Airgas, Inc. v. Air Products and Chemicals,
Inc., Del. Supr., No. 649, 2010 (Nov. 23, 2010), read
This Delaware Supreme Court opinion determined that the bylaw amendment by
which Air Products attempted to shorten the number of months before the next
"regularly scheduled" annual meeting, as a means of circumventing the
otherwise lengthier process of removing staggered board members, was
inconsistent with the charter of Airgas and the applicable statute. The
relatively short 23-page decision is full of memorable quotes, but one snippet
No party to this case has argued that DGCL Section 141(d)
or the Airgas Charter requires that the three year terms be measured with
mathematical precision. Nor is it necessary for us to define with exactitude
the parameters of what deviation from 365 days (multiplied by 3) satisfies the
Airgas Charter three year durational requirement. In this specific case, we may
safely conclude that under any construction of "annual" within
the intended meaning of the Airgas Charter or title 8, section 141(d) of
the Delaware Code, four months does not
qualify. In substance, the January Bylaw so extremely truncates the directors'
terms as to constitute a de facto removal that is inconsistent with the
Airgas Charter. (citations omitted).
Delaware's High Court also regarded the net result of
removing a staggered board member in this manner, prior to the end of his term,
as failing to satisfy another provision in the charter that only allowed such
removal based on a two-thirds' vote of shareholders entitled to vote.
Due to the great importance of this decision, and the
benefit in publicizing it promptly, we now provide this short overview
and then will provide supplemental commentary at a later date. This
short highlight presumes familiarity with the background facts and prior
procedural history of this important case. Prior decisions and developments in
this case (including the Court of Chancery's decision that was
reversed), have been highlighted on this blog here.
An example of the many articles that will be written about this case in the
mainstream press, trade publications, academic journals and blogs, is the
article by Reuters here,
which includes a quote from your friendly author by reporter Jonathan Stempel
Read more Delaware business
litigation case summaries and commentary on Delaware
Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X.
Pileggi, of Fox Rothschild LLP.
See also: Airgas Bylaw Reversed by Delaware Supreme Court by