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Many Delaware companies are considering asking stockholders to approve officer exculpation charter amendments this proxy season.  If you’re working with one of them, be sure to check out this Freshfields blog, which reviews how these amendment proposals have fared with stockholders and proxy advisors and addresses several other matters that should be considered by boards thinking about officer exculpation amendments.

Overall, these proposals have been well received by stockholders. Of the 14 submitted to stockholders so far for which results were disclosed, only three failed – and two of those involved companies that required supermajorities to adopt charter amendments. This excerpt indicates that one reason for this success may be how proxy advisors, and ISS in particular, have responded to these proposals.

Of the 15 companies, ISS recommended FOR the proposals at all companies except for two companies. Both of the AGAINST recommendations involved unusual facts. The first of these two companies did not release a proxy statement (or disclose results) and ISS recommended against all proposals on the ballot. The other was holding a meeting to vote on its de-SPAC transaction, which ISS opposed along with every other proposal on the agenda for the meeting.

For the remaining 13 companies, ISS recommended FOR the exculpation amendment proposal each time. This group that garnered ISS endorsements for their exculpation amendment proposals included companies with less than perfect records on governance and even some where ISS was recommending against the company’s director nominees and/or say-on-pay proposals.

The blog notes that while ISS’s voting guidelines provide that its recommendations on exculpation proposals will be made on a case-by-case basis, taking into account the stated rationale for the vote, in practice, it has generally been supportive of officer exculpation proposals. Glass-Lewis’s voting guidelines appear less accommodating toward officer exculpation that ISS’s. However, the blog says that the high level of support for these proposals suggests that if Glass-Lewis is recommending against them, those recommendations aren’t having much influence on the outcome of the vote.

– John Jenkins