The Williams Companies Stockholder Litigation: First Analysis

Summary

This article discusses the Delaware Court of Chancery memorandum opinion issued on February 26, 2021, in In re Williams Companies Stockholder Litigation, 2021 Del. Ch. LEXIS 34 (Ch. Feb. 26, 2021), enjoining a "poison pill" stockholder rights plan adopted by The Williams Companies, Inc. (Williams) in the wake of extreme stock price volatility driven by the double whammy of COVID-19 and the Russia-Saudi Arabia oil price war. In re Williams, 2021 Del. Ch. LEXIS 34, at *3. While the pill adopted by the board in this case had unusual features (such as a 5% trigger and a broad "acting in concert" provision), the Court's decision provides important reminders for boards in considering whether (and when) to adopt a poison pill in the face of a threat to the corporation. This includes the types of "threats" that will justify the adoption of a pill, and the scope of protections that will be considered a "proportionate" response to those legitimate threats. Although the Court struck down the pill ...