Oral agreement to settle proxy contest is enforceable

By Amy Leisinger, J.D.The Delaware Chancery Court has ordered specific performance of an oral agreement between shareholder funds and a company to settle a proxy contest by expanding the company’s board and appointing two of the shareholder nominees. According to the court, the shareholder funds demonstrated that the oral settlement agreement constituted a binding contract regardless of documentation, and the individual negotiating on behalf of the company had actual and apparent authority to bind the firm (Sarissa Capital Domestic Fund LP v. Innoviva, Inc., December 8, 2017, Slights, J.). Proxy contest and settlement. Dissident shareholders of Innoviva, Inc. mounted a proxy contest in February 2017 to elect three nominees to the company’s seven-member board of directors. The shareholder funds’ proxy materials contended that Innoviva’s incumbent directors were overpaid in comparison to performance and failed to properly execute their oversight…

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