Officer Exculpation in 2025: What the Latest Vote Results Tell Us

In 2022, Delaware amended Section 102(b)(7) of its General Corporation Law to allow corporations to eliminate or limit (i.e., exculpate) the personal liability of certain senior officers for monetary damages related to breaches of their duty of care.

As we previously discussed, this legislative shift marked a significant development in corporate governance for Delaware-incorporated companies, partially extending to officers protections long afforded to directors. The consensus at the time was and continues to be that Delaware corporations should consider extending exculpation to their officers.

It’s important to remember that for public companies, the path to officer exculpation requires stockholder approval. In practice, this translates into companies standing up a shareholder proposal in their annual meeting proxy statements.

Since 2022, public companies that decided to put an officer exculpation provision up for a stockholder vote have generally been successful in getting the proposals approved. This most recent proxy season was no different in that most of the officer exculpation proposals that went up for a shareholder vote passed.

However, a handful didn’t, and the nuances of why reveal important strategic considerations for companies looking to get one of these proposals approved.

What Happened in the 2025 Proxy Season?

Between May and June of 2025, several companies put an officer exculpation proposal up for a vote. 

We sampled approximately 30 of these companies from a wide range of industries, including technology, financial services, energy, life science, and healthcare. Of the proposals we reviewed, three failed, reflecting a success rate of almost 90%.

This aligns with broader data indicating that investor support for officer exculpation has stabilized after some hesitation at the outset.

Nonetheless, not all proposals were structured alike, and the differences in approach likely contributed to the outcomes.

The Bundling Trend: More Than Just Officer Exculpation, Sort of

One trend that gained momentum in 2025 was the bundling of officer exculpation with other charter amendments. Instead of proposing a standalone change, many companies, like this one, packaged officer exculpation with updates that would generally fall under the category of refinements and clarifications. Think of the modernization of archaic language, removing references to classes of stock that have since been retired, or cleanup changes to conform with current Delaware law.

This approach was generally successful. Perhaps it helped to paint a picture that the proposal should be viewed as routine and part of a broader governance refresh. In any case, rationales proffered by boards in recommending that stockholders approve officer exculpation didn’t break new ground.

Common rationales for recommending that officer exculpation proposals be approved included addressing rising litigation and insurance costs and an enhanced ability to attract and retain officers.

Successful companies have also been very clear in explaining that officer exculpation only permits exculpation for direct claims brought by stockholders, but that 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.

Translation: Officer exculpation isn’t a free pass; it’s just putting officers on equal footing with individual directors of the board.

Some companies decided to tee up an officer exculpation proposal in their proxy statements along with several other unrelated proposals to amend their charter. A few years ago, that approach may have been cause for pause. Now, it isn’t necessarily a reason for concern if the company going this route, like this one, clearly explains the reasons why the proposals make sense.

So why did some exculpation proposals fail?

When and Why Proposals Failed

The three proposals that we identified as having failed had two things in common: high voting thresholds and low shareholder turnout. In each case, the company had baked into legacy charter language either a supermajority of outstanding shares or approval thresholds—barriers that became fatal despite majority support from votes actually cast.

This reinforces a key lesson and takeaway from the prior proxy seasons: support alone doesn’t win the day. A well-designed proposal must account for voting dynamics, including turnout and structural constraints.

Retail-heavy stockholder bases also present challenges. These investors tend to vote less frequently or abstain on technical governance matters.

A Note on Proxy Advisors

For the 2025 proxy season, ISS maintained its “vote case-by-case” approach on officer exculpation proposals. Glass Lewis continued to say it would evaluate these proposals on a “case-by-case basis,” but noted 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.”

While it’s hard to find exact stats on whether a “vote against” recommendation from ISS or Glass Lewis dooms an officer exculpation proposal, I’d just like to point to the scoreboard. Most of these proposals tend to get approved, and if they don’t, it’s typically a voting threshold and low shareholder turnout issue.

Companies that prepare strong disclosures and run robust shareholder engagement campaigns should be able to secure approvals even when facing proxy advisor pushback. Yes, companies should continue to respect proxy advisor positions, but there is no need to defer to them blindly.

Practical Takeaways

The path to approving an officer exculpation proposal is a well-traveled and successful one. With that in mind, here are a few considerations, in addition to the ones included here, for companies thinking of including an officer exculpation proposal in their upcoming proxy, whether that be this calendar year or next:

• 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.

Parting Thoughts

The 2025 proxy season underscores that stockholders—particularly institutions—are comfortable with officer exculpation when proposals are well-framed, clearly disclosed, and procedurally sound. That said, high voting thresholds, high retail ownership, and bundling complexity all continue to shape outcomes. With more companies considering charter modernization, officer exculpation will likely remain a topic in future proxy seasons.