Suppose that a corporation has three directors, A, B & C, each of whom is compensated by the corporation. Is director A financially interested in a resolution fixing the compensation of director B? Corporations Section 310(a) provides the following answer:

A director is not interested within the meaning of this subdivision in a resolution fixing the compensation of another director as a director, officer or employee of the corporation, notwithstanding the fact that the first director is also receiving compensation from the corporation.

Thus, the statute encourages the meaningless formality of “round robin” voting on director compensation so that each director votes on the other directors’ compensation while abstaining from the vote on her own compensation. Read More