A Neglected Policy Option: Indemnification of Directors for Amounts Paid to Settle Derivative Suits - Looking Past 'Circularity' to Context and Reform

70 Pages Posted: 10 Mar 2009

See all articles by Mae Kuykendall

Mae Kuykendall

Michigan State University - College of Law

Date Written: November 1, 1995

Abstract

Permitting corporations to indemnify directors for amounts directors pay to settle derivative litigation may have merit, despite the consensus against it. It yields more cheaply the same corporate recovery - zero - as a court dismissal. Thus, notwithstanding risks, it is not patently worse than current termination options. Moreover, a board's considering it may pose sharply the question whether no-recovery termination is defensible.

Keywords: indemnification, derivative, circularity, strike suit, special litigation committee, accountability, director, dismissal, liability, exculpation

Suggested Citation

Kuykendall, Mae, A Neglected Policy Option: Indemnification of Directors for Amounts Paid to Settle Derivative Suits - Looking Past 'Circularity' to Context and Reform (November 1, 1995). San Diego Law Review, Vol. 32, No. 4, 1995, Available at SSRN: https://ssrn.com/abstract=1355966

Mae Kuykendall (Contact Author)

Michigan State University - College of Law ( email )

318 Law College Building
East Lansing, MI 48824-1300
United States

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