Lillis v. A T & T Corp. (Del. Chan. Ct., 7/20/07)
Broc Romanek blogs about this opinion ("Delaware Chancery Court Addresses Cancellation Value of Stock Options in Mergers"). The opinion is also available online. In a cash merger, out-of-the-money options were rendered worthless. The question was whether the terms of the stock option plan governing the options prohibited this treatment and instead required that the former officers and directors be compensated for the full value of their options. The court found for the plaintiffs and awarded them a sum of money equal to the full economic value of their options.
