Assignment
You have been elected to Investment Management Corporation's (IMC) board of directors. The board consists of five members. Recently, by a vote of four in favor and one opposed (you were the one opposed), the board voted to give annual college scholarships in the amount of $100,000 to local students. Last year, IMC made a profit of $2 million dollars, but the board did not vote to give shareholders dividends. You are concerned that some of the other board members have violated the business judgment rule in making their decision, based on the following additional facts about the four board members who voted in favor of the annual scholarships:
1. Peter, who works as a guidance counselor, is newly elected to the board and has only been on the board for one month. Peter has made a cursory review of corporate records. Peter is very good friends with the CEO, who recommended in favor of the vote. Peter also has two children, ages 16 and 17.
2. Paul, an advertising executive, is a very busy man and attends about four meetings a year. The board meets every month. Paul has been on the board for 10 years and stays in touch with the CEO whenever he is out of town.
3. Mary, a CPA, has been a board member for three years. Mary just returned from a trip to Europe. After two hours of sleep, Mary reviewed all corporate records before voting.
4. Janice, a retired high school teacher, serves on many corporate boards of directors. Some of the corporations are competitors of IMC.
• -For your initial response, prepare an argument against one or more of the board members, suggesting that the member(s) has (have) violated the business judgment rule.
• -Be sure to discuss the member's fiduciary duties and explain which duty or duties the member(s) may have violated and explain why
• -Include any assumptions you have made
• -300-400 words.