How boards are built, evaluated, and insured — the architecture behind the body that exercises every duty above.

4.1 Independence

NYSE § 303A.01 and Nasdaq Rule 5605(b)(1) each require a majority of independent directors on the board.¹ Independence is determined under a combination of bright-line factors (e.g., not employed by the issuer in the past three years) and a board-level “no material relationship” determination.² Heightened independence requirements apply to the audit committee under SEC Rule 10A-3 and to the compensation committee under SEC Rule 10C-1.³ Delaware S.B. 21 (2025) codified statutory independence and disinterestedness standards for listed corporations as part of the DGCL § 144 rewrite,⁴ a development sustained by the Delaware Supreme Court in Rutledge v. Clearway Energy Group LLC, No. 248, 2025 (Del. Feb. 27, 2026) (en banc) (Traynor, J.).⁵

4.2 Board size and composition

There is no statutory minimum or maximum board size under Delaware law — DGCL § 141(b) requires one or more directors with the number fixed in the certificate or bylaws. TBOC § 21.403 imposes a minimum of one director. Public-company practice typically converges on roughly nine to twelve members, varying by industry, size, and CEO/Chair structure.⁶

4.3 Director skills matrix

The board-skills matrix has become a near-universal disclosure in public-company proxies. Item 407(c)(2)(v) of Regulation S-K requires disclosure of the specific experience, qualifications, attributes, and skills that led the board to nominate each director.⁷ Most large issuers now publish a one-page matrix cross-referencing skills (industry expertise, financial expertise, M&A, risk management, regulatory, international, ESG, cyber, AI) against individual directors. The matrix is the board’s self-assessment tool as much as it is a disclosure document.

4.4 Annual evaluation

NYSE § 303A.09 requires the board to adopt and disclose corporate-governance guidelines that include an annual evaluation of the board, its committees, and individual directors.⁸ Item 407(b)(1) of Regulation S-K requires disclosure of the board’s leadership structure and the role of its members in evaluating their own performance.⁹ Outside facilitators — corporate-governance consultants or outside counsel — are commonly used for the evaluation every second or third cycle to preserve candor.

4.5 D&O insurance, exculpation, and indemnification — the three-legged stool

Director liability protection rests on three statutory and contractual mechanisms operating in parallel.

Exculpation. DGCL § 102(b)(7) permits the certificate of incorporation to eliminate or limit director monetary liability for breaches of the duty of care — but not for breaches of the duty of loyalty, intentional misconduct, knowing violations of law, unlawful dividends, or any transaction from which the director derived an improper personal benefit. The 2022 DGCL amendment extended § 102(b)(7) protection to senior corporate officers.¹⁰ TBOC § 7.001 is the Texas analog.¹¹

Indemnification and advancement. DGCL § 145 authorizes the corporation to indemnify directors and officers against expenses and liabilities incurred in their corporate capacity, subject to a good-faith standard, and to advance defense expenses as incurred subject to an undertaking to repay if indemnification is later denied.¹² TBOC §§ 8.001–8.105 are the parallel Texas provisions.¹³

D&O liability insurance. Typically structured in three tiers: Side A (personal liability when the corporation cannot or will not indemnify, e.g., in bankruptcy or for derivative-suit settlement amounts); Side B (corporate reimbursement of indemnification paid by the corporation); Side C (entity coverage for the corporation’s own securities-law liability). Side A is the layer that protects directors when other layers fail. DGCL § 145(g) and TBOC § 8.151 expressly authorize the corporation to procure such insurance.¹⁴