The Delaware Chancery Court has affirmed the validity of a dissident stockholder-proposed bylaw amendment that caused a target company's annual meeting to be held each year in the month of January rather than August, when the target company's annual meeting had historically been held. As a result, the target company will be required to hold its 2011 annual meeting in January 2011, approximately four months after its 2010 annual meeting. The bylaw amendment, which was proposed in a takeover battle, is designed to enable the dissident stockholder to add directors (in addition to those elected at the 2010 annual meeting) to the target company's staggered board of directors in a relatively short period of time.
In affirming the bylaw amendment, the court interpreted the word "annual" (as in annual meeting) as meaning only "occurring once each year," rather than "separated by approximately 365 days." In so ruling, the court noted that the target company had not specified a term of office for directors, had not defined the word "annual," and had not required a minimum period of time to have elapsed between annual meetings.
Airgas, Inc. v. Air Products and Chemicals, Inc., C.A. No. 5817-CC (Del. Ch. October 8, 2010)