Background

Commenting on the hazards of serving in the capacity of a corporate director, Robert M. Estes, General Counsel of General Electric, offered this advice in his article Outside Directors: More Vulnerable Than Ever (Harvard Business Review, Jan.–Feb. 1973, p.114):

"If Congress and the courts propose to hold directors hostage for corporate performance in a widening range of economic and social contexts…then the corporation should be alert to provide its directors with every reasonable protection against legislative, regulatory, and legal hazards. I have mentioned some primary steps: providing directors with improved access to the managerial information network, involving them more directly and intimately in the strategic planning and decision-making process, and accepting the need for a higher order of record keeping. Companies should supplement these with the best available insurance coverage and couple this coverage with optimum indemnity provisions in the company's by-laws."