Third, the written agreement may set out the procedures to be followed in the event of a dispute relating to compensation or promotion. Among other things, the written agreement may limit a presumption in favor of compensation or further development. The agreement also provides for a mechanism for resolving problems related to disputed amounts or items. The Agreement may also provide for an accelerated dispute settlement procedure. Perhaps most importantly, the agreement can provide for so-called “royalties on royalties”, i.e. for the reimbursement of expenses that must be borne by a person to enforce rights of compensation or advance. Delaware law allows a company`s instrument of incorporation to include a provision that eliminates a director`s personal liability for financial damages in the event of a breach of duty of care. 8 Del.C. § 102 (b) (7). It also allows a company to exempt a director or executive from liability resulting from a breach of due diligence. 8 Del.C. § 145 (a) & b).
These provisions reflect the strength of public order that favours the compensation of directors to ensure that highly qualified people want to serve. But the director or officer, who relies exclusively on these protective measures, is himself a disservice. It should also require a separate indemnification agreement between it and the undertaking. But in addition to statutory benefits, compensation agreements offer psychological benefits that cannot be provided by generally applicable legal, statutory or statutory provisions. Indemnification agreements offer the security that goes hand in hand with the maximum legally possible protection for D&O`s. If you are or will be a business administrator or senior executive, contact a qualified advisor for the development and negotiation of a compensation agreement tailored to you and your business. Progress is precisely what it is all about: the payment of royalties by the company before the final solution of the procedure. Assistance is an important companion to the right to compensation, as it enables staff members to immediately alleviate the financial burden of investigations and judicial proceedings. No justification is needed – although the official may have to repay what he receives if the final decision does not go his way. Definitions of key concepts.
The scope of D&O protection can be greatly extended by definitions. For example, a compensation agreement generally exempts a person from (among other things) all “expenses” incurred by the employer in connection with a “proceeding”. The definition of “expenses” can be very broad to cover all possible legal costs or expenses, including (i) attorneys` fees, expert fees, arbitrators` fees, arbitration costs and many other costs related to the prosecution, defense or participation in legal proceedings; (ii) all amounts that the recipient of compensation is legally required to pay, such as damages, judgments, fines and comparisons, and even all taxes resulting from payments made under the compensation agreement; and (iii) all premium, securities, bonds or appeal obligations in proceedings. . . .