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.
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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.