In Re Vaalco Energy Shareholder Litigation Ca No.

11775-VCL Transcript 62-66 (Ch. Del. 2015)

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Nature of the Case

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Facts

VAALCO (D), submitted a proposal to its stockholders to completely de-stagger the company’s board of directors, commencing in 2010. Those contained provisions preventing stockholders from removing directors unless the removal was “for cause.” In 2015, Ps sought to remove a majority of D’s directors without cause. D refused. Ps brought a suit for a declaratory judgment that D’s charter and bylaws were invalid under Section 141(k) of the Delaware General Corporation Law. Section 141(k) provides: “Any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors” except in the case of (1) a corporation whose board is classified in accordance with Section 141(d) of the DGCL and whose certificate of incorporation does not otherwise provide, and (2) a corporation having cumulative voting. Section 141(d) provides that the directors of any corporation organized under this chapter may, by the certificate of incorporation or by an initial bylaw, or by a bylaw adopted by a vote of the stockholders, be divided into 1, 2 or 3 classes; the term of office of those of the first class to expire at the first annual meeting held after such classification becomes effective; of the second class 1 year thereafter; of the third class 2 years thereafter; and at each annual election held after such classification becomes effective, directors shall be chosen for a full term, as the case may be, to succeed those whose terms expire….”