| PROPOSAL NO. 3: APPROVAL OF AN AMENDMENT TO THE NERDWALLET, INC. AMENDED AND RESTATED CERTIFICATE OF INCORPORATION | |
Proposal No. 3—Approval of an Amendment to the NerdWallet, Inc. Amended and Restated Certificate of Incorporation
Background
Effective August 1, 2022, the State of Delaware amended Section 102(b)(7) of the Delaware General Corporation Law (the DGCL) to allow Delaware corporations to exculpate certain officers from personal liability for monetary damages for breach of fiduciary duty as an officer. Prior to such amendment, Delaware law permitted Delaware corporations to exculpate directors from personal liability for monetary damages associated with breaches of the duty of care, but that protection did not extend to a Delaware corporation’s officers. Our stockholders are being asked to approve an amendment (the Amendment) to our Amended and Restated Certificate of Incorporation to include a provision therein that extends exculpation to certain officers of the Company, consistent with the amendment to Section 102(b)(7) of the DGCL. The Amendment was approved by our Board on December 13, 2023, subject to approval by our stockholders at the Annual Meeting. We refer to this proposal as the “Exculpation Proposal.”
Why Stockholders Should Approve the Exculpation Proposal
In the absence of the exculpation of officers, and prior to the amendment to Section 102(b)(7) of the DGCL, stockholder plaintiffs have often employed a tactic of bringing certain claims against individual officers that would otherwise be exculpated if brought against directors in order to avoid dismissal of such claims. The amendment to Section 102(b)(7) of the DGCL addressed this inconsistent treatment between officers and directors and the related rising litigation and insurance costs for stockholders.
As amended, Section 102(b)(7) of the DGCL permits exculpation of officers only for direct claims brought by stockholders for breach of an officer’s fiduciary duty of care, including class actions, and accordingly would not eliminate officers’ monetary liability for breach of fiduciary duty claims brought by the Company itself or for derivative claims brought by stockholders in the name of the Company. Furthermore, consistent with the protections currently afforded to our directors under Article VI of our Amended and Restated Certificate of Incorporation, the Amendment would not limit the liability of officers for (i) any breach of the duty of loyalty to the Company or our stockholders, (ii) any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law or (iii) any transaction from which the officer derived an improper personal benefit. The Amendment will generally align the protections available to officers with those currently available to directors and will not be retroactive to any act or omission occurring prior to its effective date. Further, the exculpation afforded by the Amendment would only apply to certain officers, namely a person who (during the course of conduct alleged to be wrongful) (a) is or was president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer or chief accounting officer; (b) is or was identified in the Company’s public filings with the SEC as one of the most highly compensated executive officers of the Company; or (c) has, by written agreement with the Company, consented to be identified as an officer for purposes of accepting service of process.
As part of our Board’s ongoing evaluation of the Company’s corporate governance practices, our Board considered the potential benefits and detriments of eliminating the personal liability of its officers under certain circumstances. After such consideration, our Board believes the Exculpation Proposal is (i) consistent with the protections currently afforded in our Amended and Restated Certificate of Incorporation to directors and (ii) necessary in order to continue to attract and retain experienced and qualified officers, which is in the best interests of the Company and its stockholders. Our Board is not proposing the Exculpation Proposal in anticipation of any specific litigation confronting the Company. Rather, the Exculpation Proposal is being proposed on a prospective basis to help mitigate potential future harm to the Company and its stockholders. Accordingly, our Board believes the Amendment is in the best interests of the Company and its stockholders.
Text of Proposed Amendment to Our Amended and Restated Certificate of Incorporation
We accordingly propose to amend Section A of Article VI of our Amended and Restated Certificate of Incorporation so that it would read in its entirety as follows (amended or new language is underlined and italicized for effect):
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| | PROPOSAL NO. 3: APPROVAL OF AN AMENDMENT TO THE NERDWALLET, INC. AMENDED AND RESTATED CERTIFICATE OF INCORPORATION |
“VI.
A. The liability of the directors and officers of the Company for monetary damages for breach of fiduciary duty as a director or officer shall be eliminated to the fullest extent permitted under applicable law.”
The proposed Certificate of Amendment reflecting the Amendment is attached as Annex A to this proxy statement.
If the Exculpation Proposal is approved by our stockholders, the Amendment will become effective immediately upon the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware, which we expect to file promptly after the Annual Meeting. The remainder of our Amended and Restated Certificate of Incorporation will remain unchanged after effectiveness of the Amendment. If the Exculpation Proposal is not approved by our stockholders, the Amendment will not become effective, and our Amended and Restated Certificate of Incorporation will remain unchanged. In accordance with the DGCL, our Board may elect to abandon the Amendment without further action by our stockholders at any time prior to the effectiveness of the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware, notwithstanding stockholder approval of the Amendment at the Annual Meeting.
Vote Required
In accordance with the provisions of our Amended and Restated Certificate of Incorporation, the affirmative vote of the holders of at least 66 2/3% of the voting power of our shares of common stock outstanding as of the record date for the Annual Meeting is required to approve the Exculpation Proposal.
Recommendation
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| Our Board unanimously recommends that you vote “FOR” the approval of the Exculpation Proposal. |