The Court of Chancery analyzed a claim for advancement made by a former computer programmer (“Aleynikov”) of Goldman, Sachs & Co., a subsidiary of The Goldman Sachs Group, Inc. (“Goldman Parent”). Despite not having any managerial or supervisory responsibilities, Aleynikov held the title of “Vice President.” He argued that he was entitled to advancement pursuant to the bylaws of Goldman Parent, which provided for advancement and indemnification to the “fullest extent permitted by law” to all directors and officers of any subsidiary of Goldman Parent. The bylaws defied “officers” of Goldman Parent subsidiaries to include “in addition to any officer of such entity, any person serving in a similar capacity or as manager of such entity.”
The Court analyzed the definition of the term “officers” in the context of the Goldman Parent’s bylaws and the Delaware General Corporation Law and concluded that Aleynikov should be considered an officer. The Court noted that “Goldman Parent and its subsidiaries created ambiguity about the scope of the officer designation by handing out the title ‘Vice President’ freely to their employees.”
BOTTOM LINE: An ambiguity in the unilaterally drafted organizational documents of a parent company will be construed against the Parent company. In order to protect itself from ambiguity and unintended liability, a parent company’s organizational documents that govern subsidiaries must align clearly with the policies and governance of those subsidiaries.