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lowed to bring a suit [2], he would then need to demonstrate
either that Tony Stark's actions were not protected by the
Business Judgment Rule, or that even if they were, that Tony's
actions were so colossally bad that they constituted waste
[3]. There are many good reasons to exit a profitable business
or decline to pursue a profitable opportunity, and it is fairly
easy to claim that an action was taken with a view towards
long-term profit. In the case of weapons manufacture, this
seems a pretty easy case. More egregious examples have been
upheld, including a baseball stadium choosing not to install
lights because the owner thought that night games spoiled
the purity of the sport [4].
The other way to get around the business judgment rule is
to allege that the corporation engaged in self-dealing — i.e.,
that the bad business decision benefited some of the directors
and officers personally. When this is alleged, a court will look
at the transaction closely, and if the transaction seems unfair,
will reverse it or compensate shareholders. I don't think
there's any suggestion of self-dealing in Iron Man though, unless
you consider the pretty attenuated theory that Tony as
Iron Man benefits by a dearth of weapons supplied to other
parties.
I am assuming that "stop manufacturing weapons" doesn't
mean immediately fire all employees, destroy all inventory,
and destroy all weapons manufacturing and research facilities
— I'm assuming that Stark Industries would divest the
weapons business in a competitive auction (if it's a separable
business), or reallocate resources over time to other manufacturing
areas (if it's not). Shutting down a profitable business
in a value-destructive way might constitute waste if it's done
poorly enough.
As above, I think that this would be a pretty hard fight
for an investor to win [5], but it is a fact-dependent inquiry,
and we really don't have enough information from the movies
to tell. If someone wants to write a sequel, Iron Man 3:
Stark Industries Derivative Litigation, it'd be worth fleshing
out the corporate governance structure of Stark Industries,
the business units of the company, and its financials and how
diversified they are.
[1] First assumption because it seems most likely and be-
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