May 2008

Emerging Trends in the Law of Fiduciary Duty

By Thomas J. Quigley and Steven S. Flores

Delaware courts are beginning to analyze claims concerning the controversial practice of spring-loading options. Spring-loading is the granting of options just prior to the release of favorable company information (in the company’s possession at the time of the grant). The options are granted at a market price on the day of the grant. They are said to be “spring-loaded” because upon release of the favorable news, the stock price is expected to rise and the options would then become “in-the-money.”

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