Why Directors And Officers Should Demand A Separate Indemnification Agreement

If you`re an officer or director of a public company (or a large private company), it`s never been more important to make sure you have a highly protective personal compensation agreement. Procedure and timetable. A compensation agreement typically includes procedures and timelines that clarify and strengthen human rights without compensation. For example, the agreement may require that, when settling a claim against the beneficiary of the compensation, the company includes certain settlement conditions favorable to the administrator, such as.B. an unconditional exemption from all responsibilities related to the procedure and confirmation that the beneficiary of the compensation denies any wrongdoing. The indemnification agreement may require that all indemnification payments be made within 30 days and all advances within 20 days of the defendant`s written request. The agreement may allow D&O to choose between several dispute resolution alternatives. The agreement may require that, in the event of an unfavourable decision against compensation, it has the right to initiate proceedings to challenge this finding before a court of competent jurisdiction and to be compensated for all costs. The agreement may also create presumptions of evidence in favour of compensation, including the presumption that the person has met the applicable standards of conduct that allow for compensation (i.e., conduct that does not constitute wilful misconduct) and that a judgment, settlement or criminal conviction does not give rise to a presumption of compensation. And the agreement can impose a reasonably short limitation period, that.B. two years from the delimitation date, for any claim the company might have against the beneficiary of the compensation.

2. Keep in mind that compensation agreements don`t just apply to listed companies. Directors and officers of private companies need these agreements in addition to D&O coverage for private companies. This is especially true for companies heading towards an IPO. An agreement that pays board members also enhances the attractiveness of a director or officer position in your company at every stage of its lifecycle. .