## Facts

- Allegro Development Corporation, a Delaware corporation, received a $40 million Series A preferred investment in 2007–2008 that amended its charter and bylaws and created a multi-class board structure.
- Eldon Klaassen founded Allegro in 1984 and served as CEO until 2012; after the Series A financing, Allegro’s performance declined and senior executives resigned citing difficulty working with him.
- The board discussed replacing Klaassen and, at a regularly scheduled board meeting on November 1, 2012 (with Klaassen present as a director), voted to remove him as CEO and appoint Raymond Hood as interim CEO.
- After removal, Klaassen cooperated with the transition, negotiated a consulting agreement, accepted committee appointments, and participated in audit and compensation committee work.
- About seven months later, Klaassen asserted the removal was invalid, attempted to retake the CEO role, purported to remove and replace directors using stockholder power, and filed a Court of Chancery action under 8 Del. C. § 225 seeking a declaration that he was the lawful CEO.

## Issues

1. Whether removing a CEO at a regular board meeting without advance notice of that agenda item is void or merely voidable.
2. Whether Klaassen’s post-removal conduct constituted acquiescence (and/or supported laches), barring a § 225 challenge to his removal.
3. Whether pre-meeting director discussions converted the decision into an unnotified “special meeting” requiring formal notice.

## Decision

- The Delaware Supreme Court (en banc) affirmed the Court of Chancery’s § 225 judgment that Klaassen was not the de jure CEO.
- The Court held the challenge was equitable in nature and rendered the board action, at most, voidable rather than void, making it subject to equitable defenses.
- The Court held Klaassen acquiesced in his removal through months of conduct consistent with accepting the change in management, barring the challenge.
- The Court held no notice rules were violated because the termination occurred at a regular board meeting; directors need not receive notice of regular meetings or specific agenda items.
- The Court rejected the argument that informal pre-meeting discussions constituted special meetings because no official board action occurred until the regular meeting.
- Having affirmed on acquiescence, the Court did not need to decide whether laches also barred the claim.

## Legal Principles

- Challenges grounded in equitable concepts (such as alleged unfairness in notice or purported deception) generally make board action voidable, not void, and therefore subject to equitable defenses.
- Corporate directors are not required to receive notice of regular board meetings, and advance notice of specific agenda items is not required for regular meetings.
- Informal director discussions do not become “special meetings” triggering notice requirements unless the board takes official action outside a duly convened meeting.
- Acquiescence may bar a § 225 claim when the challenger, with knowledge of the disputed action, engages in conduct recognizing and accepting it for a substantial period.

## Conclusion

The Delaware Supreme Court upheld Allegro’s removal of Klaassen as CEO at a regular board meeting, treating any alleged notice-based or deceptive conduct claims as equitable and therefore voidable, and held that Klaassen’s sustained post-removal cooperation and participation in corporate governance constituted acquiescence barring relief under § 225.


Klaassen v. Allegro Dev. Corp., 106 A.3d 1035 (Del. 2014)