Mondrian

By Constance Bagley, Christy Haubegger
1995 | Case No. CG3
Describes the attempt of a shareholder holding a 30% share in a privately held corporation that owns a chain of small dress boutiques to force the sale of company over the objections of the founder-CEO. Alternatives the board and special committee of independent directors must consider include a management leveraged buyout, sale to a large publicly held department-store chain, and repurchase of the dissident’s shares at a premium. Addresses the legal and strategic issues associated with the buyout attempt, including the conflict between the rights and responsibilities of directors who are also major shareholders, conflicts of interest between inside and outside directors, and the effects of cumulative voting. The committee of outside directors must decide which alternative to recommend to the full board and whether to resign due to unethical conduct of the CEO.

Learning Objective

Corporate Governance
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