First, a written compensation agreement may include definitions of important concepts. The written agreement may involve, for example. B, a comprehensive definition of the types of “expenses” for which compensation and advance are possible, as well as the types of “procedures” for which the individual is entitled in advance. For example, a written compensation agreement could specify that the individual is entitled to compensation or promotion, even if the individual is only a witness in a proceeding, and not just if the person is a designated party. In addition, O.O. policies are the subject of annual negotiations and conditions may be less favourable. Compensation agreements do not allow companies to change them unilaterally to the detriment of directors and managers without their consent. Insurance. As a general rule, the compensation agreement requires the company to provide D-O liability insurance that protects the beneficiary of the exemption to the same extent as the company`s current D-Os and its related companies. In general, compensation agreements also offer broader and more in-depth protection of the compensation rights of D-O as statutes and organisational documents. Compensation agreements often include detailed procedures and timelines for determining when compensated persons are entitled to payment, and they clarify the types of claims and procedures that are covered. A well-written compensation agreement should include, for example, that if an insurance agreement has an IRS, the amount of the IRS must be paid and applied to the insured loss of someone other than the insurance agency before the insurance pays something.
As part of ongoing efforts to attract highly qualified individuals to the role of directors and officers, compensation agreements for Canadian state-owned enterprises have increasingly become a common way to complement the protection generally enjoyed by their directors and officers through liability insurance and D-O insurance and legal compensation rights. As a general rule, compensation agreements provide the director or official with an independent contractual allowance for debts arising from the service in that capacity, as well as reimbursement of expenses and certain other rights. While it is true that the company`s statutes purport to compensate directors (and, in some cases, officers) “to the extent most permitted by law,” these statutes may be lacking when it comes to process details. Second, the written agreement may recall the right of individuals to choose their own advice. This could be particularly critical if problems arise after the person has left the company and a new management is in place. There may be a large number of potential conflicts between the individual and the new management that could argue in favour of the individual who has his own board.