More Paid to Shield Directors, Officers From Lawsuits

more paid to shield directors, officers

companies are paying up to protect their leaders from potential lawsuits, a new report shows.

about a quarter of public firms raised the limits in their directors' and officers' liability insurance policies last year, while one in seven private or nonprofit companies did the same, according to the results of a poll expected to be released wednesday by towers watson, a risk-management consulting company.

together, the 400 companies surveyed reported an average policy limit of $87 million, up from $80 million in 2010.

the unusually large increase reflects deepening concern over the exposures that company leaders face in "a highly litigious environment," says larry racioppo, leader of the executive liability practice at towers watson. the policies, generally called "d&o liability insurance," shield board members and executives from personal losses when regulators, shareholders, employees or clients sue a company.

experts say that such policies have gotten more attention thanks to lawsuits that forced directors at both enron corp. worldcom inc. to pay millions out of pocket, because their firms' liability insurance didn't cover the cost of the legal settlements.

respondents cited regulatory claims as their top concern, mr. racioppo says—a change from a few years ago, when firms tended to worry more about securities class-action suits.

most companies haven't yet put their policies to the test, the study suggests: nearly two-thirds of respondents said they haven't faced any claims against their d&o insurance policies in the last decade.

—leslie kwohtake a deep breath, make ethical choices

a recent study suggests it may only take a few minutes to help prevent corporate scandals.

the study, from researchers at northwestern university, johns hopkins university, insead and city university of hong kong, found that when workers face a choice between right and wrong, they are about five times more likely to make the unethical choice when the decision is rushed. by contrast, pausing to consider the matter makes them more likely to do right.

researchers conducted several experiments with 146 college undergraduates. one test put students in a fictitious situation in which they received more money for lying, less for being truthful. the test examined how participants fared under both speedy and contemplative conditions—less than 30 seconds versus three minutes. those who had time to think were much more likely to make the moral choice, and be truthful.

in another experiment, students facing a moral choice received an anonymous email urging them to either act morally, act in their own self interest or offering no advice at all. the researchers found that subjects were four times more likely to make moral decisions when they received emails urging them to do so.

the study, published in the current edition of the academy of management journal, urges workers facing moral decisions to "take the time to think or to consult an ethical colleague."

while pausing to ponder a moral choice might not prevent large-scale fraud a la bernard madoff, it could make a "considerable difference in innumerable instances of lying and fraud that happen every day in the business world," says study co-author j. keith murnighan, a professor at northwestern's kellogg school of management.

—rachel emma silvermanyoung job seekers turn to smartphones

companies seeking youthful job candidates should go where young people can usually be found: on their smartphones.

that is the conclusion of a survey of 3,500 u.s. college students, graduate students and recent graduates conducted by potentialpark communications, a stockholm-based market research firm.

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though most company career sites remain desktop and laptop-bound, 80% of survey respondents said that they either currently use smartphones for job hunting or see themselves doing so in the future.

some companies are already onto the trend. at&t inc. t -0.76% has offered mobile tools for job-seekers since 2009. when users click on the company's careers site from their smartphones, it identifies their device and directs them to a page designed for that phone. the company uses location-aware technology to return the job listings nearest to the user, said jennifer terry, director of staffing strategic initiatives.general electricco. ge -1.38% is in the process of developing a ge careers ipad app that will be available later this year, said michael tresca, who leads the company's online recruiting efforts.

that percentage is proof that companies who fail to embrace mobile job-search tools could wind up alienating young people, says björn wigeman of potentialpark.

meanwhile, potentialpark conducted an analysis of 117 american companies' online recruiting efforts and found that roughly a quarter of those companies had either mobile career apps or a mobile-enabled website with job listings.


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