1. The lawsuit filed by the Shareholders Foundation alleged that the board of directors of XTO breached its fiduciary duties. What are the fiduciary duties of the board? Identify the duties allegedly violated in the XTO case. Do you think the board acted in accordance with a shareholder or stewardship perspective?
2. Much has been said during the recent financial crisis about top executive salaries being way too large, especially in those companies receiving a government bailout. The Obama administration sought to rein them in through threats of taxation or other forms of “moral suasion.” Do you believe the government has an ethical right to intervene in a company’s executive compensation program? Support your answer with reference to ethical ¬reasoning. Review Exhibit 1. Do you believe that the agreement in the Form 8-K about payments to officers and board ¬members raises any ethical issues? What is the role of the business judgment in such decision?
3. One aspect of being an ethical corporation is to operate in a socially responsible way. The Corporate Social Responsibility Initiative at Harvard University defines corporate social responsibility strategically. “Corporate social responsibility encompasses not only what companies do with their profits, but also how they make them. It goes beyond philanthropy and compliance and addresses how companies manage their economic, social, and environmental impacts, as well as their relationships in all key spheres of influence: the workplace, the marketplace, the supply chain, the community, and the public policy realm.” The ethics of fracking is an issue raised in a number of articles and in the blog of one of the authors of this book. According to Mintz, “From an ethical perspective we might look at the harms and benefits of fracking. In other words, do the potential dangers of fracking, including contamination of water supplies, outweigh the potential benefits of producing badly needed oil and gas resources at a time when our national security may be in jeopardy because of our continued reliance on unreliable sources of energy? Is U.S. energy independence more important than the potential for harm to those affected by fracking procedures? Do jobs and economic growth trump health and safety concerns?”
4. Evaluate the ethics of fracking from a moral reasoning perspective using the methods discussed in this chapter. Going forward, do you believe fracking should continue without regulation? Why or why not?