Shareholders of Oracle Corporation alleged that four members of the corporation’s board of directors engaged in insider trading. Oracle formed a special litigation committee (SLC) to investigate the derivative action and to determine whether the corporation should press the claims raised by the shareholders, settle the case, or terminate it. The SLC was granted full authority to decide these matters without the need for approval by the other members of the Oracle board. The two SLC members—both of whom are professors at Stanford University—were being asked to investigate fellow Oracle directors who have important ties to Stanford. 

Of the directors accused of insider trading, one was a Stanford professor who taught one of the SLC members, one was a Stanford alumnus who directed millions of dollars to Stanford, and one was Oracle’s CEO (who has made millions of dollars in donations to Stanford through a personal foundation and large donations indirectly through Oracle, and who was considering making donations of his $100 million house and $170 million for a scholarship program at around the same time period the SLC members were added to the Oracle board). After an extensive investigation, the SLC moved to terminate the derivative lawsuit against the directors. Did the SLC members lack independence? Explain.