Page 513 CASE SUMMARY 15.4 Grobow v. Perot, 539 A.2d 180 (Del. 1988) BUSINESS JU
ID: 1174186 • Letter: P
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Page 513 CASE SUMMARY 15.4 Grobow v. Perot, 539 A.2d 180 (Del. 1988) BUSINESS JUDGMENT RULE H. Ross Perot became the single largest shareholder and a director of General Motors as a result of GM's acquisition of Perot's highly successful company Electronic Data Systems (EDS). A rift grew between Perot and GM's other directors, and after appointing a subcommittee of directors to study possible alternatives, GM's directors offered to purchase back Perot's stock at a significant premium over market value. In exchange for the payment, Perot agreed to leave his director's seat, not compete with any GM subsidiary (particularly EDS), and cease any criticism of GM's directors. A group of GM shareholders sued the directors under the theory that the directors had breached their fiduciary duty by wasting corporate assets in buying Perot's silence. The directors asserted the business judgment rule as a defense. CASE QUESTIONS 1. Who prevails and why? 2. What fiduciary duty is at issue?Explanation / Answer
1.GM's director prevail by considering business judgement rule as a defence according to business judgememt rule board act with a fiduciary duty in an interest to protect the company that the board serves .board of memebers allowed to take decisiin without any fear of being prosecuted .
2.Fiduciary considered to be most loyal to the person who owes the duty(principal).fiduciary is at issue when there is a conflict of duties between fiduciary and principal .
*fidusiaty start getting profit from his possition as a fiduciary and breaks the trust of the principal.
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