The previous sample exclusions of personal profit do not contain language requiring that there be a final adjudication for the exclusion to apply (as is sometimes found in the dishonesty exclusion), but only that the illegal personal profit was gained “in fact.” The in-fact requirement is ambiguous because it is unclear exactly what effect this might have on expanding the scope of the exclusion. It could be interpreted to mean that if the underwriters feel that the insured individual was the recipient of illegal profit or advantage, the insurer may invoke the exclusion. Then the insured individual might have to go to court to establish innocence so that the exclusion would not apply. It also may allow the insurer to litigate the question of personal profit in a separate action.

The previous examples preclude not only claims based on personal profit but also on any “advantage” to which the insured individuals were not legally entitled. The reference to personal profit seems clear to the extent that it includes improperly obtained money or money equivalents. This appears to be reasonable, as few would argue that illegal gains should be the subject of insurance.

The term advantage is somewhat more difficult to evaluate. Its use may raise questions regarding golden parachutes or other measures undertaken by management to entrench themselves in the face of a hostile- takeover situation. These types of strategies also may be the subject of other specific exclusions. A derivative suit against ousted directors involved in an unsuccessful proxy battle might claim that such struggle was an improper and self-serving use of corporate funds for the purposes of merely extending the directors' and officers' own longevity.

Another similar exclusion deals with the return of remuneration to which the insured individuals were not legally entitled. An example is shown below.

When this exclusion was first introduced, insurers were concerned that an individual insured, when forced to return to the corporation profits or excessive remuneration for which he or she was not legally entitled, might attempt to recoup these sums from the D&O insurer. The exclusion, as worded in the above example, excludes any claims based on excessive compensation when it was held illegal because such compensation had not been approved by the corporation's shareholders. Until recently there had been few requirements, legal or otherwise, for stockholder approval of executive compensation and, as such, the lack of approval probably was not a basis for upholding the exclusion. The attitude of regulators such as the SEC is changing, and shareholders now may have a greater opportunity to participate in executive-pay decisions.

Although most return-of-remuneration exclusions are similar, the following example shows that important variations exist. Although now rare, some policies may include wording similar to the following taken from an old policy form. Note that there is no requirement that the remuneration be held illegal, only that the remuneration be without previous approval of the “governing bodies” of the corporation. Hence the exclusion is broader than if the “illegal” requirement applies.