Directors and officers of companies face the possibility that even if they diligently discharge their duties to their stockholders their stockholders may still sue them. Other parties, including government agencies, can sue directors and officers as well. Recognizing that the risk of personal liability makes being a director or officer of a public company unattractive, most companies purchase director and officer liability insurance, or D&O Insurance, to protect their directors and officers. This insurance can in turn help companies recruit and retain good directors and officers.
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