The Sarbanes-Oxley Act's corporate governance language does not technically apply to small mutual insurers, but a recent court decision indicates they might be expected to live by it, an attorney warned here at an industry conference.
That advice came from Nicki Locker, a partner with the Wilson Sonsini Goodrich & Rosati law firm in Palo Alto, Calif., during a session on corporate governance at the annual convention of the National Association of Mutual Insurance Companies.
Locker based her warning on a ruling, in August, by the Delaware Court of Chancery concerning the Walt Disney Company board's approval of a no-fault separation agreement for its former president, Michael Ovitz, who was fired after one year with a $140 million payout. The court, while finding the board did not breach its fiduciary duty, was scathing in its criticism of the board's operations but upheld them based on the general board practices of the 1990s, according to Locker.
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