Question
Roger is a director of a major car manufacturer. This is one of the few remaining car companies yet to introduce a sport utility vehicle.
Roger is a director of a major car manufacturer. This is one of the few remaining car companies yet to introduce a sport utility vehicle. Roger convinces the board to investigate forming a new division to design, build and market a sport utility vehicle. Roger also convinces the board that the first sport utility vehicle that the division introduces should be the largest yet sold to the general public. The board set up a committee to do some research, and this committee hired a marketing consulting firm. The committee and the consulting firm both had a few reservations about such a large vehicle, but the data showed that the market could most likely support it. After much discussion, the board of directors voted in favor of creating the new division and the huge sport utility vehicle as its first product. The vote was 9 to 6 in favor of the plan. Shortly before this vehicle was introduced, there was a major oil supply disruption that caused the price of crude oil to nearly triple. Few purchasers were found for the huge new sport utility vehicle and the company lost considerable money. A shareholder files suit against Roger claiming he violated his duty to the corporation by convincing the board to build and market the large SUV. Discuss Roger's duties as a director and any defenses he has to the lawsuit.
Step by Step Solution
3.45 Rating (148 Votes )
There are 3 Steps involved in it
Step: 1
Rogers duties as a director 1he should work for the welfare of the compan...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started