Corporate & Securities Law

Measuring Shareholder Activism

Posted on October 07, 2008
Public Pension Funds as Shareholder Activists: A Comment on Choi and Fisch by Randall S. Thomas critiques On Beyond CalPERS: Survey Evidence on the Developing Role of Public Pension Funds in Corporate Governance by Stephen J. Choi and Jill E. Fisch. [continued on site]

Behavioral Economics and the Financial Crisis of 2008

Posted on October 06, 2008
Economics blogger Megan McArdle runs through a bunch of mostly behavioral finance explanations. [continued on site]

Would Delaware Courts Follow Baron v. Allied Artists Pictures Today?

Posted on October 06, 2008
In Baron v. Allied Artists Pictures Corp., 337 A.2d 653 (Del. Ch. 1975), app. dismissed, 365 A.2d 136 (Del. 1976), Allied’s articles of incorporation provided that if six or more quarterly dividends were missed the preferred shareholders, voting as a class, would have the right to elect a majority of the board of directors...

Strine

Posted on October 06, 2008
Vice Chancellor Leo Strine is one of our favorites here at PB.com. Smart, engaged, active, able to interact seemingly effortlessly with both academics and practitioners. The Deal recently gave him a glowing write up. Strine has become the court’s leading voice...

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Good Faith and Risk Taking

Posted on October 03, 2008
In Business Associations today, I taught Smith v. Van Gorkom (BTW, have you read my “story” article on the case? If not, why not?) One of the issues I always raise when teaching it is the standard governing the extent to which directors must inform themselves...

What?s NY and NC Law on No Shops in Letters of Intent?

Posted on October 03, 2008
Wachovia and Citi had a pretty strong no shop clause in their so-called ”exclusivity agreement,” which calls for NY law to be applied, and includes a specific performance clause. There is no fiduciary out. Assuming NY law applies, is this provision legal? Update: Presumably despite the NY choice of law provision, state of incorporation fiduciary duty law would be relevant to issues...

Is Delaware Becoming a Tort Haven?

Posted on October 02, 2008
If you believe the WSJ, Delaware is turning into the next Madison County, becoming a wholly-owned subsidiary of Trial Lawyer’s Inc.: A remarkable political fact of Mr. Biden career is that his top campaign contributor is SimmonsCooper, a law firm in Madison County, Illinois, of all places...

Chancery Verbosity

Posted on October 01, 2008
Francis Pileggi summarizes the Delaware Chancery Court’s recent opinion in Hexion Specialty Chemicals, Inc. v. Huntsman Corp., which is interesting for its interpretation of a material adverse effect clause. I commend the summary to M&A types in the audience...

Pop Quiz: Expelling Partners for Unpopular Speech

Posted on September 29, 2008
ATL reports that a contribution of $5000 to the Yes on 8 campaign (a pro-Proposition 8 group) by an Orrick, Herrington & Sutcliffe partner so enraged Cameron Wolfe, an Orrick of counsel, that Wolfe sent out a firm-wide email: The publicity attendant to the $5,000 contribution to the Yes on 8 Campaign by an Orrick partner damages the reputation of Orrick as a progressive law firm supportive of equal rights for gay and lesbian people...

Grading Systems

Posted on September 27, 2008
Brian Leiter reports: An HLS student has just forwarded me the e-mail from Dean Kagan, which reads in pertinent part: I am writing to let you know that the faculty decided yesterday to move to a grading system with fewer classifications than we have now...

McCain?s Attack on Cox

Posted on September 18, 2008
Those of you who only read this blog will have missed the discussion on my punditry blog of John McCain’s attach on SEC Chairman Chris Cox. In my usual measured way, I called it “moronic.” [continued on site]

Does Every Sale of the Corporation Put us in Revlon-Land?

Posted on September 18, 2008
In a comment to my post, The Borders of Revlon-land, Clint Krislov asks: let me pose you a question we raised in Lyondell. ... why is it that defendants persist in arguing that no revlon duties are implicated when the bid is not solicited by the board...

The Borders of Revlon-Land

Posted on September 17, 2008
The recent Delaware Chancery Court decisions in Ryan v. Lyondell and In re Lear raise many important questions. I’m told that the Delaware Supreme Court has decided to accept an interlocutory appeal in Lyondell, although I can’t find an on-line link in support of that report...

Scalia on Chicago Law

Posted on September 17, 2008
Dan Slater reports: What with the summer SCOTUS break we’ve been having a bit of Justice Scalia withdrawal around here. But recently he’s been back on tour, stopping yesterday at his teaching alma mater, University of Chicago Law School, where he served up a withering critique of what he sees as the school’s new liberal bent...

The High Costs of Shareholder Participation

Posted on September 16, 2008
A new paper by Harry Hutchison and Sean Alley argues that: A number of observers contend that the new literature on happiness, the product of the work of psychologists and economists, poses a significant challenge to traditional economics. Economics generally assumes that peoples’ choices advance their well-being...

Law, Lawyers, and (Christian) Business People

Posted on September 16, 2008
I really enjoyed reading Lyman Johnson’s new paper, A Role for Law and Lawyers in Educating (Christian) Business Managers about Corporate Purpose. Abstract: Business managers may believe that the companies they lead must exclusively pursue the goal of stockholder wealth maximization because they think it is legally mandated...

Does Delaware Need Diversity?

Posted on September 16, 2008
Jay Brown complains, inter alia, that: … there are five chancellors on the Chancery Court and five justices on the Delaware Supreme Court.  The two courts are remarkably lacking in diversity.  Of the ten positions, there are no people of color and only one woman...

Law Professors in the Directorship 100

Posted on September 15, 2008
Directorship is a magazine targeted at boards of directors, corporate executives, and other corporate governance players. They’ve just released their Directorship 100—i.e., their “second annual list of the most influential people on boardrooms and in corporate governance...

The Geography of Revlonland

Posted on September 15, 2008
Is there such a place as Revlonland? We can break that down into two key questions: Are there unique Revlon “duties” separate and distinct from those imposed by Unocal? Put another way, is the Revlon standard of review any different than that applicable under Unocal?If so, when do those duties trigger? In Ryan v...

Bebchuk?s Electronic Arts Proposal: A Critique

Posted on September 12, 2008
The latest victim of Lucian Bebchuk’s shareholder activism crusade is video game maker Electronic Arts (maker of the iconic Madden 09 NFL game, which rocks BTW, and a host of other products for PCs, Xboxes, Playstations, and the like). Bebchuk is using Rule 14a-8 in an attempt to put the following proposal on EA’s proxy statement for the upcoming shareholder meeting: RESOLVED that...

Bebchuk?s Electronic Arts Proposal: A Critique

Posted on September 12, 2008
The latest victim of Lucian Bebchuk’s shareholder activism crusade is video game maker Electronic Arts (maker of the iconic Madden 09 NFL game, which rocks BTW, and a host of other products for PCs, Xboxes, Playstations, and the like). Bebchuk is using Rule 14a-8 in an attempt to put the following proposal on EA’s proxy statement for the upcoming shareholder meeting: RESOLVED that stockholders of Electronic Arts, Incorporated recommend that the Board of Directors, to the extent consistent with its fiduciary duties, submit to a stockholder vote an amendment to the Corporation???s Certificate of Incorporation or the Corporation???s Bylaws that states that the Corporation (1) shall, to the extent permitted by law, submit to a vote of the stockholders at an annual meeting any Qualified Proposal to amend the Corporation???s Bylaws; (2) shall, to the extent permitted by law, include any such Qualified Proposal in the Corporation???s notice of an annual meeting of the stockholders delivered to stockholders; and (3) shall, to the extent permitted by law, allow stockholders to vote with respect to any such Qualified Proposal on the Corporation???s proxy card for an annual meeting of stockholders...

Cutting back on 14a-8

Posted on September 11, 2008
Larry Ribstein uses Lucian Bebchuk’s latest shareholder proposal as a starting point for a federalism-based critique of Rule 14a-8, concluding: “revise 14a-8 so that it just requires disclosure of agenda items permitted by state law.” Exactly...

Bebchuk: Gadfly?

Posted on September 11, 2008
Gordon Smith blogs on a shareholder proposal Lucian Bebchuk has put forward at Electronic Arts. I’ll blog on the substance of the proposal later. In the meanwhile, I want to cherry pick this line out of Gordon’s post: Yes, gadfly shareholders can impose costs on firms, but we have developed various procedural protections to address those sorts of proposals...

iPod Confessions

Posted on September 11, 2008
Our friend and fellow corporate law professor Gordon Smith makes a surprising admission: On Labor Day our family staged a 50-mile bicycle ride to support my 12-year-old sons in their quest to earn the cycling merit badge. The ride was particularly rough on one of the boys, who had a mountain bike...

Washington DC Event: Stockholders at the Wheel: Shareholder Access Rule

Posted on September 10, 2008
Stockholders at the Wheel: Shareholder Access Rule Federalist Society Corporations, Securities, and Antitrust Practice Group Tuesday, September 23, 2008 12:00 PM - 2:00 PM National Press Club 529 14th St. NW 13th Floor Washington, DC 20045 On November 28, 2007, the Securities and Exchange Commission voted to adopt an amendment to Rule 14a-8(i)(8), codifying the commission’s...

Is Omnicare Really of ?Questionable Continued Vitality??

Posted on September 07, 2008
Dale Oesterle: The Omnicare case is of “questionable continued vitality” notes a new opinion from the Delaware Chancery Court.  In Optima v WCI Steel, the Chancery Court refused to apply Omnicare to block a deal between Severstal and WCI in the face of a higher bid from Optima...

Law Professor Salaries

Posted on September 06, 2008
I spent the last couple of days in Chicago at my first meeting as a member of the ABA Committee on Corporate Laws. I expect to blog regularly on issues that come up before us. In the meanwhile, however, I want to pass on a juicy bit of gossip I heard at the meeting...

BusinessAssociationsBlog.com: A 99.9% Politics Free Zone

Posted on September 06, 2008
Dave Hoffman has a (typically) provocative post, in which he argues that: It’s the news-hook that launched a thousand nominally law-related blog posts: the presidential election season! Surfing the vast blawgosphere tonight, it feels like every other post, on every other blog written by, and often for, law professors, is about the federal presidential election process...

The Grasso Lawsuit?s Demise: Why Don?t Courts Decide Compensation?

Posted on August 28, 2008
Joseph Bachelder offers a detailed and insightful analysis of why Eliot Spitzer’s much ballyhooed excess compensation lawsuit against former NYSE CEO Richard Grasso fizzled in the NY courts. One of his theories takes a deeply Legal Realist approach: One explanation may lie in the March 2008 downfall of Mr...

Technology Killed Socrates

Posted on August 28, 2008
Usha Rodrigues notes that the proliferation of laptops in the classroom means that “students inherit “scripts” from prior classes, and thus are primed with the “right answers” to the professor’s questions.” Of course, students with laptops often (depending on the availability of internet or intranet connections, text each other answers...

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