Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

SimonJ.Michael,adirectorofShockingTechnologies,wastheonlyrepresentativeoftheholdersoftwoclassesofShockingpreferredstock.Overtime,significantdisagreementsbetweenMichaelandtheotherboardmembersaroseoverexecutivecompensationandwhetherpreferredshareholdersshouldhaveincreasedboardrepresentation.Michaelarguedthatthecompany'sgovernanceproblemsneededtoberesolvedbeforeitcouldattractadditionalequityfunding, which the company desperately needed. MichaelunderstoodthatShocking'ssurvivallikelydependeduponalargeinvestmentbyathirdparty,Littelfuse. Michael spoke with Littelfuse to try to align Littelfuse's interests with his. Michael not only sought todissuadeLittelfusefrominvestinginShocking,butalsodisclosedtoLittelfuseShocking'sconfidentialbusinessinformationthatLittelfusewastheonlypotential investor

SimonJ.Michael,adirectorofShockingTechnologies,wastheonlyrepresentativeoftheholdersoftwoclassesofShockingpreferredstock.Overtime,significantdisagreementsbetweenMichaelandtheotherboardmembersaroseoverexecutivecompensationandwhetherpreferredshareholdersshouldhaveincreasedboardrepresentation.Michaelarguedthatthecompany'sgovernanceproblemsneededtoberesolvedbeforeitcouldattractadditionalequityfunding, which the company desperately needed. MichaelunderstoodthatShocking'ssurvivallikelydependeduponalargeinvestmentbyathirdparty,Littelfuse. Michael spoke with Littelfuse to try to align Littelfuse's interests with his. Michael not only sought todissuadeLittelfusefrominvestinginShocking,butalsodisclosedtoLittelfuseShocking'sconfidentialbusinessinformationthatLittelfusewastheonlypotential investor likely to participate in the necessary fundraising.ByinformingLittelfusethattherewereno other options available to Shocking, Michael gave Littelfuse a significantly enhanced strategic bargaining position with Shocking. Michael believed that Shocking's resulting cash crunch would force the rest oftheboardtoimplementhisobjectives,whichhebelieved served the interests of the preferred shareholders. Did Michael breach his fiduciary duty to Shocking?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Law questions

Question

Review the findings of humanistic psychotherapy outcome research.

Answered: 1 week ago

Question

2. In what way can we say that method affects the result we get?

Answered: 1 week ago