Opinion ID: 1536001
Heading Depth: 1
Heading Rank: 14

Heading: rate of interest record requires remand

Text: Section 262(h) provides that the Court of Chancery shall appraise the shares, determining their fair value exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation together with a fair rate of interest, if any, to be paid upon the amount determined to be the fair value. [51] Section 262 permits an award of compound interest at the discretion of the Court of Chancery. Such an award, however, is the exception rather than the rule. [52] The Respondents contend that the Court of Chancery erred by awarding compound interest in the absence of any evidence or finding that exceptional circumstances were present to support that award. In this case, the Court of Chancery stated that in today's financial markets a prudent investor expects to receive a compound rate of interest. [53] That ruling appears to be consistent with what this Court has observed is a developing trend toward the routine awarding of compound interest. [54] This Court recently reaffirmed that the Court of Chancery has broad discretion under the appraisal statute to award either simple or compound interest. [55] We noted, however, that the option provided by 8 Del.C. § 262(i) precludes, ipso facto, the routine application of a standard which may have no relation to the record evidence or the merits of the appraisal proceeding. In short, the statute provides discretion to choose on a case-by-case basis, but requires explanation for the choice. [56] We have concluded that, as in Straight Arrow, we must remand this matter to the Court of Chancery for an elaboration upon its decision to award compound interest, on the basis of the record established in this case.