ShoeZoo, Inc. is an athletic shoe and apparel company that is struggling to compete with much larger companies in its industry. One of ShoeZoo's main assets is that it has Billy Paultz, a rookie NBA basketball player, as its main endorser. SportGiant, Inc. offered to purchase ShoeZoo at a price that was $10/share over the company's appraised value. ShoeZoo's board of directors approved the offer after a 15 minute meeting and without soliciting other offers. Six months later, Billy Paultz became a huge star and the value of the company skyrocketed. The former shareholders of ShoeZoo sued. Will the directors be liable? 1) Yes, because the board made an uninformed decision. 2) Yes, because the board breached its duty of care. 3) No, because the board had a meeting, even if it was only 15 minutes. O 4) No, if the directors can prove that both the process and the decision were fair to the shareholders.
ShoeZoo, Inc. is an athletic shoe and apparel company that is struggling to compete with much larger companies in its industry. One of ShoeZoo's main assets is that it has Billy Paultz, a rookie NBA basketball player, as its main endorser. SportGiant, Inc. offered to purchase ShoeZoo at a price that was $10/share over the company's appraised value. ShoeZoo's board of directors approved the offer after a 15 minute meeting and without soliciting other offers. Six months later, Billy Paultz became a huge star and the value of the company skyrocketed. The former shareholders of ShoeZoo sued. Will the directors be liable? 1) Yes, because the board made an uninformed decision. 2) Yes, because the board breached its duty of care. 3) No, because the board had a meeting, even if it was only 15 minutes. O 4) No, if the directors can prove that both the process and the decision were fair to the shareholders.
Chapter25: Taxation Of International Transact Ions
Section: Chapter Questions
Problem 25P
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Transcribed Image Text:ShoeZoo, Inc. is an athletic shoe and apparel company that is struggling to
compete with much larger companies in its industry. One of ShoeZoo's main assets
is that it has Billy Paultz, a rookie NBA basketball player, as its main endorser.
SportGiant, Inc. offered to purchase ShoeZoo at a price that was $10/share over the
company's appraised value. ShoeZoo's board of directors approved the offer after a
15 minute meeting and without soliciting other offers. Six months later, Billy Paultz
became a huge star and the value of the company skyrocketed. The former
shareholders of ShoeZoo sued. Will the directors be liable?
1) Yes, because the board made an uninformed decision.
2) Yes, because the board breached its duty of care.
O 3) No, because the board had a meeting, even if it was only 15 minutes.
No, if the directors can prove that both the process and the decision were
4)
fair to the shareholders.
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