Unlike the Annual Meeting Term Alternative, the Defined Term Alternative unambiguously provides in the charter itself that each class of directors serves for three years.
It supports a construction that the Annual Meeting Term Alternative is intended to provide that each class of directors serves three year terms.
Second, Air Products argues that Essential Enterprises is distinguishable because the charter in that case explicitly stated that each class of directors "shall be elected to hold office for the term of three years," whereas the Annual Meeting Term Alternative does not.
Thus, this model form commentary confirms the understanding that the Annual Meeting Term Alternative intends to provide that each class of directors is elected for a three year term.
The charter provision at issue relevantly provided: "At each annual election, commencing at the next annual meeting of the stockholders, the successors to the class of directors whose term expires in that year shall be elected to hold office for the term of three years to succeed those whose term expires so that the term of office of one class of directors shall expire in each year". Id. at 290.
On the other hand, some corporations, such as the firm involved in Essential Enterprises v. Automatic Steel Products, Inc., provide in their charters that each class serves for a "term of three years". There are variations on that language as well, such as (for example) that each class of directors serves for "a three-year term" (collectively, the "Defined Term Alternative").
At each annual meeting of the stockholders of the Corporation, the successors to the class of Directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election.
But in doing that the Court of Chancery erred, because it failed to give proper effect to the overwhelming and uncontroverted extrinsic evidence that establishes, and persuades us, that the Annual Meeting Term Alternative and the Defined Term Alternative language mean the same thing: that each class of directors serves three year terms.
The central issue presented on this appeal is whether the Airgas Charter requires that each class of directors serves three year terms or whether it provides for a term that can expire at whatever time the annual meeting is scheduled in the third year following election.
Ms. Scardino will serve in the class of directors whose term expires at the annual meeting of stockholders to be held in 2014.
