Commerce Bank was founded in New Jersey with a single location in 1971. Its founder, chairman and CEO, Vernon W. Hill II, was a real estate developer, whose wife owned an interior decorating business. By 2007, it had 450 branches from New York City to Washington D.C., open 7 days a week. With branches springing up like Burger Kings, Commerce Bank became the fastest growing bank in America. Mr. Hill was in all things entrepreneurial. He persuaded his board of directors to pay millions in rent for buildings owned by his family and over $50 million to Mrs. Hill for her decorating services. In June 2007, in the face of numerous federal investigations, and at the insistence of his board of directors, Mr. Hill resigned all of his posts at Commerce Bank. His severance package has been estimated at $17 million, and his Commerce Bankcorp shares, when he stepped down, were worth $225 million.
1. Would the shareholders have a claim against Mrs. Hill? Why or why not?© BrainMass Inc. brainmass.com June 4, 2020, 12:54 am ad1c9bdddf
Here is a sample response:
The shareholders would not have a claim against Mrs. Hill but they would have a claim against Mr. Hill. Mrs. Hill was not on the Board of Directors or a corporate officer of Commerce Bank, therefore, she owed no fiduciary duties to the shareholders. However, as CEO, Mr. Hill owed a fiduciary duty to avoid participating in self-dealing transactions.
Fiduciary duties ...
The solution discusses corporate governance and the shareholders that have a claim against Mrs. Hill.