As a shareholder of a corporation, you’re not responsible for the management of direction of the corporation. You’re simply an investor, and you put your trust in the officers and directors of the corporation to make prudent choices for your investment. When the officers or directors make a mistake, you may have rights under a derivative action.
A recent lawsuit was filed after the merger of Duke Entergy and Progress Energy. Progress CEO William D. Johnson became CEO of the new, merged company, but the board voted to replace Johnson with former Duke Chairman James E. Rogers.
Lesley C. Rupp, a disgruntled Duke shareholder filed a lawsuit in Delaware , alleging that Rogers and other directors misled investors and regulators and damaged the new company’s reputation by removing Johnson shortly after the deal closed. Rupp alleges this activity lead to a loss in stock price, potential loss of rate hike opportunities, an increase in borrowing costs, and possible expenses related to future litigation.
As a shareholder in a corporation, it’s important to know your rights with regards to the duties imposed on directors and officers.