Evolv Shareholders Reject Executives' Immunity for Breaching Fiduciary Duty
With Evolv executives facing a shareholder class action, the company's shareholders rejected a proposal that would have made them immune from future litigation over mismanagement.
In this report, we examine Evolv's failed "Exculpation Amendment," why Evolv proposed it, and what this indicates about shareholder confidence in Evolv's leadership,
Exculpation ******** ***** ** *********** *******
** ********* ******* ** *** **, ****, ***** ***** ************ ** **** "for *********** ** ******** **** ******** of ********* ****," ********* *** '*-*****' executives. **** ** ***** ** ** Officer *********** ********* (***).
******* ********* ******* **** *****'* *****,** ****** **** **% *******, ***** *** ******** **% *********:
***************** ******* *********** ** ****** ****. **** ******** "******* ************ ** consider ******* **** ****** **** ** their ***** ** *** ***** ******** for ****** ** ********** *** ******** of ***** ********* **** ** ****," according *** ******* *** ****** ***********.
******* *********** *** ****** ** *****. ***** so ****** ***************** ******** * ***** ****** ****, ***** ***** ********** **********, ** notable. *******, **** *** *** ***********; had ** ******, **** ***** *** apply ** **** **** ** ** actions ***** ** *** *** **** meeting.
Shareholder ********** *******
*** ****'* ******* ********* * *********** minority ********** ** ************ ************. **** usually ****; ** *** **** ***** August ****, **** **%****** ** ******* *********** ********.
***********, ***** *****'* ***** ********* ****** - ******* **** * ****** ******** - **** *** **** **** *********** support, ********* **** **.*% ****** *** the ************ ** ******** **********. *** reelection ** ******** ********* ***** ********** *********** ************ ********* ******** **% *** **% voting ***, ************:
*** **********, *** **** **** *** most *** ***** *** ************ *** auditor, ***** ******** *** ******* ***** compared ** ~** *** ~** *** those *** **********.
(*** ************ ******** *** *** ***** on * ******** ************ **** *** a ***-******* **** ** ************ ******** officers ** * ******* ******.)
**** **** ***** ************ *** ************ with *****'* ********** ** ************ ***** that *** ***** ** **** **% over *** **** ****:
******* **** *** ***** ***** ************ **************, ************ ***** ****** ****,*** ***** ******** *******, *** ****$** ******* ** **** *********** ~$*** ******* ******. *****'* ***, Peter ******, ********** ***** *********** ************** for ***** ********, ********** ****** ***** statements *** ***** ***** **-*********** ********** ******** **********.
Evolv: *********** ********* ** ******* ********
***** ******, *********** *********** ** ************(** **), ***** ** *** ****, that *** *** *** ********* ** recruit *** ****** ********.
***** *** ********* **** ******* ** potential ******** ***** "******** **** *** potential ******** ** ***********...******* *** ********" of ******* ** *****:
** ******* ****failing ** ***** the Officer Exculpation Amendment could ****** *** *********** *** ********* ** exceptional officer candidates *** ******** **** *** ********* ******** ** ***********, ***** ** *******, *** ***** ***** of proceedings exceeds *** ******** ** ******* as an officer of the Company. [emphasis added]
*******, ******* *** ***, ******** ***** face "***********" **** "*********** **** ** investigations, ******, *******, *****, ** ***********" when **** "**** ********* ** ******* matters." ****, *** *** "***** ******* officers ** **** ******** ***** ******** judgment ** *********** ** *********** *********."
** ********, ******** *** ******* *********** Amendment *****enable *** ******** to exercise their business judgment in furtherance of the interests of the stockholders without *** ********* *** *********** ***** ** *** **** ** ******** *********. The nature of the role of officers often requires them to make decisions on crucial matters. Frequently, officers **** **** ********* in response to ****-********************** *** **********, ***** ***create *********** **** ** **************, ******, *******, *****, ** *********** seeking to impose liability based on hindsight, especially in the current ********* *********** and regardless of merit. Limiting our current and prospective officers’ concern about personal risk would ******* ******** ** **** ******** ***** ******** ******** in furtherance of stockholder interests. [emphasis added]
***** **** **** *** *** ** necessary "********** ** *** ******* ********* environment." ***** *** ** ********* ** the ** ** *******, ***** ** indeed *********, ** ** ******.
Proposal *** ******* ********
***** ************ ****** *** **** *** legal ******** ****** **** ****** *** retaining ******** **** ********* *** ****** the *******. *******, *****'* *** ******** risks ***** * ******* ** *********; immunity ***** **** *** *********** ******** of ******** ******** **** ** ******** to ************ ** ********** ********* ********.
**** ***** ** * ********** ******** when ** ********* *******—**** *** ** Enron—needs * ******-******* ***, *** *** when *** **** ********** *** *** them **** ****** ****** ** ******.