Abstract

During the last three years big corporations have been targets of the news media. Several major companies have lost much esteem through the exposure of questionable or illegal activities, as government investigations aim at such indiscretions. Laws exist that hold a board of directors liable to its stockholders for the conduct of the business and the current business climate is one tension for a member of a corporate board. There is little doubt that in the growing wake of corporate scandals, a position on a corporation's board of directors has become an obligation to be assumed with caution. Much has been written about the legal hazards of holding a director's seat, which has further diminished the appeal of the position. A director can be sued by almost anyone for almost anything on behalf of a corporation's stockholders and unfortunately there have been frequent harassment suits. Corporations have turned to indemnification insurance on behalf of their directors, but this is expensive and questionable in terms of total coverage.