How to Remove an Officer in a Delaware Corporation

The officers of a Delaware corporation are appointed by the Board of Directors and are integral in the daily management and overall operations of a company. It is not uncommon, however, for the officers of a company to change as the business evolves.

The steps to remove an officer are fairly straightforward.

First, you want to review your Certificate of Incorporation (which is sometimes referred to colloquially as the Articles or the Charter) and bylaws. Any process that addresses removing officers is likely included in the bylaws. Usually, the bylaws gives the Board the power to appoint and remove officers. Even if that power is not given expressly to the Board in the bylaws, the Board has ultimate authority over the corporation.

The next step is obtain consent from the Board to make the proposed change. You might choose to call a meeting of the Board in accordance with the bylaws. An easier route is to seek the written consent of the Board of Directors to take action rather than holding a meeting. Generally, a corporation gives itself the power to act through written consent in its Certificate of Incorporation or bylaws, rather than through a meeting.  A written consent is far faster because no notice is required and there are no additional formalities. Your Certificate of Incorporation or bylaws will state whether action by written consent requires unanimity among directors, or whether an action taken by written consent requires only the same approval as would be the case at a meeting of directors.

We have included a template to show what a written consent may look like, but you must change or alter the template to suit your company’s needs. The template is generic, and is not tailored to any specific circumstances. In addition, Harvard Business Services is not a law firm, and providing this generic template does not constitute legal advice, and nothing herein or available to you will create any attorney-client relationship between you and Harvard.  We will not need to see the consent, and it is not filed with or reviewed by the State of Delaware; the consent is solely for your company’s records. The consent names the officer(s) to be removed. It can, but need not, name a replacement for that officer if the position need not be filled at that moment or if the hiring process is not yet complete. If the position is not integral to the company’s operation, the role need not be filled at all.

Typically, the consent states that the board is terminating any employment agreement that the officer or officers have entered into with the company.  The employment agreement may include additional process requirements before filing. The company may also need to terminate any other arrangements the officer has with the company after checking the terms of those arrangements, such as equity compensation grants.  Termination of an officer who has received such grants can result in vesting of yet-unvested awards as well as a cash out, and the requirements under a company’s equity incentive plan or grants may vary depending on whether termination was “for cause” or “not for cause”.

The consent usually lists the reason for the termination. The consent may give the non-terminated officers and employees the ability to carry out the purpose and actions required to facilitate the consent.

If appointing a new officer, the consent (or a subsequent consent) approves the form of any new employment agreement or any other documents that must be executed by the new officer.

Once each director reviews the written consent and executes it, it is kept with the minutes and other actions of the Board.

Finally, the officers send any termination letter, follow any termination procedures, and take any additional steps required to oust the officer in furtherance of the stated decisions in the consent.

A change of the officer is not filed or recorded with Delaware Division of Corporations. Every Delaware corporation is required to file an Annual Report on or before March 1 of each year and, in doing so, must list the names and addresses of the company's current directors and at least one officer at that time.

Summary: Steps To Changing A Corporate Officer

Step 1: Review Certificate of Incorporation and bylaws for rules and processes for removing and/or replacing an officer.

Step 2: Obtain written consent from the Board of Directors to proceed with the change. If a new officer is being named, this can also be included in the consent.

Step 3: Review any required steps or other actions that must be taken at termination under agreements with the officer (such as an employment agreement) or grants of equity, if any, which can result in a number of scenarios depending on the language used in the grant or in the equity policies.

Step 4: Notify the terminated officer as required by the bylaws or any other agreement and terminate any agreements and arrangements their removal requires.

Step 5: Designate a replacement for the officer (or not, as appropriate) or delegate his or her previous functions among other officers and employees.

You may find this related article helpful: Adding and Removing Directors on a Board