In Air Products v. Airgas, Wachtell Lipton's Ted Mirvis urged the Delaware Chancery Court to declare invalid the Airgas by-law calling for a January shareholders meeting. Mirvis argued that two meetings four months apart could not actually both be "annual meetings." "Annual" means a year apart, not just in different calendar years.
Moreover, said Mr. Mirvis, the various Delaware corporations' staggered board charters that characterized the director terms as "until the next annual meeting" were using "annual meeting" as a term of art or an accidental phrase, and that the actual and intended practice, as described in those companies' SEC filings, was to set annual terms. A by-law change cannot end a staggered board member's term, according to Mr. Mirvis, and the proposed by-law had no other purpose than to gut Airgas's staggered board.
Cravath's Gary Bornstein told the court that the shareholders are granted the right under this company's charter to change the date of the annual meeting. There was nothing unclear about the phrase "annual meeting," and the Court should not ignore the words in the charter.
The meaning of "annual," Mr. Bornstein continued, was "once per year." In real life, annual visits or daily calls do not all have to be at the same hour or on the same holiday. Finally, the Airgas by-laws even anticipate the possibility that an annual meeting may not be twelve months apart. If Airgas had wanted an impregnable defense, they could have written that, said Mr. Bornstein, but they did not. And it could not be the case that once an annual meeting date is set, it must continue to be held in the same month forever.
CVN is webcasting Air Products v. Airgas live.
