ANNUAL MEETINGS
of incorporation to include a provision eliminating or limiting monetary liability for certain senior corporate officers acting in good faith for breaches of the fiduciary duty of care not involving intentional misconduct. Previously, the provision only extended to exculpation of
directors. Te provision does not permit exculpation for officers for breaches of the duty of loyalty nor does it allow companies to eliminate officers’ monetary liability for breach of fiduciary duty claims brought by the corporation itself or for derivative claims brought by shareholders in the name of the corporation. We expect some Delaware companies to seek shareholder
approval at their 2023 annual meetings of amendments to their certificates of incorporation implementing officer exculpation. Institutional Shareholder Services (ISS) and Glass Lewis, the highest profile proxy advisory firms, indicated in their 2023 governance policy updates that they will consider these proposals on a case- by-case basis, assessing whether exculpation is overly expansive or otherwise unreasonable. Investor Relations professionals should monitor the voting
trends in this area to assess what proposals are supported by proxy advisory firms and large institutional investors.
EMERGING SHAREHOLDER PROPOSAL TRENDS
We have observed two primary emerging trends in shareholder proposals. First, we have seen a new class of proposals, primarily driven
by two prominent and frequent proponents, calling for boards of directors to amend corporate bylaws to require shareholder ap- proval prior to adopting any advance notice bylaw amendments that require the nomination of candidates more than 90 days before the annual meeting, impose new disclosure requirements for director nominees (including disclosures related to past and future plans), or require nominating shareholders to disclose limited partners or business associates, except to the extent such investors own more than 5% of the company’s shares. Many companies have unilaterally adopted revisions to their
advance notice provisions in their bylaws in response to the new universal proxy rules to ensure that shareholder nominees can be properly vetted and any potential conflicts of interest surfaced. It remains to be seen how many of these proposals make it to AGM ballots, but it is clear that they represent additional fallout from the universal proxy rules. Second, 2023 will likely see an increase in the number of
3 6 WI N T E R 2 0 2 3 ■ IR UPDAT E
2023 will likely see an increase in the number of shareholder proposals that can be described as attempting to push companies to move away from political and social issues and to instead focus on financial performance.
shareholder proposals that can be described as attempting to push companies to move away from political and social issues and to instead focus on financial performance. Tese proposals are primarily brought by conservative-leaning
interest groups as a backlash to corporate initiatives on environ- mental sustainability and social issues. Te proposals received little support at 2022 annual meetings but present a challenge for IR teams that may be facing starkly divergent views on social and environmental issues across their investor base. IR
Sean M. Donahue is Partner and Chair of the Public Company Advisory Practice at Goodwin Procter LLP; sdonahue@goodwinlaw. com. James H. Hammons, Jr., is Counsel at Goodwin Procter LLP; email
jhammons@goodwinlaw.com.
ni ri .org/ irupdate
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