Kevin LaCroix’s The D&O Diary recently highlighted a couple of Delaware cases denying the advancement of legal fees to individuals with the title of Vice President, “A Particular Vice: Job Titles, Indemnification, and Insurance.” Each case had unique features, but together they reaffirm the importance of reviewing indemnification and D&O insurance provisions for executives.
The common thread between the two cases is that in each case the individual involved held the title of Vice President. Although the VP designation has the ring of an officer title, it may not always mean what it seems to suggest (particularly, it appears, when it comes to indemnification questions). Indeed, when the Aleynikov case was in the Third Circuit, a major financial services company had tried to argue, among other things, that there has been “title inflation” in the financial services industry and that the title “vice president” is not particularly meaningful.
The basic question that these cases present is one that can and often does arise all too often when lower level personnel are seeking indemnification or advancement. By-law provisions frequently are unclear or ambiguous and the question often has not been considered until the moment that the issue arises.
As the blog suggests, companies and executives may want to consider consulting with their outside counsel and having their bylaws examined in order to ensure that the bylaw provisions relating to advancement and indemnification accurately and clearly identify the categories of persons entitled to advancement and indemnification.