## Facts

- A publicly held Delaware corporation held a contested annual meeting election in which an insurgent stockholder group sought to defeat an incumbent director.
- The corporation appointed an independent inspector of elections to tabulate votes and resolve challenges.
- A large block of shares was held through an intermediated chain: record ownership at a depository, an omnibus proxy to a bank for voting a defined share position, and further omnibus proxies from the bank to plan trustees for employee benefit plan shares.
- Votes were submitted through multiple channels tied to the same bank-position share total, and the aggregate votes cast exceeded the position by 824 shares, creating an unexplained “overvote.”
- The inspector contacted the bank and its proxy service, received no satisfactory explanation, and did not independently confirm details with at least one plan trustee.
- The inspector resolved the overvote by counting all plan trustee votes while rejecting all votes cast through the bank’s proxy service, materially affecting the tabulation.
- The insurgent plaintiffs sued in the Delaware Court of Chancery to challenge the election result and sought a judicial determination of the correct outcome.

## Issues

1. Whether the independent inspector of elections properly exercised its duties by curing an unexplained overvote through selectively rejecting only one subset of votes within a single custodial share position while counting other related votes.
2. Whether, after the election, the Court of Chancery may rely on evidence developed in litigation to validate particular proxies and determine the correct election result notwithstanding the inspector’s report.

## Decision

- The Court of Chancery held that the inspector’s selective cure of the overvote was improper because it lacked a reliable evidentiary basis to distinguish which subset of votes caused the discrepancy.
- The court determined that it could look beyond the inspector’s determinations and use the post-election evidentiary record to decide which votes were valid and to determine the correct election outcome.
- The court credited evidence showing that certain plan-related votes reflected participant directions and corresponded to the correct number of shares, and it refused to treat them as invalid solely due to upstream record-keeping anomalies.

## Legal Principles

- An inspector of elections must act impartially and accurately and may resolve an overvote only on the basis of reliable, neutral criteria rather than unsupported assumptions favoring one side.
- When an overvote arises within a single custodian’s position, selectively invalidating only part of that position requires competent evidence justifying the distinction.
- The Court of Chancery, in an equitable election challenge, may correct an inspector’s tabulation by considering evidence developed after the meeting to validate proxies and ascertain the true result.
- Courts seek to protect the shareholder franchise, including votes cast through employee plan structures, when the evidentiary record reliably ties votes to beneficial owners and proper voting instructions.

## Conclusion

The court rejected an election inspector’s unsupported, selective approach to curing an unexplained overvote and held that Delaware equity courts may use post-election evidence to validate proxies and determine the correct outcome while preserving reliably proven beneficial-owner votes.


Seidman & Assocs., L.L.C. v. G.A. Fin. Corp., 837 A.2d 21 (Del. Ch. 2003)