Corporate Governance

Jon Macey on Corporate Governance (Part 7)

Posted on December 06, 2008
Jon Macey, Deputy Dean and Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law at Yale, has recenlty published a book titled Corporate Governance, Promises Kept, Promises Broken. According to Macey, the board of directors cannot be counted on to keep the promises made to shareholders because of the problem of caputure...

Jon Macey on Corporate Governance (Part 6)

Posted on December 05, 2008
Jon Macey, Deputy Dean and Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law at Yale, has recenlty published a book titled Corporate Governance, Promises Kept, Promises Broken. Macey forcefully shows that boards of directors are "captured" by management...

Jon Macey on Corporate Governance (Part 5)

Posted on December 05, 2008
Jon Macey, Deputy Dean and Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law at Yale, has recenlty published a book titled Corporate Governance, Promises Kept, Promises Broken.  We are discussing the book in a series of posts...

Jon Macey on Corporate Governance (Part 5)

Posted on December 04, 2008
Jon Macey, Deputy Dean and Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law at Yale, has recenlty published a book titled Corporate Governance, Promises Kept, Promises Broken.  We are discussing the book in a series of posts...

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Jon Macey on Corporate Governance (Part 4)

Posted on December 04, 2008
We are discussing Corporate Governance, Promises Kept, Promises Broken, the provocative book by Jon Macey, Deputy Dean and Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law at Yale. Singularly the most provocative portion of the book is the discussion of the board of directors in Chapter 4...

The Automobile Manufacturers Return to Washington (Better Prepared) (Part 2)

Posted on December 03, 2008
We are looking at the corporate governance commitments made by the automobile companies should they receive federal funds.  Chrysler is not a public company, but is mostly owned by Cerberus Capital Management, a private equity firm.  The company has agreed to "comply with all conditions relating to executive compensation established under the Emergency Economic Stabilization Act of 2008 ("EESA") and such other conditions as the Government may require...

The Automobile Manufacturers Return to Washington (Better Prepared) (Part 1)

Posted on December 03, 2008
We are taking a short break from the discussion of the book by Jon Macey on corporate governance to discuss the recent proposals submitted by the automobile companies in connection with their renewed request for federal funds. General Motors, Ford and Chrysler have presented Congress with plans on what would happen if they receive a bailout...

Jon Macey on Corporate Governance (Part 3)

Posted on December 03, 2008
We are discussing Corporate Governance, Promises Kept, Promises Broken, the provocative book by Jon Macey, Deputy Dean and Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law at Yale.  As we have noted, Macey views corporations as a nexus of contracts...

Jon Macey on Corporate Governance (Part 2)

Posted on December 03, 2008
We are discussing Corporate Governance, Promises Kept, Promises Broken, the provocative book by Jon Macey, Deputy Dean and Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law at Yale. Macey defines corporate governance in terms of promises...

GM, the Bailout and the Role of the Board

Posted on December 02, 2008
It seems that after the disastrous appearance of Rick Wagoner, the CEO of General Motors, in Washington to ask for a bailout without any real plan and flying back to Detroit on a private jet, has had one potential benefit.  The "mirror image" board at GM seems to have woken up...

A Regional Director for the SEC Office in Denver

Posted on December 02, 2008
  DONALD M. HOERL NAMED REGIONAL DIRECTOR OF SEC’S DENVER REGIONAL OFFICE   Washington, D.C., Dec. 2, 2008 – Securities and Exchange Commission Chairman Christopher Cox today named Donald M. Hoerl as the Regional Director of the SEC’s Denver Regional Office...

Jon Macey on Corporate Governance (Part 2)

Posted on December 02, 2008
We are discussingCorporate Governance, Promises Kept, Promises Broken, the provocative book by Jon Macey, Deputy Dean and Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law at Yale. Macey defines corporate governance in terms of promises...

Jon Macey on Corporate Governance (Part 1)

Posted on December 02, 2008
Jon Macey, Deputy Dean and Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law at Yale, has recently published a book titled Corporate Governance, Promises Kept, Promises Broken.  The book is, as expected, thorough, thoughtful, and provocative...

Returning Fairness to Executive Compensation

Posted on December 01, 2008
The current waive of turmoil in the financial markets has cast attention on the problem of executive compensation. Companies that have failed or disappeared in shot-gun mergers have nonetheless paid exorbitant sums to officers who arguably played a substantial role in their demise...

Shareholder Rights and Executive Compensation: The Growing Fight Over Gross-Ups

Posted on December 01, 2008
We have noted that executive compensation is a matter of state law.  Delaware, a state that earns considerable income by attracting large corporations to form in the state, has an incentive to appeal to management to induce them to enter the jurisdiction...

Starbucks, Social Responsibility and the Global Fund

Posted on November 29, 2008
We have long pointed out that Starbucks needed to recast its strategy if it intended to fight back from the declining sales and the onslaught of competition, most noticeably McDonalds.  We have criticized the emphasis on gold cards (although we were rewarded with one during an experiment in Denver) and free flavors, noting that the approach did little more than treat lattes as commodities, a losing strategy...

Director Duties and the Delaware Standards: The View from Wachtell Lipton

Posted on November 28, 2008
We received a memorandum drafted by Wachtell Lipton titled "Risk Management and the Board of Directors."  In the memorandum, the firm describes the oversight responsibilities of directors under Delaware law.  The memorandum has this to say about director oversight obligations:  "The cases that followed [Caremark] made clear that there would be no liability under a Caremark theory unless the directors intentionally failed entirely to implement any reporting or information system or controls or, having implemented such a system, intentionally refused to monitor the system or act on any warnings it provided...

The UK, AIM and the Decline of Regulatory Lite

Posted on November 28, 2008
Remember when one of the attacks on SOX was the loss of cross-listings by foreign companies?  The main evidence was the increase in cross listings in London.  Turned out that the growth in London came at Alternative Investment Market or AIM...

US News, Rankings, and the Possible Change to the Formula

Posted on November 27, 2008
US News is considering changing the formula for computing rankings of law schools.  Right now, the magazine uses the median LSAT and GPA from the full time divison.  The magazine is considering using the median from the combined full time and part time divisions...

Wachovia and Golden Parachutes

Posted on November 26, 2008
Wachovia Bank has been one of the casualties of the current financial crisis.  Trading in the $40s a year ago, the stock has plummeted to somewhere around $5. Perhaps the third quarter said it all.  According to the Washington Post, Wachovia: posted a $23...

General Motors, The Bailout, and Corporate Governance Reform (Part 2)

Posted on November 26, 2008
The three auto makers came to Washington for a bailout.  They had no plan and arrived with no commitments that would ensure careful use of any funds received from Congress. AIG gets a $65 billion bailout and throws a $400,000 party for sales people...

No Bright-line Test for "Foreign-Cubed" Securities Fraud Actions

Posted on November 25, 2008
Cases continue to arise involving efforts by foreign shareholders to seek recourse for fraud and mismanagement in US courts.  The efforts reflect the relative ease in suing in the US compared with other jurisdictions. In Morrison v. Nat'l Austl. Bank Ltd...

The Ninth Circuit and Scienter: South Ferry LP v. Killinger

Posted on November 25, 2008
In the aftermath of Tellabs, the circuit courts continue to revisit the analysis of the pleading standards under the PSLRA for scienter.  A recent example emanated from the 9th Circuit. In South Ferry LP v. Killinger, 542 F.3d 776 (9th Cir. 2008) Washington Mutual, Inc...

US News and Law School Rankings

Posted on November 24, 2008
Law schools live and die by rankings.  The mother of all rankings are those prepared and published by US News & World Report.     The scourge of these rankings may, however, soon be over.  US News recently announced that it was shifting from publishing every other week (it had already ceased to be a weekly) to monthly...

US v. Stockman: Barnaba Wants to Sever

Posted on November 24, 2008
As we have discussed in previous posts, Paul Barnaba has been pushing for an early trial and previously filed a Motion for Severance in May. The first motion was denied during a status conference on August 25, 2008, but the court invited Barnaba to supplement the motion because “it’s a motion that needs to be looked at in terms of where we’re at...

What if Contract Replaced Fiduciary Duties? A Lesson from Amirsaleh v. Board of Trade of the City of New York

Posted on November 24, 2008
Amirsaleh v. Board of Trade of the City of New York is a case that illustrates what can happen if Delaware gets its way in the evolution of corporate law.  It shows what can happen to shareholder rights if they become entirely a matter of contract...

Merger Agreements, the Duty of Good Faith and Fair Dealing, and the Duty to Provide Notice to Shareholders

Posted on November 24, 2008
The Race to the Bottom focuses on Delaware decisions, particularly those that affect shareholders. In Amirsaleh v. Board of Trade of the City of New York, Inc., Del. Ch., C.A. No. 2822-CC, Chandler, C. (Sept. 11, 2008)(Mem. Op.), an owner sued alleging that the company failed to distribute an election form required by a merger agreement...

The Obama Administration and the Chairman of the SEC (Part 2)

Posted on November 23, 2008
More names in the rumor mill for Chairman.  We confess that none of these names came from anyone directly associated with the Obama Administration.  Moreover, the plethora of names suggests that the incoming Administration has not really focused on the issue...

Director Resignations and Board Diversity

Posted on November 22, 2008
The WSJ reports that the number of directors resigning from public company boards has increased, highlighting particularly the resignation of CEOs who are otherwise too busy to sit on board of companies in trouble.  The numbers in the article are actually quite small...

Excessive Compensation and the Responsibility of the Delaware Courts (Part 3)

Posted on November 21, 2008
We are always pleased to have converts to the need to reform governance in an effort to make corporate management act in a manner designed to better promote the interests of shareholders.  One of the more interesting converts has been Henry Paulson, the very person who originally tried to block any limits on executive compensation in the Bailout Bill...

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