Fiduciary obligations are the highest duties in the confines of law. Examples of fiduciary duties include confidentiality, accounting, obedience, disclosure and reasonable care and diligence. Corporate officers such as chief executive officers or directors fall under the category of fiduciaries who are highly entrusted as agents of their corporations to make the best decisions for their principals without putting self-interests first and are remunerated handsomely to perform their managerial duties.
Corporate officers are presumed to make business decisions under the guidance of these duties also referred to as ‘business judgement rule’. Therefore, corporate officers need to arm themselves with up to date information that is business critical to ensure protection of their principals’ interests such as growing shareholder wealth and protecting the firm from being deregistered or from hostile takeovers.
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The diet pill has grown rapidly both in interest and market sales. As much as the company has generated revenue from the product, it has also been the recipient of bad publicity and reported adverse health risks among a few consumers. The business has faced a few lawsuits and the Food and Drug Administration Agency has raised concerns about the safety of diet pills across the industry and more regulations and warnings will certainly follow suit. After taking a 360 degree perspective at the ramifications of either retaining or scrapping the diet pill from the shelf, I find it prudent and necessary to exercise the fiduciary duty of care to advise the business to remove the product from the market to safeguard the business from risks of loss of license and further litigation or bans both present and future as the thorny issue continues to unravel. Losses in unsold inventory could harm profits and bad press damage shareholder wealth and brand equity.
References
Lafferty, W. M., Schmidt, L. A., & Wolfe Jr, D. J. (2011). A Brief Introduction to the Fiduciary Duties of Directors Under Delaware Law . Penn St. L. Rev., 838, 846.
