Generally, the board of directors are responsible for the following duties: 1) duty of care – duty to make/delegate decisions in an informed way; 2) duty of loyalty – duty to advance corporate over personal interests; 3) duty of good faith – duty to be faithful and devoted to the interests of the corporation and its shareholders; 4) duty not to “waste” – duty to avoid deliberate destruction of shareholder value. There is no reason to believe that the duties of Vector’s board should be any different. The major conflict between Vector’s board and its president centers on President Wiegert’s management style, belief of excessive spending and his deceitfulness towards the board members and potential investors. Although President Wiegert’s
…show more content…
Following this addition, one of the members resigned because Wiegart deliberately lied to the members stating that the investor insisted on there only being four board members. In the meantime, Wiegart continues trying to sell his fabricated business plan with potential investors, losing their trust, and burying the company in a huge financial deficit. The board members did not challenge Wiegart and try to take control of the situation until the financial position of the company was in dire straits and it was, in a sense, too late. The board members acted completely inappropriate despite Wiegart’s deceitfulness and manipulation. The boards major failure was waiting too long to take action and failing to notice the clause in Wiegart’s contract that mentions receiving a “90 days’ written notice and opportunity for Employee to remedy any non-compliance”. They never confronted him formally about his poor management or ill-fated decisions and the board will now have a hard time firing him and not receive some form of legal action taken against them. However, the first initial mistake was the president and founder of the company appointing himself as the chair of the board.
There were many possible ways in which this could have had a much more favorable outcome. The most obvious one is a law set in place that does not allow the president and the board member to be one in the same. The