The claim requires a transaction in which the corporation received consideration so inadequate that it amounts to a gift. The standard is deliberately extreme and rarely satisfied.
Waste claims are not exculpable and cannot be ratified by majority vote.
Alternative Names:
Waste of Corporate Assets|Corporate Waste Claim
Why it Matters?
The extreme standard means waste claims almost never survive, but their significance lies in what they cannot be defeated by, since waste is not subject to exculpation and requires unanimous rather than majority ratification. Plaintiffs plead waste to preserve a claim that exculpation provisions do not reach. Executive compensation is the recurring context, and courts have rejected waste challenges to compensation absent a complete absence of consideration.
Frequently Confused with
Related terms
Frequently asked questions
Why plead waste if it rarely succeeds?
What is the recurring context?
