Recent major issues affecting corporations raise the question of how relevant the Caremark standard and the business judgment rule are as they pertain to today's business and social, political and cultural issues. Many states follow the Delaware court decisions, many of which are rooted in the Caremark standard and the business judgment rule, in evaluating whether board directors have fulfilled their duty of care and other fiduciary duties when allegations of poor judgment arise. ![]() ![]() Manufacture and distribution of guns and opioids.Some other current issues that cause today's corporations to evaluate the board's performance include: Most recently, the #MeToo movement and the controversies over the pledge of allegiance and the national anthem have made important headlines that affect most companies in one form or another. Many of the non-financial decisions that boards face today are driven by important social, cultural and political concerns. Besides the financial side of business, boards also make many decisions that are unrelated to financial performance and those issues can have negative consequences as well. They also make disclosures to shareholders and stakeholders in the interest of transparency. Public and private boards have to make many decisions about financial performance. Two of the main standards by which boards are judged are the Caremark standard and the business judgment rule. Changes in the marketplace, along with changes in society, are forcing boards, managers, regulators and the courts to revisit past legislation and its relevance in today's society.
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