2. Different companies use different styles and levels of detail to inform their shareholders of their equal
employment and affirmative action policies. Have students obtain some of the different versions and compare them.
For example, in the past, Bristol-Myers Squibb and The Travelers Corporation have produced magazine-style reports.
Campbell Soup Company produced a four-page document. General Motors Corporation disclosed its policies in its
“Public Interest Report.” J. C. Penney Company produced a one-page analysis as part of its annual report. CIGNA
Corporation made available to its shareholders a five-page internal memorandum on the subject. What has
Microsoft, Wal-Mart, or any of the “dot com” companies done?
EXPLANATION OF A SELECTED FOOTNOTE IN THE TEXT
Footnote 4: The board of Chugach Alaska Corp. (CAC) split into two factions—one led by Sheri Buretta,
who had chaired the board for several years, and the other by director Robert Henrichs. A coalition of directors voted
to remove Buretta and install Henrichs. During his term, Henrichs committed a variety of acts of misconduct with
respect to CAC’s directors, shareholders, and employees. After six months, the board voted to reinstall Buretta. CAC
filed a suit in an Alaska state court against Henrichs, alleging a breach of fiduciary duty. A jury found Henrichs liable.
Do acts such as those in which Henrichs engaged satisfy any of the elements for the application of
the business judgment rule? No. The business judgment rule applies to protect a director or officer from liability for
a mistake of judgment or a bad business decision as long as (1) the director or officer took reasonable steps to
Why do courts in their application of the business judgment rule give significant deference (weight) to
the decisions of corporate directors and officers? Courts give significant deference to the decisions of corporate
directors and officers by considering the reasonableness of a decision at the time it was made, without the benefit of
hindsight. Corporate decision makers are not subjected to second-guessing. This is because judges are not business
experts, and courts do not have access to all of the information and factors that a corporate director or officer may
weigh and balance in making a decision.
Does misbehavior such as the conduct at the heart of this case constitute a breach of business
ethics? Yes. Business ethics focuses on what is right or wrong in the business world. Henrichs exhibited unethical
behavior when he breached his fiduciary duty to his corporation by holding mini-board meetings and making decisions