CGOV.6:5.2 - Competing horizons and a separate incentive

Two directors disagree about retaining cash for investment or distributing it. Both rely on forecasts and claim to be pursuing the corporation’s interests. The disagreement alone supports a comparison of alternatives, not a finding that one must leave the decision.

Now add a supplied fact: the director advocating a distribution receives a substantial personal bonus from a different company if this corporation makes a distribution this quarter. That director now has a financial interest in the decision beyond the stated judgement about the corporation’s use of cash. Examine the duty and the bonus arrangement under the actual rules. The conflict analysis still leaves the financial merits of retaining or distributing the cash to be assessed.