1. CEOs and Shareholders' Legal Relationship
CEOs are bounded by the fiducial responsibility of the care, loyalty, and disclosure, which encompasses both internal and external relations, staff and shareholders respectively ("Legal Relationship Between Shareholders " Ceos"). According to corporate law, stockholders interest take primacy concern of most organisations (Winkler). With that said, the statutory regulations have considered the discretions of organisational leaders and confirms that although Zuckerberg remains accountable to its stockholders, it is still a matter of personal choice not contractual obligation (Winkler).
Though this may be opportunistic to allow for the manipulation of company’s resources, another layer of security that is the Business Judgement rule – justifies losses made by the CEO as an acceptable qualm, provided the business is transparent and has the interest of stockholders ("Legal Relationship Between Shareholders " Ceos"). That said, for businesses such as Facebook which involves a mass of people, authorities should impose certain ethical boundaries to safeguard the interests of many that strive to own a share of the company. Boundaries would include anything that could possibly jeopardize their position as a stockholder, or cloud their judgement (e.g. getting bribed or having the voice been deemed as irrelevant). That said, ultimately stockholders’ hold a partial dominance in the rights to refute any decisions made by the company, dependent on their stock power. Stockholder also has the jurisdiction to retract shares at will.
2. The Board's Role and Strategic Decision
The Board did not directly violate any agreement, what would constitute as a violation could only be substantiated by contractual terms (i.e. if the decision has been made to acquire the company already, and the agreement is signed on papers), till then it is a leveled playing field. The board holds the purview based on their experience and their interest in the company, and in the case of Paramount, business strategy alignment is placed more important than a price-heavy sell-out. The board has long-term vision and is more intuitive of incoming plausible threats or they would take serious consideration for a better fit for the company. Members of the board are obligatorily bounded to the company’s interest based on the duty to act faithfully and to care (Eisenberg). Hence, it is not wrong in this case, but the consequence may be that it leaves an impression that the Board may not be wise of their strategic decision in being led profitably.
References
Eisenberg, Melvin A. "The Duty Of Good Faith In American Corporate Law". European Company And Financial Law Review, vol 3, no. 1, 2006, pp. 1-44. Walter De Gruyter Gmbh, doi:10.1515/ecfr.2006.001.
"Legal Relationship Between Shareholders " Ceos". Smallbusiness.Chron.Com, http://smallbusiness.chron.com/legal-relationship-between-shareholders-ceos-33637.html.
Winkler, Adam. "Corporate Law Or The Law Of Business?: Stakeholders And Corporate Governance At The End Of History". Law And Contemporary Problems, vol 67, 2004, pp. 109-134.
