Court of Chancery Deals a Blow to Use of “Pfizer Type” Majority Voting Policies as a Mechanism for Shareholder Activism


Prof. Lawrence A. Hamermesh
Ruby R. Vale Professor of Corporate and Business Law

In a very interesting opinion on a matter of first impression, Vice Chancellor John Noble has indicated that the refusal of a board of directors to accept the resignation of a director who fails to obtain a majority vote under a “Pfizer-style” majority vote resignation policy is largely immune from judicial review. Read the rest of this entry »

Domineering Chairman, Derivative Claims, and More


In re NYMEX S’holders Litig., C.A. 3621-VCN, 2009 WL 3206051 (Del. Ch. Ct. Sept. 30, 2009).

A couple of noteworthy principles were touched on in an opinion dismissing a litany of shareholder claims regarding NYMEX’s approval of a merger with CME.  Primarily, the shareholders claimed they did not receive fair value for their shares. Read the rest of this entry »

Amylin Pharmaceuticals and a Substantive Duty of Care?


San Antonio Fire & Police Pension Fund v. Amylin Pharm., Inc., 2009 WL 3182602 (Del.).

In the trial below, the plaintiffs claimed, among other issues, that the board violated their fiduciary duty of care because they were not explicitly aware of the proxy puts when they approved the Indenture and credit agreements. The board had retained highly-qualified counsel and asked if there was anything “unusual or not customary” in the terms of the agreement.  It was told there was not.  The Proxy Puts exposed the Company to immediate repayment and repurchase obligations if Amylin shareholders elected a board of directors that did not include a majority of the incumbent directors, or directors approved by the incumbent directors.  These obligations could have required Amylin to remit more than $900 million – an amount exceeding the Company’s available cash. Read the rest of this entry »

The “Proof of Beneficial Ownership” Requirement Explained


Smith v Horizon Lines, Inc., C.A. 4573-CC, 2009 WL 2913887 (Aug. 31, 2009).

The statute governing demands for inspection rights requires a beneficial owner who makes demand to provide proof of beneficial ownership. This decision explains what form that proof must take. An account statement that just has the owner’s last name and does not indicate the date of ownership is not good enough. Moreover, a sworn statement is not a proper substitute.

U.S. Supreme Court to Weigh in On Executive Pay


The United States Supreme Court has agreed to hear Jones v. Harris Associates, a case on executive pay.  The case is on manager’s fees in the mutual fund industry, but the holding will likely effect corporate governance in all industries.  Oral arguments are scheduled for November 2.

For coverage of the case see: (scotus wiki providing links to briefs and commentary) (Larry E. Ribstein’s coverage of commentary exchanged between several professors)