Ning Chiu is counsel at Davis Polk & Wardwell LLP. This post is based on a Davis Polk publication by Ms. Chiu.
Among the settlement terms in the proxy contest between Arconic Inc. and Elliot Management is an agreement to reincorporate to Delaware due to the corporate governance provisions in the company’s charter.
As the surviving company of Alcoa Inc., which spun off parts of its business into a new entity called Alcoa Corp., the renamed Arconic was governed under a charter that staggered board elections and required 80% of outstanding shares to amend the terms for fair price protection, change the classified board or remove its directors. About eight years ago, shareholder proposals favored by a majority of the votes cast asked the board to amend those provisions. Though the company made several efforts by sponsoring management proposals that the board supported, the company never obtained the requisite 80% of outstanding shares necessary to effect the changes. In fact, it appears that the number of shares voted on any proposal may have never reached that level.