Moran v. Household Intl., Inc
In Moran v. Household Intl., Inc. (500 A2d 1346 ), the Delaware Supreme Court, in reviewing an attacked board of directors' preferred share purchase rights plan, under the business judgment rule, described the business judgment rule as a presumption that in making a business decision, directors of a corporation act on an informed basis, in good faith and in honest belief that an action is taken in the best interests of the company.
The court went on to rule that while directors must show that a takeover defense mechanism, as occurred in that case, was reasonable in relation to the threat posed, that such "proof is materially enhanced . . . where . . . the majority of the board favoring the proposal consisted of outside independent directors" who acted in good faith and in honest belief that their action was in the best interest of the company. (Id. at 1356.)