In a shareholder claim against the former global head of HR at McDonald’s, the Delaware Chancery Court has held that liability for breach of the duty of oversight, which Delaware courts had previously extended only to corporate directors, can also extend to corporate officers, as well. In addition, in a separate part of the opinion that may not gain as much attention as the duty of oversight ruling, the same court also held that a breach of fiduciary duty claim can be alleged against an officer based on sexual harassment allegations. The court’s January 25, 2023 opinion in this case, a copy of which can be found here, is likely to be the subject of scrutiny, commentary, and controversy.
Continue Reading Breach of the Duty of Oversight Liability Extends to Officers as Well as Directors
As readers of this blog well know, ESG is one of the hot topics in the investment and financial world these days. ESG is also very much on the mind of regulators as well, as two recent developments show. First, on November 22, 2022, the U.S. Department of Labor issued updated rules expressly allowing plan fiduciaries to consider ESG factors when they select retirement fund investments and exercise shareholder rights, such as proxy voting. Second, the SEC, acting through its Division of Enforcement’s Climate and ESG Task Force, brought a settled enforcement action against Goldman Sachs Asset Management for policies and procedures shortcomings at funds marketed as ESG investments. These developments underscore the challenges companies, investment funds, and others face as they navigate the complex ESG landscape.