boards and benign neglect

The Board of Director's ran navies, insurance companies, and aerospace suppliers.  

They earn $500,000 a year, $6 million as the crow flies through line items of corporate expense, before considering other opportunities that befall them for having their hindquarters rest in board chairs as shepherds of Big Air.

In 2014 the rocket scientists at Big Air identified a design flaw in a new plane ignored by management because it would make the new plane more expensive than the competition and customers would be required to train pilots on the new software.  

In 2018 that plane crashed twice taking souls from 349 families over two continents. The crashes were six months apart. Managements' attempt to cover up the reasons for the first crash resulted in the second. 

The Board dithered. The General Counsel retired.  The CEO was handed $60 million on the way out the door plus a $200 million blank check company.  $50 million was budgeted for the victim's families. 

 In defence of the indefensible, Big Air adopted a strategy that did not work well for a sitting President forty years earlier.

The Board was sued by shareholders in November 2019 for negligence after two plane crashes, the coverup, grand jury investigation, SEC investigation, civil suits, and the criminal fine. The shareholders claim if the Board was unaware of the conduct of management it should have been. 

The civil suit was joined by the Wall Street Journal. The suit sought to hold the Directors personally liable for their benign neglect.  Thinking that might have been enough to encourage the Board to save legal fees and settle on the spot. 

The Directors paid their money and took their chances filing motions to suppress everything from the public record except the names of the Big Air whistleblowers. 

The court disagreed and ruled the only information to be suppressed was the names of the whistleblowers. The rest of the information from board minutes to internal communications was the toothpaste that was already out of the tube in the public record of the legal contest. 

In the September 2021 decision, Judge Zurn politely reminded counsel that the case was about what the board knew, what they did about it, especially in their discussions with a CEO they paid $60 million and fired, and that their motion to dismiss has been dismissed.

Two months later the Board settled for $240 million.