Three Chicago public pension funds have obtained a Delaware court order compelling Paramount Global to produce informal board materials related to the company's merger with Skydance Media, marking the third Chancery ruling to find a credible basis for stockholder suspicions of fiduciary misconduct.
On June 5, 2026, Magistrate Wright of the Delaware Court of Chancery granted the funds' petition under Section 220 of the Delaware General Corporation Law, which permits stockholders to inspect corporate records for a proper purpose. The plaintiffs—the Metropolitan Water Reclamation District Retirement Fund, the Laborers' and Retirement Board Employees' Annuity and Benefit Fund of Chicago, the Park Employees' Annuity and Benefit Fund of Chicago, and individual stockholder Gary Mendelsohn—sought to investigate whether Shari Redstone, Paramount's former controller, breached her fiduciary duties during the merger negotiations.
The merger, announced on July 7, 2024, and closed on August 7, 2025, involved Skydance Media acquiring Paramount. Redstone controlled Paramount indirectly through National Amusements, Inc. (NAI), which held 77.4% of Paramount's voting Class A stock. The funds alleged that Redstone used her position to block a sale of Paramount in favor of a sale of NAI alone, potentially securing non-ratable benefits for herself.
Magistrate Wright found that the formal board minutes inaccurately described the abrupt mid-negotiation departures of three special committee members—Dawn Ostroff, Nicole Seligman, and Frederick O. Terrell—who resigned in early 2024. The court noted that a New York Times feature, based on on-the-record interviews with Redstone, reported that she had pushed out Paramount's CEO and four directors to facilitate the deal. This account, Wright ruled, contrasted sharply with the formal minutes, justifying the need for informal materials such as emails and text messages.
The court identified three potential non-ratable benefits to Redstone: Skydance's acquisition of NAI alongside Paramount, the preservation of Paramount as a single entity rather than a break-up sale, and Skydance's agreement to indemnify Redstone against merger-related liability. The indemnity provision was deemed particularly material given Redstone's public statements in the New York Times about feeling constrained by potential stockholder litigation.
Timing was a critical factor. On March 19, 2024, the special committee learned that four members would not stand for re-election, with Ostroff and Seligman resigning in early April while the committee was evaluating competing bids from Skydance and Apollo Global Management, which had offered $27 billion for all of Paramount. Terrell stepped down at the June 4 annual meeting. Paramount maintained that no directors were removed, but the court found this explanation inconsistent with the broader record.
The plaintiffs did not prevail on all counts. The court declined to order officer-level materials, finding no evidence that officers played a role in the merger talks or director departures.
For financial advisors and investors monitoring controlled-company M&A, the ruling reinforces a Delaware pattern where stockholders can access materials beyond formal board minutes when public records suggest discrepancies. It also signals that indemnification packages for controllers may be scrutinized as non-ratable benefits if liability protection is uniquely valuable to that controller. This decision adds to a growing line of Chancery rulings in the Paramount–Skydance litigation, following earlier findings by Vice Chancellor Laster in Rhode Island I and Senior Magistrate Molina in Gabelli.
The case underscores the importance of transparency in controlled-company transactions, a topic of increasing relevance as advisors navigate the complexities of Delaware governance statutes and shareholder litigation trends.
