In re MFW Shareholders Litigation

OPINION

I. Introduction

This case presents a novel question of law. Here, MacAndrews & Forbes — a holding company whose equity is solely owned by defendant Ronald Perelman— owned 43% of M & F Worldwide (“MFW”). MacAndrews & Forbes offered to purchase the rest of the corporation’s equity in a going private merger for $24 per share. But upfront, MacAndrews & Forbes said it would not proceed with any going private transaction that was not approved: (i) by an independent special committee; and (ii) by a vote of a majority of the stockholders unaffiliated with the controlling stockholder (who, for simplicity’s sake, are termed the “minority”). A special committee was formed, which picked its own legal and financial advisors. The committee met eight times during the course of three months and negotiated with MacAndrews & Forbes, eventually getting it to raise its bid by $1 per share, to $25 per share. The merger was then approved by an affirmative vote of the majority of the minority MFW stockholders, with 65% of them approving the merger.

MacAndrews & Forbes, Perelman, and the other directors of MFW were, of course, sued by stockholders alleging that the merger was unfair. After initially seeking a preliminary injunction hearing in advance of the merger vote with agreement from the defendants and receiving a good deal of expedited discovery, the plaintiffs changed direction and dropped their injunction motion in favor of seeking a post-closing damages remedy for breach of fiduciary duty.

The defendants have moved for summary judgment as to that claim. The defendants argue that there is no material issue of fact that the MFW special committee was comprised of independent directors, had the right to and did engage qualified legal and financial advisors to inform itself whether a going private merger was in the best interests of MFW’s minority stockholders, was fully empowered to negotiate with Perelman over the terms of his offer and to say no definitively if it did not believe the ultimate terms were fair to the MFW minority stockholders, and after an extensive period of deliberation and negotiations, *500approved a merger agreement with Perelman. The defendants further argue that there is no dispute of fact that a majority of the minority stockholders supported the merger upon full disclosure and without coercion. Because, the defendants say, the merger was conditioned up front on two key procedural protections that, together, replicate an arm’s-length merger — the employment of an active, uncon-flicted negotiating agent free to turn down the transaction and a requirement that any transaction negotiated by that agent be approved by the disinterested stockholders — they contend that the judicial standard of review should be the business judgment rule. Under that rule, the court is precluded from inquiring into the substantive fairness of the merger, and must dismiss the challenge to the merger unless the merger’s terms were so disparate that no rational person acting in good faith could have thought the merger was fair to the minority.1 On this record, the defendants say, it is clear that the merger, which occurred at a price that was a 47% premium to the stock price before Perelman’s offer was made, cannot be deemed waste, a conclusion confirmed by the majority-of-the-minority vote itself.

In other words, the defendants argue that the effect of using both protective devices is to make the form of the going private transaction analogous to that of a third-party merger under Section 251 of the Delaware General Corporation Law. The approval of a special committee in a going private transaction is akin to that of the approval of the board in a third-party transaction, and the approval of the non-controlling stockholders replicates the approval of all the stockholders.

The question of what standard of review should apply to a going private merger conditioned upfront by the controlling stockholder on approval by both a properly empowered, independent committee and an informed, uncoerced majority-of-the-minority vote has been a subject of debate for decades now. For various reasons, the question has never been put directly to this court or, more important, to our Supreme Court.

This is in part due to uncertainty arising from a question that has been answered. Almost twenty years ago, in Kahn v. Lynch, our Supreme Court held that the approval by either a special committee or the majority of the noncontrolling stockholders of a merger with a buying controlling stockholder would shift the burden of proof under the entire fairness standard from the defendant to the plaintiff.2 Although Lynch did not involve a merger conditioned by a controlling stockholder on both procedural protections, statements in the decision could be, and were, read as suggesting that a controlling stockholder who consented to both procedural protections for the minority would receive no extra legal credit for doing so, and that regardless of employing both procedural protections, the merger would be subject to review under the entire fairness standard.

Uncertainty about the answer to a question that had not been put to our Supreme Court thus left controllers with an incentive system all of us who were adolescents (or are now parents or grandparents of adolescents) can understand. Assume you have a teenager with math and English *501assignments due Monday morning. If you tell the teenager that she can go to the movies Saturday night if she completes her math or English homework Saturday morning, she is unlikely to do both assignments Saturday morning. She is likely to do only that which is necessary to get to go to the movies — ie., complete one of the assignments — leaving her parents and siblings to endure her stressful last-minute scramble to finish the other Sunday night.

For controlling stockholders who knew that they would get a burden shift if they did one of the procedural protections, but who did not know if they would get any additional benefit for taking the certain business risk of assenting to an additional and potent procedural protection for the minority stockholders, the incentive to use both procedural devices and thus replicate the key elements of the arm’s-length merger process was therefore minimal to downright discouraging.

Because of these and other incentives, the underlying question has never been squarely presented to our courts, and lawyers, investment bankers, managers, stockholders, and scholars have wondered what would be the effect on the standard of review of using both of these procedural devices.3 In this decision, Perelman and his codefendants ask this court to answer that question by arguing that because the merger proposal that led to the merger challenged here was conditioned from the time of its proposal on both procedural protections, the business judgment rule standard applies and requires a grant of summary judgment against the plaintiffs’ claims.

In this decision, the court answers the question the defendants ask, but only after assuring itself that an answer is in fact necessary. For that answer to be necessary, certain conditions have to exist.

First, it has to be clear that the procedural protections employed qualify to be given cleansing credit under the business judgment rule. For example, if the MFW special committee was not comprised of directors who qualify as independent under our law, the defendants would not be entitled to summary judgment under their own argument. Likewise, if the majority-of-the-minority vote were tainted by a disclosure violation or coercion, the defendants’ motion would fail.

The court therefore analyzes whether the defendants are correct that the MFW special committee and the majority-of-the-minority vote qualify as cleansing devices under our law. As to the special committee, the court concludes that the special committee does qualify because there is no triable issue of fact regarding (i) the independence of the special committee, (ii) its ability to employ financial and legal advis-ors and its exercise of that ability, and (iii) its empowerment to negotiate the merger and definitively to say no to the transaction. The special committee met on eight occasions and there are no grounds for the plaintiffs to allege that the committee did not fulfill its duty of care. As to the majority-of-the-minority vote, the plaintiffs admit that it was a fully informed vote, as they fail to point to any failure of disclo*502sure. Nor is there any evidence of coercion of the electorate.

Second, the court has to satisfy itself that our Supreme Court has not already answered the question. If our Supreme Court has done so, this court is bound by that answer, which may only be altered by the Supreme Court itself or by legislative action. Therefore, the court considers whether the plaintiffs are correct in saying that the Supreme Court has held, as a matter of law, that a controlling stockholder merger conditioned up front on special committee negotiation and approval, and an informed, uncoerced majority-of-the-minority vote must be reviewed under the entire fairness standard, rather than the business judgment rule standard. Although admitting that there is language in prior Supreme Court decisions that can be read as indicating that there are no circumstances when a merger with a controlling stockholder can escape fairness review, the court concludes that this language does not constitute a holding of our Supreme Court as to a question it was never afforded the opportunity to answer. In no prior case was our Supreme Court given the chance to determine whether a controlling stockholder merger conditioned on both independent committee approval and a majority-of-the-minority vote should receive the protection of the business judgment rule. Like the U.S. Supreme Court, our Supreme Court treats as dictum statements in opinions that are unnecessary to the resolution of the case before the court.4 The plaintiffs here admit that under this definition of what constitutes binding precedent, our Supreme Court has not spoken to the question, because it has never been asked to answer the question. After reading the prior authority again, the court concludes that the question remains open and that this court must give its own answer in the first instance, while giving important weight to the reasoning of our Supreme Court in its prior jurisprudence.

After resolving these two predicate issues, the court answers the important question asked by the defendants in the affirmative. Although rational minds may differ on the subject, the court concludes that when a controlling stockholder merger has, from the time of the controller’s first overture, been subject to (i) negotiation and approval by a special committee of independent directors fully empowered to say no, and (ii) approval by an un-coerced, fully informed vote of a majority of the minority investors, the business judgment rule standard of review applies. This conclusion is consistent with the central tradition of Delaware law, which defers to the informed decisions of impartial directors, especially when those decisions have been approved by the disinterested stockholders on full information and without coercion. Not only that, the adoption of this rule will be of benefit to minority stockholders because it will provide a strong incentive for controlling stockhold*503ers to accord minority investors the transactional structure that respected scholars believe will provide them the best protection,5 a structure where stockholders get the benefits of independent, empowered negotiating agents to bargain for the best price and say no if the agents believe the deal is not advisable for any proper reason, plus the critical ability to determine for themselves whether to accept any deal that their negotiating agents recommend to them. A transactional structure with both these protections is fundamentally different from one with only one protection. A special committee alone ensures only that there is a bargaining agent who can negotiate price and address the collective action problem facing stockholders, but it does not provide stockholders any chance to protect themselves. A majority-of-the-minority vote provides stockholders a chance to vote on a merger proposed by a controller-dominated board, but with no chance to have an independent bargaining agent work on their behalf to negotiate the merger price, and determine whether it is a favorable one that the bargaining agent commends to the minority stockholders for acceptance at a vote. These protections are therefore incomplete and not substitutes, but are complementary and effective in tandem.

Not only that, a controller’s promise that it will not proceed unless the special committee assents ensures that the committee will not be bypassed by the controller through the intrinsically more coercive setting of a tender offer. It was this threat of bypass that was of principal concern in Lynch and cast doubt on the special committee’s ability to operate effectively.6 Precisely because the controller can only get business judgment rule treatment if it foregoes the chance to go directly to stockholders, any potential for coercion is minimized. Indeed, given the high-profile promise the controller has to make not to proceed "without the committee’s approval, any retributive action would be difficult to conceal, and the potent tools entrusted to our courts to protect stockholders against violations of the duty of loyalty would be available to police retributive action. As important, market realities provide no rational basis for concluding that stockholders will not vote against a merger they do not favor. Stockholders, especially institutional investors who dominate market holdings, regularly vote against management on many issues, and do not hesitate to sue, or to speak up. Thus, when such stockholders are given a free opportunity to vote no on a merger negotiated by a special committee, and a majority of them choose to support the merger, it promises more cost than benefit to investors generally in terms of the impact on the overall cost of capital to have a standard of review other than the business judgment rule. That is especially the case because stockholders who vote no, and do not wish to accept the merger consideration in a going private transaction despite the other stockholders’ decision to support the merger, will typically have the right to seek appraisal.7

In addition, if the approach taken were applied consistently to the equitable re*504view of going private transactions proposed by controllers through tender offers, an across-the-board incentive would be created to provide minority stockholders with the best procedural protections in all going private transactions. Whether proceeding by a merger or a tender offer, a controlling stockholder would recognize that it would face entire fairness review unless it agreed not to proceed without the approval of an independent negotiator with the power to say no, and without the un-coerced, fully informed consent of a majority of the minority. This approach is consistent with Lynch and its progeny, as a controller who employed only one of the procedural protections would continue to get burden-shifting credit within the entire fairness rubric, but could not escape an ultimate judicial inquiry into substantive fairness. Importantly, by also providing transactional planners with a basis to structure transactions from the beginning in a manner that, if properly implemented, qualifies for the business judgment rule, the benefit-to-cost ratio of litigation challenging controlling stockholders for investors in Delaware corporations will improve, as suits will not have settlement value simply because there is no feasible way for defendants to get them dismissed on the pleadings.

This approach promises minority stockholders a great deal in terms of increasing the prevalence of employing both fairness-enhancing protections in more transactions — most notably, by giving investors a more constant chance to protect themselves at the ballot box through more prevalent majority-of-the-minority voting conditions. It also seems to come at very little cost, owing to the lack of evidence that entire fairness review in cases where both procedural protections are employed adds any real value that justifies the clear costs to diversified investors that such litigation imposes. Thus, respected scholars deeply concerned about the well-being of minority stockholders support this approach as beneficial for minority stockholders.8 For the same reason, the court embraces it, and therefore grants the defendants’ motion for summary judgment.

II. The Structure Of This Decision

Consistent with the introduction, this opinion will first address whether, under the undisputed facts of record, the defendants are correct that the MFW special committee and the majority-of-the minority provision qualify as cleansing devices under Delaware’s approach to the business judgment rule. After addressing that issue, the court then considers whether our Supreme Court has answered the question of what judicial standard of review applies to a merger with a controlling stockholder conditioned upfront on a promise that no transaction will proceed without (i) special committee approval, and (ii) the affirmative vote of a majority of the minority stockholders. Finally, having concluded that the question has not been answered by our Supreme Court, this court answers the question itself.

In keeping with this structure, therefore, the court begins by discussing the undisputed facts that are relevant to deciding the legal issues raised by the pending motion for summary judgment, applying the familiar procedural standard.9 That *505motion seeks summary judgment on the ground that the two procedural devices in question qualify as cleansing devices and, taken together, warrant application of the business judgment rule. Because the merger’s terms are indisputably ones that a rational person could think fair to the minority stockholders, the defendants say that summary judgment is warranted.10

For their part, the plaintiffs argue that there are material questions of fact regarding the independence of the special committee. The plaintiffs also raise debatable issues of valuation, similar to those that are typically addressed in an appraisal or in the part of entire fairness analysis dealing with the substantive fairness of a merger price. Most important, however, the plaintiffs argue that regardless of whether the MFW special committee and the majority-of-the-minority vote qualify as cleansing devices, this court must still hold a trial and determine for itself whether the merger was entirely fair. At best, the defendants are entitled to a shift in the burden of persuasion on that point at trial under the preponderance of the evidence standard. But that slight tilt is all, the plaintiffs say, that is permitted under prior precedent.

III. The Procedural Devices Used To Protect The Minority Are Entitled To Cleansing Effect Under Delaware’s Traditional Approach To The Business Judgment Rule

Determining whether the defendants are entitled to judgment that, as a matter of law, the MFW special committee and the majority-of-the-minority vote condition should be given cleansing effect, necessitates a discussion of how the merger came about.

A. MacAndrews & Forbes Proposes To Take MFW Private

MFW is a holding company incorporated in Delaware. Before the merger that is the subject of this dispute, MFW was 43.4% owned by MacAndrews & Forbes, which is entirely owned by Ron Perelman.11 MFW had four business segments. Three of these were owned through a holding company, Harland Clarke Holding Corporation (“HCHC”). These are the Harland Clarke Corporation (“Harland”), which printed bank checks;12 Harland Clarke Financial Solutions, which provided technology products and services to financial services companies;13 and Scantron Corporation, which manufactured scanning equipment used for educational and other purposes.14 The fourth segment, which was not part of HCHC, was Mafco Worldwide Corporation, a manufacturer of licorice flavorings.15

The MFW board had thirteen members. The members were Ron Perelman, Barry Schwartz, William Bevins, Bruce Slovin, Charles Dawson, Stephen Taub, John Keane, Theo Folz, Philip Beekman, Martha Byorum, Viet Dinh, Paul Meister, and Carl Webb.16 Perelman, Schwartz, and Be-vins had roles at both MFW and MacAn-drews & Forbes. Perelman was the Chairman of MFW, and the Chairman and CEO of MacAndrews & Forbes; Schwartz was the President and CEO of MFW, and *506the Vice Chairman and Chief Administrative Officer of MacAndrews & Forbes; and Bevins was a Vice President at MacAn-drews & Forbes.17

In May 2011, Perelman began to explore the possibility of taking MFW private. At that time, MFW’s stock price traded in the $20 to $24 range.18 MacAndrews & Forbes engaged the bank Moelis & Company to advise it. Moelis prepared valuations based on projections that had been supplied to lenders by MFW in April and May 2011.19 Moelis valued MFW at between $10 and $82 a share.20

On June 10, 2011, MFW’s shares closed on the New York Stock Exchange at $16.96.21 The next business day, June 13, 2011, Schwartz sent a proposal to the MFW board to buy the remaining shares for $24 in cash.22 The proposal stated, in relevant part:

The proposed transaction would be subject to the approval of the Board of Directors of the Company [ie., MFW] and the negotiation and execution of mutually acceptable definitive transaction documents. It is our expectation that the Board of Directors will appoint a special committee of independent directors to consider our proposal and make a recommendation to the Board of Directors. We will not move forward with the transaction unless it is approved by such a special committee. In addition, the transaction will be subject to a non-waivable condition requiring the approval of a majority of the shares

of the Company not owned by M & F or its affiliates. ...

... In considering this proposal, you should know that in our capacity as a stockholder of the Company we are interested only in acquiring the shares of the Company not already owned by us and that in such capacity we have no interest in selling any of the shares owned by us in the Company nor would we expect, in our capacity as a stockholder, to vote in favor of any alternative sale, merger or similar transaction involving the Company. If the special committee does not recommend or the public stockholders of the Company do not approve the proposed transaction, such determination would not adversely affect our future relationship with the Company and we would intend to remain as a long-term stockholder.

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In connection with this proposal, we have engaged Moelis & Company as our financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP as our legal advisor, and we encourage the special committee to retain its own legal and financial advisors to assist it in its review.23

MacAndrews & Forbes filed this letter with the SEC and issued a press release containing substantially the same information.24

B. The MFW Board Forms A Special Committee Of Independent Directors To Consider The Offer

The MFW board met the following day *507to consider the proposal.25 At the meeting, Schwartz presented the offer on behalf of MacAndrews & Forbes. Schwartz and Bevins, as the two directors present who were also on the MacAndrews & Forbes board, then recused themselves from the meeting, as did Dawson, the CEO of HCHC, who had previously expressed support for the offer.26 The independent directors then invited counsel from Willkie Farr & Gallagher, which had recently represented a special committee of MFW’s independent directors in relation to a potential acquisition of a subsidiary of Ma-cAndrews & Forbes, to join the meeting. The independent directors decided to form a special committee, and resolved further that:

[T]he Special Committee is empowered to: (i) make such investigation of the Proposal as the Special Committee deems appropriate; (ii) evaluate the terms of the Proposal; (iii) negotiate with Holdings [ie., MacAndrews & Forbes] and its representatives any element of the Proposal; (iv) negotiate the terms of any definitive agreement with respect to the Proposal (it being understood that the execution thereof shall be subject to the approval of the Board); (v) report to the Board its recommendations and conclusions with respect to the Proposal, including a determination and recommendation as to whether the Proposal is fair and in the best interests of the stockholders of the Company other than Holdings and its affiliates and should be approved by the Board; and (vi) determine to elect not to pursue the Proposal....

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... [T]he Board shall not approve the Proposal without a prior favorable recommendation of the Special Committee....

... [T]he Special Committee [is] empowered to retain and employ legal counsel, a financial advisor, and such other agents as the Special Committee shall deem necessary or desirable in connection with these matters....27

The special committee consisted of Byo-rum, Dinh, Meister (the chair), Slovin, and Webb.28 The following day, Slovin recused himself because, although the board had determined that he qualified as an independent director under the rules of the New York Stock Exchange, he had “some current relationships that could raise questions about his independence for purposes of serving on the special committee.”29

C. The Special Committee Was Empowered To Negotiate And Veto The Transaction

It is undisputed that the special committee was empowered to hire its own legal and financial advisors. Besides hiring Willkie Farr as its legal advisor, the special committee engaged Evercore Partners as its financial advisor.

It is also undisputed that the special committee was empowered not simply to “evaluate” the offer, like some special committees with weak mandates,30 but to nego*508tiate with MacAndrews & Forbes over the terms of its offer to buy out the noncon-trolling stockholders. Critically, this negotiating power was accompanied by the clear authority to say no definitively to MacAndrews & Forbes. Thus, unlike in some prior situations that the court will discuss, MacAndrews & Forbes promised that it would not proceed with any going private proposal that did not have the support of the special committee. Therefore, the MFW committee did not have to fear that if it bargained too hard, MacAndrews & Forbes could bypass the committee and make a tender offer directly to the minority stockholders. Rather, the special committee was fully empowered to say no and make that decision stick.

Although the special committee had the authority to negotiate and say no, it did not have the practical authority to market MFW to other buyers. In its announcement, MacAndrews & Forbes plainly stated that it was not interested in selling its 43% stake. Under Delaware law, MacAn-drews & Forbes had no duty to sell its block,31 which was large enough, as a practical matter, to preclude any other buyer from succeeding unless it decided to become a seller. And absent MacAndrews & Forbes declaring that it was open to selling, it was unlikely that any potentially interested party would incur the costs and risks of exploring a purchase of MFW. This does not mean, however, that the MFW special committee did not have the leeway to get advice from its financial advisor about the strategic options available to MFW, including the potential interest that other buyers might have if Ma-cAndrews & Forbes was willing to sell. The record is undisputed that the special committee did consider, with the help of its financial advisor, whether there were other buyers who might be interested in purchasing MFW,32 and whether there were other strategic options, such as asset divestitures, that might generate more value for minority stockholders than a sale of their stock to MacAndrews & Forbes.33

For purposes of this motion, therefore, there is undisputed evidence that the special committee could and did hire qualified legal and financial advisors; that the special committee could definitely say no; that the special committee could and did study a full range of financial information to inform itself, including by evaluating *509other options that might be open to MFW; and that the special committee could and, as we shall see, did negotiate with MacAn-drews & Forbes over the terms of its offer.

D. The Independence Of The Special Committee

One of the plaintiffs’ major arguments against summary judgment is that the MFW special committee was not comprised of directors who meet the definition of independence under our law. Although the plaintiffs concede the independence of the special committee’s chairman (Meis-ter), they challenge the independence of each of the other three members, contending that various business and social ties between these members and MacAndrews & Forbes render them beholden to Ma-cAndrews & Forbes and its controller Perelman, or at least create a permissible inference that that is so, thus defeating a key premise of the defendants’ summary judgment motion.

To evaluate the parties’ competing positions, the court applies settled authority of our Supreme Court. Under Delaware law, there is a presumption that directors are independent.34 To show that a director is not independent, a plaintiff must demonstrate that the director is “beholden” to the controlling party “or so under [the controller’s] influence that [the director’s] discretion would be sterilized.” 35 Our law is clear that mere allegations that directors are friendly with, travel in the same social circles, or have past business relationships with the proponent of a transaction or the person they are investigating, are not enough to rebut the presumption of independence.36 Rather, the Supreme Court has made clear that a plaintiff seeking to show that a director was not independent must meet a materiality standard, under which the court must conclude that the director in question’s material ties to the person whose proposal or actions she is evaluating are sufficiently substantial that she cannot objectively fulfill her fiduciary duties.37 Consistent with the overarching requirement that any disqualifying tie be material, the simple fact that there are some financial ties between the interested party and the director is not disqualifying. Rather, the question is whether those ties are mateñal, in the sense that the alleged ties could have af*510fected the impartiality of the director.38 Our Supreme Court has rejected the suggestion that the correct standard for materiality is a “reasonable person” standard; rather, it is necessary to look to the financial circumstances of the director in question to determine materiality.39

Before examining each director the plaintiffs challenge as lacking independence, it is useful to point out some overarching problems with the plaintiffs’ arguments. Despite receiving the chance for extensive discovery, the plaintiffs have done nothing, as shall be seen, to compare the actual economic circumstances of the directors they challenge to the ties the plaintiffs contend affect their impartiality. In other words, the plaintiffs have ignored a key teaching of our Supreme Court, requiring a showing that a specific director’s independence is compromised by factors material to her.40 As to each of the specific directors the plaintiffs challenge, the plaintiffs fail to proffer any real evidence of their economic circumstances. Furthermore, MFW was a New York Stock Exchange-listed company. Although the fact that directors qualify as independent under the NYSE rules does not mean that they are necessarily independent under our law in particular circumstances,41 the NYSE rules governing director independence were influenced by experience in Delaware and other states and were the subject of intensive study by expert parties. They cover many of the key factors that tend to bear on independence, including whether things like consulting fees rise to a level where they compromise a director’s independence,42 and they are a useful source for this court to consider when assessing an argument that a director lacks independence. Here, as will be seen, the plaintiffs fail to argue that any of the members of the special committee did not meet the specific, detailed independence requirements of the NYSE.

With those overarching considerations in mind, the court turns to a consideration of the plaintiffs’ challenge to the members of the special committee. Here, an application of our Supreme Court’s teachings to the challenged directors in alphabetical order reveals that the defendants are correct, and that there is no dispute of fact that the MFW special committee was comprised solely of directors who were independent under our Supreme Court’s jurisprudence.

1. Byorum

Director Byorum is a vice president and co-head of the international group at Stephens, an investment bank.43 She was a director of MFW from 2007, and served on the audit committee.44 As was mentioned, the plaintiffs do nothing to il-*511lústrate the actual economic circumstances of Byorum, other than say she has worked in finance. Thus, the plaintiffs do nothing to show that there is a triable issue of fact that any of the factors they focus on were material to Byorum based on her actual economic circumstances.

The plaintiffs allege, in a cursory way, that Byorum has a personal relationship with Perelman, and that she had a business relationship with him while she worked at Citibank in the nineties.45 Byo-rum got to know Barry Schwartz, the CEO of MFW, and Howard Gittis, Perelman’s close aide and the CEO of MacAndrews & Forbes, while working at Citibank in the nineties.46 Gittis asked her to serve on the MFW board.47 In 2007, Byorum, while working on behalf of Stephens Cori, an affiliate of Stephens, initiated a project for Scientific Games, an entity in which Ma-cAndrews & Forbes owns a 37.6% stake.48 Stephens Cori received a $100,000 retainer fee for this work, and, if the project had been successful, would have received more.49

Taken together, these allegations and the record facts on which they are based do not create a triable issue of fact regarding Byorum’s independence. The allegations of friendliness — for example, that Byorum has been to Perelman’s house— are exactly of the immaterial and insubstantial kind our Supreme Court held were not material in Beam v. Stewart,50 The plaintiffs do not specify the nature of the business relationship between Byorum and Perelman during Byorum’s time at Citigroup, beyond claiming that Byorum would “come into contact” with him in her capacity as a senior executive.51 This vague relationship does not cast her independence into doubt: the plaintiffs have made no showing that Byorum has an ongoing relationship with Perelman that was material to her in any way.52 The plaintiffs even admit the unsurprising fact that Perelman had multiple dealings with the financial giant Citigroup over the years, thus undermining the relative importance of any connection that Byorum personally had with him.53 And, the plaintiffs do not allege that Byorum has a deeper friendship with Schwartz and Gittis than she does with Perelman, and no facts in the record suggest any emotional depth to these relationships at all. Therefore, these allegations do not undermine her independence either.

More important, the plaintiffs have not made any genuine attempt to show that the $100,000 fee that Stephens Cori earned was material to Stephens Cori, much less to Byorum on a personal level given her *512personal economic and professional circumstances.54 Nor have the plaintiffs tried to show that this modest transactional fee — which is only one tenth of the $1 million that Stephens Cori would have had to have received for Byorum not to be considered independent under the NYSE rules — created a “sense of beholdenness” on the part of Byorum.55 Thus, there is no genuine issue of material fact as to Byo-rum’s independence.

2. Dinh

The plaintiffs next challenge the independence of Dinh, who was a member of MFW’s Nominating and Corporate Governance Committees.56 Dinh is a professor at the Georgetown University Law Center and a co-founder of Bancroft, a Washington D.C. law firm.57 Aside from these facts about Dinh’s professional activities, the plaintiffs have not explained how they relate to Dinh’s economic circumstances. The concept of materiality is an inherently comparative one, requiring consideration of whether something is material to something else.58 As a result, the plaintiffs have done nothing to demonstrate that there is a triable issue of fact based on any of the factors they have brought up.

Dinh’s firm, Bancroft, has advised Ma-cAndrews & Forbes and Scientific Games since 2009, and it is undisputed that Bancroft received approximately $200,000 in fees in total from these two companies between 2009 and 2011.59 The plaintiffs have also alleged that Dinh had a close personal and business relationship with Schwartz.60 Schwartz sits on the Board of Visitors of the Georgetown University Law Center, where Dinh is a tenured professor, and Schwartz requested that Dinh join the board of another Perelman corporation, Revlon, in 2012.61

But these allegations do not create any issue of fact as to Dinh’s independence. As is the case with Byorum, the plaintiffs have not put forth any evidence that tends to show that the $200,000 fee paid to Dinh’s firm was material to Dinh personally, given his roles at both Georgetown and *513Bancroft.62 The fees paid to Bancroft are, as in the case of the fees paid to Scientific Games on account of Byorum’s work, a fraction of what would need to be paid for Dinh no longer to be considered an independent director under the New York Stock Exchange rules, and would not fund Bancroft’s total costs for employing a junior associate for a year. Nor have the plaintiffs offered any evidence that might show that this payment was material in any way to Dinh, given his personal economic circumstances.

Furthermore, Dinh’s relationship with Schwartz does not cast his independence into doubt. Dinh was a tenured professor long before he knew Schwartz.63 And there is no evidence that Dinh has any role at Georgetown in raising funds from alumni or other possible donors, or any other evidence suggesting that the terms or conditions of Dinh’s employment at Georgetown could be affected in any way by his recommendation on the merger.64 Likewise, the fact that Dinh was offered a directorship on the board of Revlon, another Perelman company, after he served on the MFW special committee does not create a genuine issue of fact regarding his independence.65

3. Webb

Finally, the plaintiffs challenge the independence of Webb, who was a member of MFW’s audit committee.66 Webb was, at the time of the MFW transaction, a banking executive.67 The plaintiffs allege that Webb has known Perelman since at least 1988, when Perelman invested in failed thrifts with the banker Gerald J. Ford, and that Webb was President and Chief Operating Officer of their investment vehicles.68 According to the plaintiffs, Webb and Perelman both made a “significant” amount of money in turning around the thrifts, which they sold to Citigroup for $5 billion in 2002.69 But, once *514again, the plaintiffs have ignored Webb’s economic circumstances in attempting to create a triable issue of fact about his independence. Despite touting the business success that Webb enjoyed alongside Perelman, counsel for the plaintiffs claimed at oral argument that his wealth was not relevant to his independence, and only begrudgingly conceded that Webb might be “seriously rich.”70

The profit that Webb realized from coin-vesting with Perelman nine years before the transaction at issue in this case does not call into question his independence. In fact, it tends to strengthen the argument that Webb is independent, because his current relationship with Perelman would likely be economically inconsequential to him. And, there is no evidence that Webb and Perelman had any economic relationship in the nine years before this merger that was material to Webb, given his existing wealth. Therefore, the only challenge that the plaintiffs may make to Webb’s independence is the existence of a distant business relationship — which is not sufficient to challenge his independence under our law.71

For all these reasons, therefore, the MFW special committee was, as a matter of law, comprised entirely of independent directors.

E. There Is No Dispute Of Fact That The MFW Special Committee Satisfied Its Duty Of Care

The plaintiffs do not make any attempt to show that the MFW special committee failed to meet its duty of care, in the sense of making an informed decision regarding the terms on which it would be advantageous for the minority stockholders to sell their shares to MacAndrews & Forbes.72 At its first meeting, the special committee interviewed four financial advis-ors, before hiring Evercore Partners.73 Such an interview process not only lets the client consider a number of qualified advis-ors and, one hopes, therefore get better financial terms from the winner because the winner knows it has competition. The process has another utility, which is that each of the pitching firms present “pitch books” relevant to the potential engagement, and give the committee a chance to hear preliminary thoughts from a variety of well qualified financial advisors, a process that therefore helps the committee begin to get fully grounded in the relevant economic factors.

From the outset, the special committee and Evercore had projections that had been prepared by MFWs business segments in April and May 2011.74 Early in its process, Evercore and the special committee requested MFW to produce new projections that reflected the manage*515ment’s most up-to-date, and presumably most accurate, thinking.75 Mafco, the licorice business, told Evercore that all of its projections would remain the same.76 Harland Clarke updated its projections.77 On July 22, Evercore received new projections from HCHC, which incorporated the updated projections from Harland Clarke, and Evercore constructed a valuation model based on them.78

The updated projections forecast EBIT-DA for MFW of $491 million in 2015, as opposed to $535 million under the original projections.79 On August 10, Evercore produced a range of valuations for MFW, based on the updated projections, of $15 to $45 per share.80 Evercore valued MFW using a variety of accepted methods, including a DCF model, which generated a range of fair value of $22 to $38 per share, and a premiums paid analysis, with a resulting value range of $22 to $45.81 Ma-cAndrews & Forbes’s $24 offer fell within the range of values produced by each of Evercore’s valuation techniques.82

The special committee asked Evercore to analyze how the possible sale of Har-land to a rival check printing company might affect the valuation.83 Evercore produced this analysis a week later, at the next meeting of the special committee, on August 17.84 Evercore opined that such a sale would not produce a higher valuation for the company.85 The special committee rejected the $24 proposal, and countered at $30 a share.86 MacAndrews & Forbes was disappointed by this counteroffer.87 On September 9, 2011, MacAndrews & Forbes rejected the special committee’s $30 counteroffer, and reiterated its $24 offer.88 Meister informed Schwartz that he would not recommend the $24 to the special committee.89 Schwartz then obtained approval from Perelman to make a “best and final” offer of $25 a share.90 At their eighth, and final, meeting, on September 10, 2011, Evercore opined that the price was fair, and the special committee unanimously decided to accept the offer.91

The MFW board then discussed the offer. Perelman, Schwartz, and Bevins, the three directors affiliated with MacAndrews & Forbes, and Dawson and Taub, the *516