Seinfeld v. Verizon Communications, Inc.

Summary

The Delaware Supreme Court affirmed the Court of Chancery's denial of a stockholder's demand under Delaware General Corporation Law section 220 to inspect Verizon's books and records concerning executive compensation. The court reaffirmed that a stockholder seeking inspection to investigate possible waste, mismanagement, or wrongdoing must prove a proper purpose by showing, by a preponderance of the evidence, a credible basis supported by some evidence. Mere suspicion, curiosity, or disagreement with the board's business judgment is insufficient.

Holdings

1. A stockholder seeking inspection under Delaware General Corporation Law section 220 to investigate possible wrongdoing or mismanagement must prove a proper purpose by a preponderance of the evidence and must present some evidence establishing a credible basis from which the court can infer that possible waste, mismanagement, or wrongdoing may have occurred.
2. Seinfeld was not entitled to inspection because his disagreement with the amount of executive compensation and his unsupported suspicions did not establish a credible basis to infer waste, mismanagement, or wrongdoing.

Questions Presented

1. Whether a stockholder seeking inspection under Delaware General Corporation Law section 220 must present some evidence establishing a credible basis from which the court can infer possible waste, mismanagement, or wrongdoing.
2. Whether Seinfeld's evidence established a credible basis to investigate possible waste or mismanagement in Verizon's executive compensation.

Disposition

affirmed