Director Independence
Evan Epstein has a great post on the corporate governance fight at Cloudflare. Highly recommended.
For me, the most interesting part deals with the potential application of the DGCL § 141 safe harbor for conflicted controller transactions, which was created by SB 21 and about which we have written often here.
Cloudflare has a dual class capital structure that gives co-founders Matthew Prince and Michelle Zatlyn voting control (50.3% of the voting power) despite owning only about 10% of the company’s equity. Plaintiff shareholders are challenging a proposed recapitalization that would perpetuate the founders’ control.
A chart at Epstein’s post compares the status quo to the recap:
