I recently had a meeting with the board of a publicly traded company. Among the topics I knew that I would be asked to address at the board meeting is the growing risk of cyber liability. In my preparation for the board meeting, I came across a recent article by D&O maven Dan Bailey, a partner in
Corporate Governance
Nonprofit Board Members’ Statutory Immunity
Most states have adopted statutes providing individuals who serve as directors on nonprofit boards with limited immunity from liability. Among other issues that frequently arise is the scope of the protection provided under this statutory immunity. A recent decision from the Connecticut Appellate Court in a case involving a liability claim against the volunteer President…
Thinking About the Limits of Corporate Officials’ Defense Cost Advancement Rights
In addition to indemnification, corporate directors and officers also may have the right under applicable law and corporate by-laws to have their costs of defense advanced before the ultimate right to indemnification has been determined. A question that often arises is whether a corporation may withhold advancement. A recent decision from the Ontario Superior Court…
Employer Social Media Policies, Cyber Security and Other Web Notes
As the various forms of social media have become increasingly pervasive, employers have struggled with appropriate responses to employees’ use of the social media sites. One question in particular that has arisen is the extent to which employers can seek to regulate and even discipline employees’ use of social media to comment on the employer…
Corporate Officials’ Strict Liability Conviction Under the Responsible Corporate Officer Doctrine Can Have “Career-Ending” Consequences
Under the Responsible Corporate Officer Doctrine, corporate officials can be held liable for misconduct in which they did not participate and of which they have been entirely unaware, based on their responsibility for the corporation itself. As shown in a July 27, 2012 opinion from the District of Columbia Court of Appeals (here…
Director Protection: Advancement and Indemnification
One of the most important sources of director protection is corporate indemnification. But as significant as indemnification is for the protection of directors, the directors’ first line of defense, literally, is their right to advancement of their costs of defense. All too often, these two terms – advancement and indemnification – are used interchangeably, but…
The Benefit Corporation Concept and Related Director and Officer Liability Issues
A fundamental tenet of corporate law is that a business corporation is organized and carried on for the benefit of its stockholders. In recent times, an increasing number of for-profit organizations have formed in order to pursue social and environmental goals. There is a growing investor movement toward the financial support of organizations that have…
Second Time Around on Say-on-Pay
The advisory shareholder vote required under the Dodd Frank Act went through its first cycle in 2011, and by and large most companies’ shareholders approved the companies’ executive compensation plans. Only about 45 companies (less than 2%) received negative “say on pay” votes from a majority of investors. But that does not mean that the…
Liability Without Culpability: A Deeply Troublesome Trend
One of the most basic notions in our legal system is that liability attaches only to those who act with intent or knowledge. But as detailed in a front-page September 27, 2011 Wall Street Journal article (here), Congress has in recent decades enacted numerous provisions imposing criminal liability regardless of intent. Among the…
Some Thoughts About “Board Accountability”
Yahoo’s board members may or may not be “doofuses” as departed Yahoo CEO Carol Bartz declared after they sacked her, but the one thing for sure is that the events surrounding her firing, and the more recent CEO turnover at H-P, sure have folks riled up. Whatever else you want to say about these events…