Weil’s “Officer Exculpation Charter Amendments: A 2023 Proxy Season Review” summarizes the firm’s analysis of management-sponsored officer exculpation proposals included in the proxy statements of 279 companies between the August 1, 2022, effective date of the amendment to Delaware’s General Corporation Law permitting such exculpation (first reported on here) and July 5, 2023.
Among the key takeaways:
- Of 279 proposals included in proxy statements, stockholders approved 221 (79%) and failed to support 42 proposals (15%). The balance are still outstanding.
- Of 18 proposals that required supermajority approval, 13 failed based on the higher vote standard.
- ISS tended to support officer exculpation proposals, while Glass Lewis tended not to do so (consistent with its previously articulated position). ISS unfavorable recommendations were generally not predictive of vote outcomes, with 38 of the 47 proposals that received an ISS negative vote recommendation winning stockholder approval.
The memo also discusses relevant litigation aimed at dual class stock companies and provides good guidance to all companies that are considering proposing charter amendments for this purpose in light of the activity to date.