Printer Friendly, PDF & Email

Leadership oversight of compliance and ethics programs

Rebecca Walker (, is a Partner in the Santa Monica, California, office of Kaplan & Walker LLP.

In its seminal 1996 decision of In re Caremark Int’l Inc. Derivative Litigation, the Delaware chancery court held that directors have a fiduciary duty to oversee a company’s compliance systems.[1] The parameters of that duty have been explored in a number of recent cases. In January 2023, in the case of In re McDonald’s Corporation Stockholder Derivative Litigation, the Delaware courts, for the first time, directly addressed the question of whether the Caremark oversight duties also apply to a company’s officers.[2] (Spoiler alert—the court answered that question with a resounding “yes.”) It is a detailed and interesting decision—one well worth exploring for the court’s discussion of both (1) an officer’s duty to oversee a compliance program and (2) the Caremark line of cases.

This article will first provide a quick overview of the McDonald’s case to set the stage, then offer a brief (but important) review of Caremark and its progeny. We will then take a closer look at McDonald’s and its implications for compliance programs. As a bonus, we also consider two interesting procedural aspects of shareholder derivative litigation with which compliance professionals may want to be familiar.

This document is only available to subscribers. Please log in or purchase access.

Would you like to read this entire article?

If you already subscribe to this publication, just log in. If not, let us send you an email with a link that will allow you to read the entire article for free. Just complete the following form.

* required field