Corporate Governance

Delaware Courts and the [Non-] Duties of Directors: Pfeffer v. Redstone

Posted on March 01, 2008
We have today a student post on Pfeffer v. Redstone, 2008 Del. Ch. LEXIS 12, a case involving Viacom's divestiture of its ownership of Blockbuster.  The central issue in the case was the decision by the board of Blockbuster (including approval by a special committee of independent directors) and the board of Viacom to authorize a cash dividend by Blockbuster of $5 a share, costing the company $905 million, most of which ($738 million) would go to Viacom...

Del. Ch. Rejects Inference that is ?At Odds? with ?Common Experience? ? Pfeffer v. Redstone

Posted on March 01, 2008
In Pfeffer v. Redstone, No. 2317-VCL, 2008 WL 308450 (Del. Ch. 2008); a stockholder brought suit alleging the board breached various fiduciary duties.  The stockholder’s claims arose from Viacom’s special dividend and a stock swap plan with its subsidiary Blockbuster...

Société Générale and Notions of Corporate Officer Responsibility

Posted on February 29, 2008
Imagine a major U.S. bank with a world-class equity derivatives trading practice; a "rogue" trader bypasses internal risk controls to place risky bets over the course of a few years.  At first, the rogue trader earns accolades as his risky bets pay off...

Corporate Governance and the International Experience

Posted on February 29, 2008
We are fortunate today to have two student pieces, each on an aspect of international corporate governance.  The piece from Salman Banaei looks at the scandal in France involving the "rogue" trader at Societe Generale and the differences the consequences to top management...

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Social Responsibility and Islamic Principles

Posted on February 29, 2008
We try on this Blog to introduce readers to approaches to corporate governance that occur outside the territorial boundaries of the United States. Anyone who follows the debate knows that some systems do not focus entirely on shareholder rights and profit maximization...

Faculty Blogs and Influence: The Top 50 Most Influential Law Blogs (In Order) (Part 7)

Posted on February 28, 2008
We have been discussing the growing influence of law faculty blogs, a topic examined in my paper, Of Empires, Independents, and Captives : Law Blogging, Law Scholarship, and Law School Rankings. We have already examined the growing number of blog citations in law review articles and in court opinions and the impact on SSRN downloads...

Senator Grassley and SEC Oversight of Stock Exchanges

Posted on February 28, 2008
In a February 1, 2008, press release, Senator Charles Grassley (R-Iowa) announced that the SEC will employ greater measures to fulfill its responsibility to police self-regulatory organizations, such as the New York Stock Exchange and other financial markets...

Stock Exchanges, Corporate Governance, and Problems of Enforcement

Posted on February 28, 2008
One of the topics addressed often on this Blog is the role played by the stock exchanges in the corporate governance process.  It is the stock exchanges that require a majority of the board to be independent and that boards have audit, compensation and nominating committees...

CALPERS and Supreme Court Review of NYSE Immunity

Posted on February 28, 2008
On January 16, 2008, the California Public Employees’ Retirement System (CalPERS) filed a petition for writ of certiorari requesting Supreme Court review of a decision to dismiss fraud claims against the New York Stock Exchange (NYSE) based on governmental immunity...

Faculty Blogs and Influence: The Impact on US News (Part 6)

Posted on February 27, 2008
We have been discussing the growing influence of law faculty blogs, a topic examined in my paper, Of Empires, Independents, and Captives : Law Blogging, Law Scholarship, and Law School Rankings. We have already examined the growing number of blog citations in law review articles and in court opinions and the impact on SSRN downloads...

The SEC and the Vacancies on the Commission

Posted on February 27, 2008
The WSJ hasreported that the Administration is searching for replacements for Commissioner Atkins who is expected to leave the SEC this summer.  Names under consideration?  Douglas Cox, Steven Guynn and Stuart Kaswell, as well as Troy Paredes...

Faculty Blogs and Influence: Increasing Influence (Part 5)

Posted on February 26, 2008
We have been discussing the growing influence of law faculty blogs, a topic examined in my paper, Of Empires, Independents, and Captives : Law Blogging, Law Scholarship, and Law School Rankings. We have already examined the growing number of blog citations in law review articles and in court opinions...

Derivative Suits, Delaware and the Race to the Bottom: Schoon v. Smith (Part 5)

Posted on February 26, 2008
We are discussing Schoon v. Smith, a Delaware case holding that a single director could not initiate a derivative suit.  We take the opportunity to provide a final thought.The right of individual directors to bring lawsuits against their brethren on the board is not an easy one and, while we would have argued for a different outcome, we understand that reasonable minds can disagree...

Faculty Blogs and Influence: SSRN Downloads (Part 4)

Posted on February 25, 2008
We have been discussing the growing influence of law faculty blogs, a topic examined in my paper, Of Empires, Independents, and Captives : Law Blogging, Law Scholarship, and Law School Rankings. We have already examined the growing number of blog citations in law review articles and in court opinions...

Derivative Suits, Delaware and the Race to the Bottom: Schoon v. Smith (Part 4)

Posted on February 25, 2008
We have been discussing Schoon v. Smith, a case addressing whether a single director should have the right to bring a derivative suit.  We turn to the actual reasoning of the case.  In many ways, the case was remarkable for what plaintiff was not seeking...

Backdating and Derivative Litigaiton: In re Finisar Corp

Posted on February 24, 2008
On January 11, 2008, the District Court for the Northern District of California dismissed a derivative suit on behalf of Finisar Corporation. In re Finisar Corp., 2008 U.S. Dist. LEXIS 4590 (N.D. Cal. Jan. 11, 2008). The plaintiffs filed the case without first making demand upon the board, alleging that current and former directors and officers engaged in a backdating scheme that spanned five years...

Board Diversity and SOX

Posted on February 23, 2008
Are Corporate Boards Diversifying?We have noted on this Blog a few times the lack of diversity on boards of public companies and some of the responses to this, particularly overseas.  Celia Taylor, a professor at the University of Denver Sturm College of Law continues this discussion...

Fogel v. U.S. Energy Systems Inc and Limits on the Authority of Independent Directors

Posted on February 23, 2008
Delaware courts may provide incentive for boards to have independent directors but they are not about to actually let them run the company.  In a series of recent cases, the Delaware courts have gone out of their way to limit the authority of these directors...

Fogel v. U.S. Energy Systems Inc: "Improperly Convened" Meetings And The Blasius Standard In Delaware

Posted on February 23, 2008
In Fogel v. U.S. Energy Systems Inc., No. 3271-CC, 2008 WL 151857 (Del. Ch. Dec. 13, 2007 ) the Delaware Chancery Court decided that a confrontation between the CEO and directors was not a “meeting” under section 141 of Delaware’s General Corporation Law...

Caremark?The Failed Revolution (part II)

Posted on February 22, 2008
As discussed inpart I of this series, the duty of a Board of Directors in Delaware to monitor for possible wrongdoing by corporate managers under the famous Caremark decision was more of an illusion than a reality. Two facts account for this result. First, the standard for liability announced in Caremark itself was extremely hard for plaintiffs to prove...

Law Faculty Blogs and Influence: The Case of Court Citations (Part 3)

Posted on February 22, 2008
We have been discussing the growing influence of law faculty blogs. Yesterday, we took a look at the number of citations of law blogs in law reviews. Today we look at the number of citations in court opinions, whether state or federal. As discussed in the paper, Of Empires, Independents, and Captives : Law Blogging, Law Scholarship, and Law School Rankings, I put together a list of approximately 130 law blogs and ran them through the Lexis-Nexis case file (state and federal)...

Derivative Suits, Delaware and the Race to the Bottom: Schoon v. Smith (Part 3)

Posted on February 22, 2008
We are discussing Schoon v. Smith, an entirely predictable opinion in which the Delaware Supreme Court declined to allow a single director to bring a derivative suit.We know that the Delaware courts have a pro-management bias that has little to do with the protection of shareholders...

LaRue v. DeWolff and a Result Oriented Use of "Plain" Language

Posted on February 21, 2008
Yesterday, the Supreme Court decided LaRue v. DeWolff, a case addressing whether individual account holders in 401(k) plans have a right to bring an action indvidually.  The Court agreed unanimously that they did.  Beneath the unanimity, however, was a five to four division on the Court, with five justices joining a majority opinion written by Justice Kennedy and the other four Justices concurring, one in an opinion written by the Chief and another in an opinion written by Justice Thomas...

Law Faculty Blogs and Influence: The Case of Law Review Citations (Part 2)

Posted on February 21, 2008
We are examining the influence of law faculty blogs, something addressed in greater detail in my paper, Of Empires, Independents, and Captives:  Law Blogging, Law Scholarship, and Law School Rankings.There has been considerable traffic in recent weeks about law blogs and the frequency of law review citations...

Derivative Suits, Delaware and the Race to the Bottom: Schoon v. Smith (Part 2)

Posted on February 21, 2008
We are discussing Schoon v. Smith, a recent decision by the Delaware Supreme Court denying a single director the right to bring a derivative suit.  We mentioned in the last post that the Court used some disingenuous reasoning.  It did so by relying on Section 144 to emasculate the duty of loyalty...

Law Faculty Blogs and Rankings

Posted on February 20, 2008
Paul Caron at the Tax Law Blog has put up a post ranking law faculty blogs by page views using site meter data (a counter that appears on most law faculty blogs).  These rankings are useful to some degree for comparison purposes but need to be taken in context...

Faculty Blogs and Influence: Overview (Part 1)

Posted on February 20, 2008
I have just posted a paper on law faculty blogs, Of Empires, Independents, and Captives: Law Blogging, Law Scholarship, and Law School Rankings on SSRN.  To some degree, the paper is an update of anearlier version posted last summer that argued blogging was a cost effective mechanism for schools outside the top tier to improve notoriety and rankings in US News...

Derivative Suits, Delaware and the Race to the Bottom: Schoon v. Smith (Part 1)

Posted on February 20, 2008
For a corporate governance blog, the Delaware courts are a relentless source of material.  We spent much of last week discussing Portnoy v. Cryo Cell, a case that found abuse of the election process by management yet essentially imposed a heavy financial penalty on plaintiff...

Of Hoaxes and Regulation FD

Posted on February 19, 2008
We read with great amusement the article in the WSJ where an anonymous hoaxer would call in to earnings conference calls, impersonating an analyst, and ask nonsensical questions full of jargon.  We thought we'd take a moment to use the incident to remind readers of a highly anomalous element of Regulation FD...

Microsoft v. Yahoo v. Google v. News Corp

Posted on February 19, 2008
We haven't yet commented on the proposed takeover of Yahoo by Microsoft.  By now, one would have to have been in a coma not to know that Microsoft made an apparently unexpected offer on Jan. 31 to acquire Yahoo, a $44 billion acquisition.  Google offered to help Yahoo fend off the untoward offer...

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