Review sections 21-5a and 21-5b.

Trevor was hired as the Chief Operating Officer at Premier Inefficiency Corporation. He decided to totally overhaul its distribution processes and implement state of the art equipment. The overhaul ended up costing $25 million more than expected and some of the shareholders started grumbling. With this in mind, explain:

1. The business judgment rule (what is the rule?) and how it may protect Trevor from liability.
2. The two duties of the rule (make sure you explain each duty).
3. The four ways (from the textbook) that the rule is applied (make sure you explain each way).
4. How the rule will positively impact him in this and other business decisions as COO (i.e. how it will have a positive influence on his decision making; what will he be more likely to do from a business perspective?).