If it wasn't for bad faith ...

In 1985, the Supreme Court of Delaware held that the business judgment rule doesn't protect directors who make, "an unintelligent or unadvised judgment." (Smith v. Van Gorkam, 488 A.2d 858) In the words of Chancellor Strine, "After Van Gorkom met an unenthusiastic reception, the General Assembly adopted § 102(b)(7)." 102(b)(7) allows a company to insert into its certificate of incorporation a provision, "limiting personal liability of a director ... for monetary damages for breach of fiduciary duty ..."

In three recent cases the Chancery Court has given shape to the jurisprudence of section 102(b)(7).

The cases are:

McPadden v. Sidhu, 2008 WL 4017052
Ryan v. Lyondell Chemical, 2008 WL 4174038
In Re Lear Corp. Shareholder Litigation, 2008 WL 4053221

For detail about the holdings look at this post on the Delaware Corporate and Commercial Litigation Blog.

To help you find precedents, here's the exculpatory provision from Lear Corp.'s certificate of incorporation:

(e) No director shall be personally liable to the Corporation
or any of its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the
director's duty of loyally to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174
of the Delaware General Corporation Law or (iv) for any transaction
from which the director derived an improper personal benefit.