3. Consider mergers and acquisitions. One of the top three reasons why state-owned enterprises are being sued. The compensation agreement in force on that date is usually the one that responds when a right arises after certain claims have been completed. When disputes take place under a new direction, compensation is sometimes considered only when there is a formal agreement. (Note that final D-O guidelines should also be considered when a sale is imminent.) Also remember that goal acquisition companies are on the rise, and they also have a number of unique risks. 6. Request and final payment. Final payments of the expected debts and expenses are made by PepsiCo no later than thirty days after receiving a written request from the Director or on behalf of the Director, and the Director is entitled to compensation and payment of these debts and expenses, unless a decision is made within that thirty-day period, by i) a quorum of PepsiCo`s board of directors by a majority , composed of directors of public utility if such a quorum of disinterested directors, through an independent counsel, in a written statement or (iii) by decision to the majority of PepsiCo shareholders, indicates that the Director has not met the standard of conduct, i.e. there are exclusions and coverage restrictions that may not exist in a personal compensation agreement.
4. Check compensation agreements every two years as household products. It is a mistake to rely only on the form of the compensation agreement put in place for all directors and executives when the company went public a few years ago. Things are changing, and what might be called «the protection of the status of the species» evolves over time. Even if the company has acquired insufficient D-O insurance and expires while the business is still solvent, a good compensation agreement will ensure that legal fees are advanced and that invoices are paid by the company and not by individual directors or senior executives. These «details» can be scratched when directors and officers are accused of misconduct, even unfairly. Waiting for these details to be negotiated until a complaint has been concluded could put enormous financial pressure on directors and officers who must immediately hire lawyers. In a world where SIRs are extremely high, the stakes are even higher. If you`re a director or an officer, it`s never been more important to think about how a compensation agreement will interact with your D-O insurance and to make sure you have the broadest possible agreement to protect yourself.
Advance fees. Since a claim against a director or officer can last for years, the ability to retain and pay for legal aid is important for an energetic and successful defence. Companies often want their articles and statutes to allow the company to intervene to pay (or reimburse) the costs they charge directors and executives. However, a temporal problem arises in the fact that the auctioning of costs necessarily occurs before the final decision of the case, which can either prove or overturn whether the director or public servant has met the «minimum standard» necessary for compensation. To address this problem, most state laws allow a company to increase expenses, including legal fees, to directors and officers facing demand, and many companies make this expense advance mandatory (not just permissive) among their organizing documents.