Malpractice Suit Against Disney Directors

Disney lawsuit could ripple through Corporate America:
http://www.usatoday.com/money/media/2004-10-18-disney-ovitz-lawsuit_x.htm

The suit against Disney is in protest about the general assumptions of corporate governance. The stockholders have placed a suit against the board of directors. This is incredible since usually in a corporation, stockholders and board members are not personally liable except in the case of corporate fraud. However, in this case the board members are being sued for not properly doing their job and not acting in the best interest of the shareholders. The board of directors are required by law to act in the best interest of the stockholders. However, there has never been a case where stockholders have sued for remuneration because of business negligence. Instead, the board of directors are usually voted out by the stockholders.

If the plaintiffs win, this could be very significant since it would dramatically change the boundaries of personal liability for managers of a corporation. Because personal liabilities are removed, the directors of a corporation can be more gutsy in attempting businesses with low probability of success. However, it also removes a level of responsibility for their decisions.

I think that directors should be somewhat personally liable for their decisions. The corporation provides too much shelter in its current formation. On a related note, the corporation's stucture frees the directors of personal liability for the social consequences of the company. i think that these decisions are even more important, and I think that the directors who make the decisions should have some responsibility for the decisions they make that impact the environment around us.