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Corporations Keyed to O’Kelley
Moran v. Household Int’l, Inc.
Citation:
500 A.2d 1346 (1985)Facts
John A. Moran is a Household director who voted against the Rights Plan and the company of which he is Chairman, Dyson-Kissner-Moran Corporation (DKM) the largest single shareholder of Household. Under the Rights Plan proposed by Lipton, and adopted by a majority of Household’s board, each shareholder receives one right for each share of common outstanding. The right entitles the holder to buy one hundredth of a share of a new series of participating preferred stock. The rights are redeemable by Household, at a price of $50 per right, at any time before the occurrence of one of the 20% triggering events and even after occurrence of the 30% event. The minutes of the board meeting reflect a pointed exchange between Lipton and Moran over adoption of the Rights Plan. Moran believed that the plan would have the effect of entrenching management while denying shareholders the opportunity to sell their shares at a premium in a tender offer. The only director other than Moran to vote against the Rights Plan was John C. Whitehead. With Moran and Whitehead dissenting, the Household Board approved the Rights Plan. The Rights were subsequently distributed and have received listing on the New York Stock Exchange. Plaintiffs contend that the Household Rights Plan acts to restrict both the alienability and proxy component of its shares and thereby deprives shareholders significant property rights without their approval.
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