Under the Unocal standard established by the Delaware Supreme Court, a board's defensive measures in response to a hostile takeover are evaluated based on which test?

Why D — Whether the board identified a legitimate threat and the response was reasonable and proportionate to the threat

Under the Unocal standard, the board must demonstrate that it had reasonable grounds for believing a threat to corporate policy and effectiveness existed, and that the defensive measure adopted was reasonable in relation to that threat (proportionality). This enhanced scrutiny standard is more rigorous than the business judgment rule but less demanding than entire fairness review. The board must show good faith and reasonable investigation, and the defense must not be draconian or preclusive of all competing bids.