Re:Seattle C.E.O. Who Promised $70,000 Salaries Wins Suit Fi...
by TheCoelacanth on Monday July 11, 2016 @07:40PM
(#12075640)
> In cases where directors have acknowledged sacrificing shareholder interests for other groups
This part is key. When the directors actually admit that they are harming shareholder interests, they are opening themselves to a lawsuit. When they make a plausible claim that their actions are in the shareholders' interest, even if some of the shareholders disagree, they are fine. Courts do not second-guess business judgement.
To overrule the directors in court, shareholders have to show that the directors are acting in bad faith, not just that the actions will seemingly harm the company.
This part is key. When the directors actually admit that they are harming shareholder interests, they are opening themselves to a lawsuit. When they make a plausible claim that their actions are in the shareholders' interest, even if some of the shareholders disagree, they are fine. Courts do not second-guess business judgement.
To overrule the directors in court, shareholders have to show that the directors are acting in bad faith, not just that the actions will seemingly harm the company.