Companies Adopting Officer Exculpation Amendments to Corporate Charters | The D&O Diary

For nearly 40 years, Delaware Corporations have been permitted to adopt corporate charter provisions exculpated their directors from liability. Effective August 1, 2022, Section 102(b)(7) of the Delaware General Corporations Law (DGCL) was amended to permit Delaware corporations to adopt charter provisions exculpating officers, in order to provide officers with protection from liability for monetary damages similar to the protection available to directors. In the time since the officer exculpation amendment provision went into effect, many Delaware corporations have adopted officer exculpation provisions; the record so far suggest that these provisions generally enjoy significant shareholder support. As discussed below, these developments should also be of interest to D&O insurance professionals.

What the statutory officer exculpation amendment does is permit Delaware corporations to take steps to adopt officer exculpation provision in their corporate charters through a shareholder vote. The officers eligible for exculpation, if implemented by the corporation, include the president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer, or chief accounting officer, the company’s most highly compensation executive officers as identified in SEC filings and certain other officers who have consented (or deemed to have consented) to be identified as an officer and to service of process.

Source: Companies Adopting Officer Exculpation Amendments to Corporate Charters | The D&O Diary