When a new CEO is asked to sign her executive employment agreement, a standard clause advises her to consult an attorney of her choosing. Even when advised by counsel, however, few CEOs are warned about the strict liability that accompanies certain senior management roles. Nor can protection from certain liabilities be found in indemnifications from the company. Indemnity provisions in executive employment agreements, protecting the CEO from certain violations of law, often will not cover allegations under the Responsible Corporate Officer (RCO) doctrine. As a result, the CEO may be left out to dry for corporate acts of which she had no prior knowledge. Attorneys are not immune, and in-house lawyers would be wise to take steps to avoid the worst, for their own sake as well as their clients’.
Dotterweich and Park
