In re VAALCO Energy Shareholder Litigation
Delaware Court of Chancery
CA No. 11775-VCL (2016)
VAALCO Energy originally had a classified board, and its charter and bylaws stated directors could only be removed for cause. In 2009, VAALCO declassified its board so the entire board stood for election together, using straight (non-cumulative) voting. A shareholder group, Group 42 (plaintiff), announced plans to remove VAALCO's directors at a special meeting without cause, relying on section 141(k) of the Delaware General Corporation Law, which lets shareholders remove directors with or without cause except on classified boards or boards elected by cumulative voting. VAALCO argued its charter and bylaws' cause requirement controlled instead, and Group 42 sued.
Whether directors serving on a declassified board elected by straight voting may be removed with or without cause by a shareholder vote.