General Datacomm Industries, Inc. v. Wisconsin Investment Board

1999 WL 66533 (Delaware Chancery Court 1999)

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Nature of the Case

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Facts

Wisconsin (D) submitted a Repricing Bylaw for stock options that required shareholder approval before repricing any already issued stock options to a lower strike price. General (P) opposed that by law and attempted to get SEC approval to exclude it from its proxy materials. P was advised by the SEC that it could not exclude the Repricing Bylaw from its proxy materials; there was no compelling state law precedent. The materials were included but with sharp statements in opposition by the board of directors. On January 22, 1999, the Delaware Supreme Court issued a decision in the Quickturn case, and P asked D to withdraw the Bylaw. With the new case law in hand P also went back to the SEC. As of this hearing neither D nor the SEC have responded to P. P sued D for a declaratory judgment holding that the Bylaw is invalid, and an injunction to prohibit D from soliciting votes on the Bylaw as its statements concerning the Bylaw were false and misleading and or removal of the Bylaw from voting at the next annual meeting.