In the current corporate accountability environment, the extent to which state law treats corporate officers (but not directors) as agents of the corporation may have increasingly important implications. This treatment may affect how the general counsel advises corporate leadership in certain situations.
A new scholarly article provides a helpful discussion of the distinctive fiduciary relationship of officers to the corporation. It confirms those duties that officers and directors share (e.g., the loyalty triad), and those that may be peculiar to officers (e.g., performance-related duties that include both a duty to comply with reasonable instructions and a duty to share material information with the board ). These unique agency-related duties form the basis of the corporation's authority to exercise control over officer conduct.
Depending upon specific state law, the characterization of corporate officers as agents may affect the legal analysis applied to the evaluation of such matters as an officer's performance, standard of conduct, reliance, scope of authority, and indemnification and advancement rights, and the interpretation of employment contracts. This is a topic of increasing academic debate. The general counsel should thus note the potential that fiduciary and other laws may apply differently to officers than they do directors.