LexisNexis® Legal Newsroom
Delaware Supreme Court Extends Fiduciary Duties to Corporate Officers -- Important Lessons for Nonprofit Corporations

In Gantler v. Stephens, Delaware Supreme Court clarified the law, making clear that corporate officers are subject to the same fiduciary duties as directors. Jack Siegel's analysis of this decision provides best practices and lessons corporate officers and directors, particularly in the nonprofit...

The Fiduciary Duties of Acquiring Directors

Relatively few cases address the fiduciary duties of an acquiring board. These cases indicate that, absent a conflict of interest, courts will generally apply the deferential standard of the business judgment rule to a board's acquisition decision. Nonetheless, recent highly publicized failed acquisitions...

Free Download: Liability of Corporate Officers and Directors--Ch. 5.08-Executive Compensation

§ 5.08 Executive Compensation. For years shareholders have complained of the highly lucrative executive compensation arrangements maintained by their companies, and some complaints have found their way into the courts. Examples of such lawsuits include: Viacom shareholders initiated a derivative...

Free Download: Liability of Corporate Officers and Directors--Ch. 17.03-Guidelines: The Corporate Director's Guidebook

The governance legacy of the recent credit crisis is the importance of directors and officers effectively identifying, quantifying and managing the company's most important risks. A new discussion has been added which explains the purpose, importance and structure of an Enterprise Risk Management...

New Appleman Premium Online Checklists - § 37.03 Checklist: Evaluating Coverage Claims Under Directors' and Officers' (D&O) Insurance Policies

New Appleman Premium Online Checklists - § 37.03 CHECKLIST: EVALUATING COVERAGE CLAIMS UNDER DIRECTORS' AND OFFICERS' (D&O) INSURANCE POLICIES , is one of the 200 coverage checklists in New Appleman Premium Online Checklists. This online checklist provides step by step guidance...

U.S Supreme Court Addresses Materiality in Securities Fraud Case

In Matrixx Initiatives, the U.S. Supreme Court reaffirmed the case-by-case analysis for materiality that it espoused in Basic Inc. v. Levinson, but it may also have signaled that the pleading of materiality is subject to the standards found in Rule 8(a) of the Federal Rules of Civil Procedure and not...

Should Directors Be Held Liable More Often?

In an interesting and provocative June 7, 2011 post on the DealBook blog ( here ), University of Connecticut Law Professor Steven Davidoff voiced his frustration that public company directors are not held liable more often for problems at their companies. Directors, he says, "have about the...

First HP Lawsuit on File

No surprise. The first derivative suit against HP and its board of directors was filed in the Central District of California. Here's the complaint: Espinoza v. Leo Apotheker et al . It was filed on Wednesday - before Apotheker was fired. So it's more concerned with Apotheker's recent...

From UK to the U.S., Talent in Pipeline Keeping Women in Boardroom Numbers Down

by Gary Larkin Whether it's at conferences, in new studies or on the blogosphere, the issue of whether or not there are enough women in the boardroom has begun to pick up steam globally. The issue has been the topic of a recent forum in New York City, a recent global study on differences ...

More Woes for Companies with Chinese Connections

SciClone Settles FCPA Follow-on Derivative Suit : In a settlement that involves a company with significant Chinese operations -- and that also may represent something of a template for the settlement of FCPA enforcement follow-on civil lawsuits -- SciClone Pharmaceuticals and the individual defendant...

Taking a Look at the Limits of Indemnification

Indemnification is the first and most important line of defense for the protection of directors and officers. But corporate officials are not always entitled to indemnification. For example, under Delaware law, they cannot claim mandatory indemnification if their defense is not successful. And they...

D&O Corporate Counsel Checklist Published by ABA

In the August edition of the ABA's Business Law Today, the Business Section's Committee on Director and Officer Liability (under the very capable direction of James Wing of Holland & Knight) has just issued a brief commentary and a checklist for use by corporate counsel who must manage the...

More Thoughts About Corporate Officials' Defense Cost Advancement Rights

An important accessory to the indemnification rights of directors and officers is their right to have their defense expenses advanced while the claims against them are pending, before their ultimate right to indemnification has been determined. A frequently recurring issue is the question of when the...

D&O Insurance: No Coverage for Attorney Fee Award to Underlying Plaintiffs if Underlying Claim Not Covered

Does a D&O insurance policy provide coverage for attorneys’ fees awarded in settlement of a breach of contract class action? That was the question before the court in an insurance coverage action brought by the Screen Actors Guild (SAG) against its D&O insurer. In a July 11, 2013 decision...

Advisen Releases Private Company D&O Study

There is a great deal of information available about the liabilities of publicly traded companies, as well as about the D&O insurance implications arising from those liabilities. It can be a bit of a challenge to locate the same of information concerning private companies. For that reason, it is...

To Whom Are Directors' Duties Owed?

It is generally understood that corporate directors act in a fiduciary role in performing their board duties. But to whom do directors owe their fiduciary duties? That was the question asked in a November 8, 2013 decision from the North Carolina Supreme Court, in which the Court reversed a trial verdict...

First Circuit: D&O Insurer Must Advance Failed Bank Directors and Officers’ Defense Expenses

In an interesting March 31, 2014 opinion ( here ), the Unites States Court of Appeals for the First Circuit, applying Puerto Rico law, affirmed a district court’s ruling that the D&O insurer for the failed Westernbank of Mayaguez, Puerto Rico must advance the bank’s former directors’...

Rogue CFO - Part I: Introduction

by David Carroll Small, privately owned corporations deal with all types of challenges: competition, government regulations, recessions, rising cost of benefits for employees —the list is long. But one area that seems to be a persistent problem for small businesses is the area of fraud, in particular...

Supreme Court Affirms Oral Resignation of Director

Biolase, Inc. v. Oracle Partners, L.P . , Del. Supr., No. 270, 2014 (Del. Ch. June 12, 2014) [ an enhanced version of this opinion is available to lexis.com subscribers ]. Issue Addressed : Whether a director may resign by an oral statement alone, pursuant to DGCL Section 141(b). Answer : Yes. ...

Who Is an “Officer”? A Critical Inquiry For Indemnification and Insurance

Many companies provide advancement, indemnification and insurance benefits and protection for their officers and directors. However, it is not always clear who is an “officer” for purposes of claiming the benefits and protection. The long-running and high-profile saga of Sergey Aleynikov...

Advice for Deal Advisors

In the context of a merger and in the making of other decisions, boards are entitled to rely on advice from experts and advisors. When they do so in good faith, board members are "fully protected" to use the words of 141(e). In the wake of Rural Metro, bankers now seem to feel that the target...

Should There Be More Litigation Against Corporate Officers? (Uh, No.)

Over the past fifteen years, there has been a steady progression of corporate scandals, from Enron to options backdating to the excesses that led to the global financial crisis. These debacles were followed by waves of shareholder litigation. However, according to one legal scholar, the shareholder lawsuits...

An Alarming Liability Award Against Not-for-Profit Organization’s Directors and Officers

A question that frequently recurs when I am speaking to directors and officers of non-profit organizations is why – given that their firms have no shareholders – they need to bother with D&O insurance. The reality is that even though officials at non-profit firms don’t have to worry...

Defenses to Advancement Based on Conditions in Agreement Rejected

Blankenship v. Alpha Appalachia Holdings, Inc., C.A. No. 10610-CB (Del. Ch., May 28, 2015) [ an enhanced version of this opinion is available to lexis.com subscribers ]. This is the latest Delaware Court of Chancery decision in a long series of recent Delaware decisions (and one of two opinions handed...

Protecting Corporate Executives’ Rights to Advancement and Indemnification

Most senior corporate executive have a general understanding of the importance to them of their corporate indemnification rights. As discussed here , a related but sometimes even more important corporate benefit is the right to advancement – that is, the right to have their defense fees paid on...