This Woodruff Sawyer blog shares some helpful info on trends in officer exculpation proposals in the 2025 proxy season. Here are some notable takeaways:

– When exculpation proposals failed, high vote thresholds and low turnout were to blame. The three companies with failed proposals still received majority of votes cast. A heavily retail base contributed to this challenge.

– Many companies presented a proposal with charter amendments that contemplated “modernization of archaic language, removing references to classes of stock that have since been retired, or cleanup changes to conform with current Delaware law,” including officer exculpation.

– Proffered rationales didn’t break new ground. They included addressing rising litigation and insurance costs and an enhanced ability to attract and retain officers.

– Companies have made their disclosure clear that officer exculpation only permits exculpation for direct claims brought by stockholders. It would not eliminate officers’ monetary liability for breach of the duty of care claims brought by the company itself or for derivative claims made by stockholders on behalf of the company.

– The proxy advisors maintained their approaches to officer exculpation, with both taking a case-by-case approach, but Glass Lewis noting it would “recommend voting against such proposals eliminating monetary liability for breaches of the duty of care for certain corporate officers, unless compelling rationale for the adoption is provided by the board, and the provisions are reasonable.”

The blog shares these suggestions:

Review Your Charter Language Early. Identify whether a simple majority or supermajority threshold applies and plan accordingly.

Don’t Assume Investor Familiarity. Even with growing acceptance, many stockholders, especially retail, still require education on why officer exculpation matters. Make the case clearly and succinctly.

Bundle Wisely. Combining officer exculpation with refinements and clarifications can be effective, but avoid obscuring the proposal or diluting its rationale.

Engage Retail Shareholders. Where possible, boost turnout through proactive investor outreach and simple, accessible communications. Also, don’t feel like you need to go at it alone. Proxy solicitors are just a call away.

Be Ready to Proceed Without Proxy Advisor Support. Positive outcomes are achievable without unanimous recommendations from proxy advisors, but only with strong preparation.

– Meredith Ervine