Judge nixes Nutrisystem bylaw on removing board directors
DOVER, Del. (AP) -- A Delaware judge has voided a bylaw amendment adopted by directors of weight-loss company Nutrisystem Inc. regarding removal of board members.
Ruling in a lawsuit brought by a Nutrisystem shareholder who claimed company directors were trying to entrench themselves, the judge said Tuesday that the bylaw amendment violates Delaware's General Corporation Law.
The amendment eliminated language saying directors of Fort Washington, Pennsylvania-based Nutrisystem could be removed only for cause, presumably in response to a court finding in an unrelated case that such language was unlawful.
But the amendment retained a provision saying Nutrisystem shareholders can remove directors only with the support of at least two-thirds of the voting power of all outstanding shares.
Delaware's law says corporate directors may be removed by a simple majority vote of corporate shares.