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WK 5 - Team IRAC PPT Updated
WK 5 - Team IRAC PPT Updated
WK 5 - Team IRAC PPT Updated
Introduction
This
The
CASE
Brehm
v. Eisner
Michael
Ovitz
The
$23.6
million per year for the first five years of the deal, plus bonuses
and stock options
The
Entitled
In
Issue (Ruben)
The
Breach
Disagreement
Rule (Eli)
Informed decision
No conflicts of interest
Rational basis
Analysis (Jonah)
CLAIMS
A) Approval of employment and Ortiz as president
B) No Fault Termination of Ortiz and subsequent severance
costs
l
a
e
p
p
Business Judgment Rule
A
t
r
u
Aronson demand futility test
o
C
e
m
e
r
p
u
S
Duty
of Care
Analysis (Jonah)
Approval
of employment contract
Termination
Complaint:
Good
Material
Constitute
Eisners
without cause
waste or fraud
fiduciary conduct
Analysis (Jonah)
Remark
s
Conclusion (Valerie)
-Weighed the alternatives, received advice from counsel and then exercised his
business judgment in the manner he thought best for the corporation
- Knew all the material information reasonably available when making the decision
- Did not neglect an affirmative duty to act (or fail to cause the board to act)
- Acted in what he believed were the best interests of the Company, taking into account
the cost to the Company of the decision and the potential alternatives
- Decision to hire Ovitz as President, and then to terminate him on an NFT basis, were
protected business judgments, made without any violations of fiduciary duty.
- Unnecessary for the Court to reach the shareholders' contention that the Disney
defendants were required to prove that the payment of the NFT severance to Ovitz was
entirely fair
Reference
Mcdonnell, C., Bruce, S., & Flynn, S. (2009). Business Law (2nd ed.).
Retrieved from http://highered.mcgraw-hill.com/sites/0073375691.