Podcast
Questions and Answers
With respect to process, the board would satisfy the burden by showing good ______ and reasonable investigation.
With respect to process, the board would satisfy the burden by showing good ______ and reasonable investigation.
faith
Management's strongest argument is that the board is acting solely out of ______ incentives.
Management's strongest argument is that the board is acting solely out of ______ incentives.
entrenchment
The management argues the board is not acting in the best interests of the corporation or its ______.
The management argues the board is not acting in the best interests of the corporation or its ______.
SHs
The board spent less than two hours discussing the threat posed by the ______.
The board spent less than two hours discussing the threat posed by the ______.
The board's discussion was regarding the threat posed by the hedge funds given the ______ stock price.
The board's discussion was regarding the threat posed by the hedge funds given the ______ stock price.
The board approved the adoption of the ______ after limited discussion.
The board approved the adoption of the ______ after limited discussion.
Successfully arguing that the board is acting solely out of entrenchment incentives would require demonstrating a lack of ______ and reasonable investigation.
Successfully arguing that the board is acting solely out of entrenchment incentives would require demonstrating a lack of ______ and reasonable investigation.
The limited time spent by the board raises concerns about the ______ of their investigation.
The limited time spent by the board raises concerns about the ______ of their investigation.
A board must demonstrate they are acting in the best interests of the corporation, not solely to ______ themselves.
A board must demonstrate they are acting in the best interests of the corporation, not solely to ______ themselves.
The depressed stock price would motivate hedge funds to act to improve ______ returns.
The depressed stock price would motivate hedge funds to act to improve ______ returns.
Flashcards
Burden of Proof for Board Decisions
Burden of Proof for Board Decisions
Directors must show good faith and conduct a reasonable investigation to prove they are acting in the corporation's best interest.
Entrenchment
Entrenchment
Entrenchment refers to actions taken by a company's management to protect their positions, potentially at the expense of shareholders.
Poison Pill
Poison Pill
A rights plan used by a corporation against a hostile takeover attempt.
Study Notes
- A board can satisfy its burden by demonstrating good faith and reasonable investigation in its processes.
- Management's strongest argument against the board is that it is acting solely out of entrenchment incentives, not in the corporation's or shareholders' best interests.
- Supporting facts for this argument include the board spending less than two hours discussing the threat posed by hedge funds, given the depressed stock price and the adoption of the pill.
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