On November 23, 2010, the Delaware Supreme Court invalidated a bylaw amendment that accelerated the next annual meeting of Airgas by eight months and cut short the term of directors serving on the company’s staggered board.
Air Products and Chemicals, a hostile bidder for the company, proposed the bylaw amendment at the Airgas annual meeting in September 2010, at which Air Products’ slate of three directors was elected to the Airgas board of directors. The bylaw amendment would have permitted Air Products to elect another slate of three directors to the Airgas board (and to potentially obtain majority control of the board) just four months later, in January 2011.
The Delaware Supreme Court held that the term of a class of directors ending “at the annual meeting in the third year following its election” means that the class of directors is elected to serve “a three-year term,” and cannot be cut short by a stockholder-approved bylaw amendment.
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