Six years ago Dell Technologies financed its multi-billion dollar acquisition of EMC Technologies by issuing a special class of “V” shares.  Two years later Dell, under the leadership of Michael Dell, recapped the V class and distributed to holders $14 billion in cash and about 150 million shares of Class C Common.  Company and its founder and certain directors were sued by shareholders  claiming that on the exchange the investors were short-changed to the tune of about $6 billion.

This high-stakes court battle has just been settled, subject to approval by the Delaware Chancery court, for $1 Billion dollars payable by defendants Dell and four directors who were allegedly coerced and/or were self-interested.  Or perhaps not.  Seems the deal is dependent on the entire tab being paid by either the company itself under indemnity agreements (isn’t that circular– shareholders were harmed and now shareholders are to pay their own damages to themselves) OR by the insurers of the company (presumably under D&O coverage).

Finally and also interesting, this is the second case I am posting about this week wherein founding and wealthy company CEOs are being implicated by allegation in mounting coercive tactics against sitting directors to achieve personal benefit.  Assume you want to undertake a transaction involving your company that has benefit to yourself–how do you “vet” that deal?  How do you avoid implicit coercion where independent directors are also of course selected by you?  Independent committee review may be necessary but not dispositive.  Investment banking opinions you pay the bankers to give?  Is it practical to get a vote of shareholders (discounting interest shares)?  How can you be sure that your disclosure in soliciting the vote will not be challenged as biased?

The impact of the class action plaintiffs’ bar is pretty scary these days.  What’s a corporate mogul to do?