Liability of corporate officers: new developments

The liability of corporate directors is well-trod territory.   But what about corporate officers?

In a recent issue of the Harvard Law School Forum on Corporate Governance          /    Edward Micheletti, Bonnie David and Andrew Kinsey of  Skadden, Arps, Slate, Meagher & Flom LLP, write: “More than a decade ago in the seminal case Gantler v. Stephens, the Delaware Supreme Court clarified that officers of Delaware corporations owe the same fiduciary duties of care and loyalty that directors owe to the corporation and its stockholders.” But “until recently, officer liability cases were still few and far between. Over the past year, however, stockholder plaintiffs have increasingly pursued claims against officers for breaches of the duty of care.”

Note that the cases described in the Skadden memo involve deal litigation – not compliance program oversight, which is the setting for Caremark   the case which paved the way for fiduciary liability against directors and officers. But there is, to my knowledge, nothing preventing such a case against officers, at least as a general matter.

What should be done with this news? It should be the subject of training not only of corporate officers but also of the directors who oversee the officers and the chief compliance & ethics officer who helps the others keep fiduciary duties top of mind.