City of Westland Police & Fire Retirement System v. Axcelis Technologies, Inc. case brief

City of Westland Police & Fire Retirement System v. Axcelis Technologies, Inc. case brief summary
2009 WL 3086537

CASE SYNOPSIS

Plaintiff stockholder filed an action under Del. Code Ann. tit. 8, § 220 against defendant corporation based on the board of directors' refusal to accept the resignations of three directors who received less than a majority of the stockholder vote at the 2008 annual meeting, and failure to accept an acquisition offer from a competitor to whom it soon thereafter sold the company's principal asset for a fraction of the initial offer.

DISCUSSION

• The trial court held that the stockholder did not meet the credible evidence standard. 
• The stockholder did not show that the board's decision to retain the directors was based on an entrenchment motive. 
• The corporate policy requiring directors not receiving a majority of votes to submit their resignations to a board-designated committee, which had the discretion to accept or reject the resignations, was followed. 
• Moving forward with negotiations with the competitor was not the sole justification for the retention of the directors. 
• The retention of the directors was not a defensive measure requiring the application of the Unocal standard. 
• There was no evidence that the board disloyally desired to fend off the competitor's advances, that the board's negotiations were conducted in bad faith, or that rejecting the competitor's acquisition proposals was a defensive action. 
• The corporation was eventually forced to sell one of its valued assets to the competitor, which had sought to acquire the corporation, but the stockholder had to show more than a precipitous drop in stock price before § 220 inspection rights could be granted.

CONCLUSION
The action was dismissed and judgment was entered for the corporation.

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