## Facts

- Cincinnati Milacron, Inc. proposed a charter amendment implementing a recapitalization with “tenure voting.”
- Stockholders of record on the effective date received ten votes per share.
- When shares were sold or transferred, they reverted to one vote per share until held by the new owner for three years.
- The tenure-voting structure applied to all stockholders, including both minority holders and a controlling ownership bloc associated with certain directors.
- A minority stockholder challenged the recapitalization as disproportionately favoring the controlling bloc and as intended to entrench management while allowing partial sales without loss of control.
- The board recommended the charter amendment, and stockholders approved it by the required vote.

## Issues

1. What standard of review applies to a board-sponsored charter amendment recapitalization affecting voting power when it is approved by stockholders: business judgment or enhanced scrutiny (e.g., Unocal/Blasius)?
2. What legal effect does a fully informed, uncoerced stockholder vote have on the validity of the recapitalization and related fiduciary-duty challenges?

## Decision

- The Delaware Supreme Court affirmed summary judgment for the corporation and directors.
- The court held the recapitalization was valid and reviewed under the business judgment rule.
- Enhanced scrutiny under Unocal or Blasius did not apply because the recapitalization was implemented through a charter amendment approved by a fully informed, uncoerced stockholder vote.
- In the absence of fraud, waste, coercion, or other inequitable conduct, the stockholder vote validated the recapitalization.

## Legal Principles

- A board-sponsored charter amendment recapitalization approved by a fully informed, uncoerced stockholder vote is generally reviewed under the business judgment rule rather than Unocal or Blasius.
- Stockholder ratification can “cleanse” fiduciary challenges to a transaction when the vote is informed and uncoerced, absent fraud, waste, or inequitable conduct.
- Tenure-voting structures that apply on their face to all stockholders may be upheld when adopted through proper charter procedures and supported by a rational corporate purpose.

## Conclusion

The court upheld Milacron’s tenure-voting recapitalization because it was adopted through a charter amendment approved by a fully informed, uncoerced stockholder vote, making business judgment review appropriate and leaving no basis to invalidate the plan absent inequitable conduct.


Williams v. Geier, 671 A.2d 1368 (Del. 1996)