Will you serve on our Board of Directors?

Playing golf with your Saturday foursome you are asked, " John, I think you are just what I need. Recently, we have been advised to add independent individuals to my company's board, and I think you would be perfect. What do you say?"

John is very interested, but knows that going on a Board is not the social club it used to be. There are lots of questions John should ask before saying yes including checking with his personal independent insurance agent who should say:

A prospective director should evaluate the company’s D&O insurance program and consider buying personal director’s liability insurance.

In evaluating the corporate D&O policy, questions to ask include the following.

1. Is the company carrying sufficient D&O insurance in light of increased risks to independent directors?

2. Do severability provisions or policy exclusions leave individuals personally exposed? Limited or no severability means that the entire board of
directors, who might be included in a potential lawsuit, might not have coverage regardless of any individual’s own actions.

3. How experienced and financially stable are the insurers of the D&O program?

4. Does the company’s D&O policy cover the company as an entity in addition to directors and officers? Entity coverage erodes protection for individuals.

5. What is the effect of bankruptcy on the D&O policy? Entity coverage can tie a policy up in bankruptcy court.

6. Is the company following corporate governance best practices?

In addition, John should consider Personal Director’s Liability Coverage
An existing or prospective director should also consider personal director’s liability coverage. Personal director’s liability insurance is a coverage that protects individuals and their personal assets in the event that they are sued as a result of their directorship activities.

If the response is when he starts asking these questions is " we don't need D&O insurance its expensive and a waste of money." John, should join another foursome.

DOL's latest on reporting requirements

WHAT CAN EMPLOYERS EXPECT IN THE FUTURE FROM DOL?

DOL has initiated rulemaking on the LM-30 instructions. It is anticipated that parallel rules will be developed for the LM-10 employer reports. Several DOL proposals would eliminate exemptions and significantly increase the reporting requirements of employers. For example:

(1) DOL proposes to require reporting on the LM-30 payments received by union officers and employees for work performed for the union — e.g., a “no docking” arrangement under which a union steward or union officer resolves grievances on an “as needed” basis while being paid regular wages or a “union leave” arrangement whereby a union officer continues to be paid a salary by the employer while working fulltime on union business. Both the employee and the employer would have to report all payments other than those for “productive work”.

(2) DOL proposes to eliminate the de minimis exception altogether.