TheCorporateCounsel.net

A recent Wilson Sonsini blog provides another interesting data point for how officer exculpation proposals fared with investors this proxy season.  The blog looked specifically at Silicon Valley 150 companies, and while it found that relatively few companies asked stockholders to approve officer exculpation charter amendments, those that did enjoyed a fairly high rate of success:

Of the 143 SV150 companies that are incorporated in Delaware, only nine companies, or approximately 6.3 percent, included an officer exculpation proposal in their proxy statement.[3] Of those nine proposals, five required the affirmative vote of a majority of the voting power of the outstanding stock entitled to vote on the proposal (the default voting requirement under the DGCL for an amendment to the charter), and four required the affirmative vote of a supermajority (generally, 66 2/3 percent) of the voting power of the outstanding stock entitled to vote on the proposal.

Seven of the nine proposals, or approximately 78 percent, passed. The failed proposals were comprised of two of the four proposals that required a supermajority vote and, although they both received significantly more affirmative votes than “against” votes, they failed to attain the affirmative vote of a supermajority of the voting power of the outstanding stock entitled to vote thereon.

The blog says that while only a handful of SV 150 companies asked their stockholders to approve officer exculpation amendments this year, the success those companies enjoyed will likely prompt a much larger number to take this step next year. Based on the data in Weil’s memo, I think that it’s probably going to be the case beyond Silicon Valley as well.

– John Jenkins