitted, judicial transfers of the LLC interests could occur and the remaining members might face a new member whom they had not anticipated and did not want. To protect these members, the statute provides that the exclusive remedy of a creditor holding a