They must discharge their actions in good faith and in the best interest of the corporation, exercising the care an ordinary person would use under similar circumstances.
Thus the definition of waste is an exchange so one-sided that no business person of ordinary, sound judgment could conclude the corporation has received adequate consideration.
In this decision, a standard of gross negligence was used, which is defined as “reckless indifference to or a deliberate disregard of the whole body of stockholders or actions which are without the bounds of reason.”[2] In the case of Van Gorkom, a share price was set for a company buyout with essentially no consideration, this meeting the standard of gross negligence in informed decision making.
Caremark, Unocal Corp. v. Mesa Petroleum Co., Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc. (setting out duty of supervision and knowledge of company finances).
The courts stated that she breached her duty of care because she failed to monitor what was happening within her organization.
Note, however, that this case was decided under Delaware's rather extreme codification of the Business Judgment Rule, §102(b)(7), which allows the Corporation to shield its board members from liability for almost anything short of outright bad faith.