Earlier this month, former outside directors of WorldCom and Enron agreed to pay substantial sums out of their own pockets in ground-breaking US settlements of class action lawsuits. These deals are a big break with prior experience in the US but they have parallels with legal nightmares suffered by non-executives of companies elsewhere.

The ex-directors of WorldCom, the telecommunications group, and Enron, the energy group, paid out of their own pockets despite the fact that they did not enrich themselves at company expense or know about the frauds that management had committed. Such payments are extraordinary, even by the standards of the highly litigious US. Our research has so far uncovered only a few instances in the US or elsewhere where outside directors paid damages out of their own pockets. No payment has come close to the $13m (£7m) paid by former Enron directors or the $18m paid by their WorldCom counterparts.