City of Westland Police & Fire Retirement System, Plaintiff Below, Appellant v. Axcelis Technologies, Inc…

Summary

The Supreme Court of Delaware affirmed dismissal of a stockholder’s Section 220 demand because Westland failed to present evidence establishing a credible basis to infer wrongdoing in the board’s handling of acquisition proposals or rejected director resignations. The court held that rejecting unsolicited acquisition proposals, without more, was not a defensive action warranting an inference of entrenchment, and that Westland could not shift its burden by invoking the compelling-justification standard. The court also recognized that investigating a director’s suitability is a proper purpose and that triggering a board-adopted plurality-plus policy can satisfy the credible-basis threshold for that purpose, subject to the remaining Section 220 requirements.