City of Westland Police & Fire Retirement System v. Axcelis Technologies, Inc.
Delaware Court of Chancery
2009 WL 3086537
After Axcelis (defendant) rejected multiple takeover offers from SHI, three directors up for reelection received a plurality but not a majority of votes at the 2008 annual meeting; under an Axcelis policy modeled on Pfizer's, they submitted resignations, which the board rejected, citing their experience, committee roles, and value in ongoing SHI negotiations. After SHI made no further offers and Axcelis's stock price fell sharply, shareholder City of Westland Police & Fire Retirement System (CWPFRS) (plaintiff) demanded books and records under DGCL § 220, alleging the board's retention decision was driven by entrenchment rather than shareholder interest; Axcelis rejected the demand as lacking a credible basis for suspecting wrongdoing.
Whether a board of directors provides a credible basis to suspect wrongdoing when it retains corporate directors, pursuant to corporate policy, after the directors have received only a plurality of the vote at a shareholder election.