Decisions on the remuneration of company directors require factual, legal, economic and strategic analysis. If you have any questions about the compensation provisions in employment contracts, please contact Clouse Brown PLLC. Our lawyers are available to executives who need assistance in negotiating compensation arrangements. In addition, we advise employers and contractors on minimizing the risks associated with compensation provisions and the drafting of employment contracts for executives. In addition, the articles may be amended from time to time at the Discretion of the Company, which means that there is a risk that the protection will be removed. Contractual rights, on the other hand (e.g. B in an employment contract), may not be modified or terminated without the written consent of the manager. Thus, an individually negotiated compensation provision in a manager`s individual employment contract offers the best security for managers. Similarly, directors` and officers` (D&O) insurance coverage may have exclusions or limitations that expose an officer to risk for certain types of claims. A contractual set-off clause can close the gap to ensure full coverage. For more information, see Why executives should negotiate a compensation clause in employment contracts, or contact us for help in negotiating and drafting an employment contract. Indemnification clauses are clauses in contracts that aim to protect a party from any liability if a third party or third party is harmed in any way.
This is a clause that contractually obliges a party to compensate another party for any loss or damage that has occurred or may occur in the future. “Mutual Compensation” (or “Mutual Compensation”) means that both parties agree to compensate each other for the scope of the measures contained in the Indemnification Agreement. On this page you will find more articles than I have written about compensation in medical contracts. For assistance with issues arising from the compensation provisions in management agreements, please contact Clouse Brown PLLC. Keep in mind that these clauses can be negotiated or formulated to respond to specific events that would trigger them, and an experienced business lawyer is best placed to advise you. Before discussing the pros and cons of a mutual compensation agreement, it may be worth taking a brief look. Let`s look at the wording of the mutual set-off clause presented above. A compensation provision may be negotiated in an employment contract to give the director an enforceable right for the company to cover all expenses if the manager is sued in connection with the director`s current or previous employment in the company. If the Company agrees to indemnify the officer, he is not personally liable for any debt or liability arising from acting on behalf of the Company. Thus, remuneration clauses are essentially a shield for executives. A manager should negotiate the promotion of legal fees, not the reimbursement of expenses.
The advance is an advance compensation for the costs incurred with the promise to reimburse the amounts advanced if it is determined by the court that the manager was not entitled to compensation. One way a compensation provision can provide protection is to defend against claims from a manager`s former employer. For example, Ed Executive leaves Company 1 to join Company 2. Ed Executive signs an employment agreement with Company 2, which includes a indemnification clause stipulating that Company 2 will indemnify and defend Ed Executive against any and all claims, damages, attorneys` fees and costs related to Ed Executive`s functions within Company 2. After Ed Executive started working for Company 2, Company 1 sued him, claiming that his new job with Company 2 violated various post-restrictive agreements contained in his employment contract with Company 1. Since Company 2 has agreed to indemnify Ed Executive, Company 2 must pay all costs and expenses incurred by Ed Executive to defend Company 1`s claims. I recently signed a black work contract in a rural hospital that includes an agreement on “mutual compensation”. Is it as serious [as a unilateral compensation agreement], or would it protect me from unnecessary costs that the hospital might be able to impose on me because of reciprocity? Insurance is equivalent to a compensation contract. For example, in the case of medical malpractice insurance, the insurer agrees to pay for a doctor`s legal defense, expert witnesses, attorneys` fees, judgments, and sometimes even the cost of temporarily closing a practice to be present at testimony or trial.
However, unlike set-off clauses in employment contracts, compensation for insurance companies (which have tens of millions of dollars in reserves) has exceptions and limitations. A compensation provision in a malpractice insurance policy often denies coverage to a physician who commits fraud or gross negligence. Malpractice insurance also limits the amount it will pay. An average policy pays no more than $1 million in damages per incident. .
