Will Trial Lawyers Target Woke Corporation Directors?

In early June, Elon Musk wrote on Twitter that it won t be long before there are class-action lawsuits by shareholders against the company and board of directors for destruction of shareholder value, referencing the rise of corporate wokeism and so-called environmental, social, and governance, or ESG policies.

The prospect held out by Musk is one that, according to former Assistant Secretary of State and experienced litigator and congressional counsel Robert Charles, could indicate a coming flurry of lawsuits against individual board members and directors for breaching their fiduciary duty to shareholders. In an interview with AMAC Newsline, Charles said that the recent spate of boycotts against woke corporations such as Anheuser-Busch and Target are not enough on their own, and litigation should also be on the table.

Shareholders should pierce the corporate veil, Charles said, by taking aim at members of the corporate boards themselves arguing that in some cases, board members should be held personally liable for violating their legal obligation to act in the best financial interests of their shareholders.

As Charles explained, that process begins with a company s Directors & Officer s (D&O) insurance policy. The board of directors is directly accountable to the owners of the company and that includes the shareholder, he said. The irony is, having looked at many D&O insurance policies over the years& I would bet you two to one that there is not a protection in some of these policies for directors who decide to use the pulpit of their companies to pursue their own ideological goals.

As a shareholder, you have a right to knowledge about how the company is operating because you are the party to whom the fiduciary duty is owed, Charles said. So, the first thing is: counsel for shareholders, or shareholders, should get a hold of the D&O insurance policies and study them& and see whether they realistically do or don t protect the directors of the company from personal liability for acting in a way that is realistically interpreted as inconsistent with the way they acted previously, which was to make money for the investor.

via amac.us

Well it’s certainly worth a try. But I suspect most corporate boards and directors would have the sense to say that their excursions into wokeland were motivated by their desire to increase share value and the reputations of their brands, however misguided they may have been.