In business transactions, the parties generally address the target company's stock awards in a manner that honors the contractual rights of employees. Costly lessons come, however, when deal terms run afoul of the change-in-control provisions within the target's stock award plan and/or award agreements. In CDX v. Fox, for example, Delaware's Supreme Court recently awarded over $16 million to a private company's optionees. The court upheld trial court findings that Plan terms (and the associated contractual rights of optionees) were violated because (1) management, rather than the Board as plan administrator, determined "fair market value" in the spin-off and its determination did not reflect “fair market value” in any event, and (2) option proceeds were improperly held-back as part of the associated merger's post-closing escrow arrangement. For a copy of the CDX decision, or to discuss stock award matters arising from business transactions, just contact Steve Harris, Eric Keller, or Mark Poerio.