Kistefos As v. Trico Marine Services, Inc

Facts

Trico (D) is a Delaware corporation. P owns approximately 22.2% of D’s issued and outstanding common stock and is D’s largest stockholder. P sent a letter to D’s board that included several proposals to be put before stockholders for a vote at the 2009 annual meeting. Among these proposals are: (1) a proposal to amend the bylaws to change the number of directors on the board from seven to nine; (2) a proposal to amend the bylaws to change the number of directors required to constitute a quorum from a majority to seven, six of whom must be United States citizens; (3) a proposal to remove a current director from the board; and (4) if the three previous proposals are adopted, the nomination of two persons for election as directors. Also, included in the March 14 letter was the proposal at issue in this case, the so-called “Proposal 8,” which provides, in part, that: A Person shall be ineligible to serve as a director if such person fails to receive the number of votes required to elect directors at any meeting of stockholders at which such person is to be elected . . . . The term of any existing director of the Corporation who fails to receive the number of votes required to re-elect such existing director at any meeting of stockholders at which such existing director is nominated to be re-elected . . . shall immediately expire, and a vacancy in the Board of Directors shall be deemed to exist. Bylaws provide that directors are elected by a majority vote of stockholders. D’s governing documents allow an incumbent director who receives only a plurality of votes can continue to serve as a “holdover” director until a successor has been elected or until the director’s resignation or removal. D rejected Proposal 8 as contrary to its certificate of incorporation and §§ 141(b) and (k) of the Delaware General Corporation Law. P initiated this action.

Issues

Rule of Law

Holding and Decision

Legal Analysis

© 2007-2024 ABN Study Partner.