Pub. 4 2015 Issue 4

15 w i n t e r | 2015 President’s Message ...Continued from page 6 as December 10 with Elliott Davis Decosimo, and we’ve con- ducted our 4th Quarter Compliance Forums. And then, just for grins, we’ve also conducted a number of targeted surveys for our members. But beyond these most visible elements of VACB – the convention, our Congressional lobbying and our vast array of educational offerings – we have been equally busy “under the surface” this year, creating a strategic plan and working to implement it. You’ll soon be seeing our expression of that plan, and you‘ll be invited to engage in various ways as it is rolled out. Key elements of the plan include an expanded focus on collaboration, highlighted by the Chairman’s comments above, and an emphasis on new leadership – getting more people at your bank involved with the activities of VACB. So, we must all be intentional about taking those needed moments to slow down, step out of the rushing current, and recognize those around us who contribute much to the success of our intertwined endeavors. We’re very appreciative of your partnership, and your numerous investments in us. Katharine, Kelli and I send you our very best wishes for a joyous and peaceful holiday season. Reach your target audience a ordably. advertise get results KRIS MONTIONE Advertising Sales 727.475.9827 or 855.747.4003 kris@thenewslinkgroup.com or possibly to even a stricter standard under the common law of principal and agent. In most cases Virginia law limits the liability of officers and directors for breach of duty to the corporation to the greater of $100,000 or cash compensation for the 12 months that precede the breach. Liability is not limited if an officer engages in willful misconduct, knowing criminal conduct or violates any federal or state securities law. Finally, Virginia obligates a corporation to indemnify an officer against expenses he incurs in a proceeding brought against him be- cause he is an officer only if he entirely prevails. Taken together this tells me that an officer of a Virginia corporation does not have much statutory protection against claims by the corporation, its shareholders or, in the case of a bank, the FDIC. The amount of protection an officer should have can be debated. Recognizing that reasonable people can reach different conclusions, Virginia permits a corporation to provide officers more protection than they are given by statute. If a corporation chooses to do this, it can amend its articles of incorporation to eliminate liability in all cases except those that involve willful misconduct, knowing criminal conduct or securities law violations. A corporation also can substantially expand an officer’s rights to indemnification by amending its articles of incorporation. Of course, most banks and bank holding companies carry directors and officers li- ability insurance, which covers many, but not all, claims that might be made against an officer. Not all banks have decided that all officers should have the maximum amount of protection in all cases. Many, however, have made that judgment. If a Virginia bank has language in its articles of incorporation that eliminates the liability of officers (or senior officers) to the fullest extent that Virginia law permits, it is likely that officers would escape liability in a case like Rippy . Another rarely explored, but sensible avenue would be to spell out the standard of conduct for senior officers in a corpo- ration’s bylaws just as Virginia law does by statute for direc- tors. That would go a long way toward eliminating uncer- tainty about what a board expects and what type of conduct or misconduct exposes an officer to personal liability. The FDIC as receiver sued the bank’s directors and officers. Its allegations included the usual things – loan approvals that did not follow bank policy and a failure to address examination concerns. F E A T U R E