The Race to the Bottom: Corporate Governance

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Corporate Governance

The Race to the Bottom

A student-faculty collaboration discussing all areas of corporate governance including: methods for improving, the role of the Securities and Exchange Commission, the role of Delaware, and independent directors, impact of Sarbanes-Oxley.
By J Robert Brown Jr et al.

Post Frequency: 21.6/day

Last Entry: April 01, 2011 at 09:00:35

The Director Compensation Project: International Business Machines Corporation

Posted on December 06, 2010
This post is part of an ongoing series that examines the way stock exchange independence rules influence director compensation. We are including companies from 2010's Fortune 500 and using information found in their 2010 proxy statements. In addition to state standards and the requirements of SOX, the stock exchanges each have their own standards for independence...

The Director Compensation Project- ExxonMobil

Posted on December 04, 2010
This post is part of an ongoing series that examines the way stock exchange independence rules influence director compensation. We are including companies from 2010's Fortune 500 and using information found in their 2010 proxy statements. In addition to state standards and the requirements of SOX, the stock exchanges each have their own standards for independence...

In re Alstom SA Securities Litigation: The Implications of Morrison

Posted on December 04, 2010
Last term, the Supreme Court addressed the extraterritorial application of Rule 10b-5 in Morrison v. National Australia Bank, Ltd., 130 S.Ct. 2069 (2010). The Court essentially held that there was no extraterritorial jurisdiction. Cases could only be brought if they involved "transactions in securities listed on domestic exchanges, and domestic transactions in other securities, to which Section 10(b) applies...

The Director Compensation Project: Hewlett-Packard Company

Posted on December 03, 2010
This post is part of an ongoing series that examines the way stock exchange independence rules influence director compensation. We are including companies from 2010's Fortune 500 and using information found in their 2010 proxy statements. In addition to state standards and the requirements of SOX, the stock exchanges each have their own standards for independence...

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The Director Compensation Project: CVS Caremark Corporation

Posted on December 02, 2010
This post is part of an ongoing series that examines the way stock exchange independence rules influence director compensation. We are including companies from 2010's Fortune 500 and using information found in their 2010 proxy statements. In addition to state standards and the requirements of SOX, the stock exchanges each have their own standards for independence...

The Director Compensation Project: Berkshire Hathaway

Posted on December 01, 2010
This post is part of an ongoing series that examines the way stock exchange independence rules influence director compensation. We are including companies from 2010's Fortune 500 and using information found in their 2010 proxy statements. In addition to state standards and the requirements of SOX, the stock exchanges each have their own standards for independence...

Airgas and the Management Friendly Nature of Delaware Law (Part 1)

Posted on November 26, 2010
Delaware is a small state based upon population and area. Yet the state is very big in the area of corporate governance. Some 60% of the Fortune 500 are incorporated there. Most IPOs of companies to be listed on an exchange are for Delaware companies...

Airgas, Inc. v. Air Products: Staggered Boards Staggered (The Overstated Role of Proxy Advisory Firms)(Part 6)

Posted on November 25, 2010
The discussion below is based upon the Chancery Court decision in Airgas, Inc. v. Air Products. The Supreme Court has reversed the decision. The Supreme Court's opinion is here. One of the interesting factual asides in the case is the role of the investor advisory firm...

Airgas, Inc. v. Air Products: Staggered Boards Staggered (A Possible Improvement in Majority Vote Provisions)(Part 5)

Posted on November 24, 2010
The discussion below is based upon the Chancery Court decision in Airgas, Inc. v. Air Products. The Supreme Court has reversed the decision. The Supreme Court's opinion is here. The case turned on the validity of a bylaw rescheduling the next annual meeting...

Airgas, Inc. v. Air Products: Staggered Boards Staggered (What About Those Special Interest Directors)(Part 4)

Posted on November 23, 2010
We are discussing Airgas, Inc. v. Air Products, a recent decision out of the Delaware Chancery that validated a bylaw shortening the time between annual meetings to three months. In the world of shareholder access, one of the most significant concerns has been the use of the authority to elect 'special interest' directors, candidates that will act in the interests of the nominating shareholder rather than all shareholders...

Airgas, Inc. v. Air Products: Staggered Boards Staggered (A Prediction)(Part 7)

Posted on November 23, 2010
The Supreme Court in Delaware issued an opinion today reversing the Chancery Court's decision in Airgas. This post had been scheduled for Friday but was written last week. In it we predicted this very result. We will have more to say about this in subsquent posts...

Airgas Reversed

Posted on November 23, 2010
We have been following Airgas v. Air Products, a Chancery Court decision that had given shareholders a rare victory. The case, however, was (predictably) reversed by the Supreme Court. The case turned on the provision in the staggered board provision that gave directors a term that expired "at the annual meeting of stockholders held in the third year following the year of their election...

Airgas, Inc. v. Air Products: Staggered Boards Staggered (A Drafting Tutorial by the Chancery Court)(Part 3)

Posted on November 22, 2010
We are discussing Airgas, Inc. v. Air Products, a recent decision out of the Delaware Chancery that validated a bylaw shortening the time between annual meetings to three months. In responding to the argument that its holding would 'destabilize the staggered boards of Delaware companies,' the Chancery Court made clear that the problem was inartful drafting...

Airgas, Inc. v. Air Products: Staggered Boards Staggered (The Holding)(Part 2)

Posted on November 19, 2010
We are discussing Airgas, Inc. v. Air Products, a recent decision out of the Delaware Chancery involving staggered boards. The legal issue was whether a bylaw scheduling the next annual meeting for three months after the prior annual meeting violated the Company's staggered board provision and/or the Delaware statute...

Airgas, Inc. v. Air Products: Staggered Boards Staggered (Introduction and Facts)(Part 1)

Posted on November 18, 2010
Even Delaware can occasionally issue a decision that surprises and Airgas, Inc. v. Air Products certainly qualifies. After Selectica and Yucaipa validated poison pills in the context of proxy contests at companies with staggered boards, it would have been reasonable to predict that the Delaware courts would do little to interfere with the use of staggered boards or adopt positions that would allow for their circumvention...

Matrixx v. Siracusano: Law and Business Professors (and the SEC) Speak

Posted on November 18, 2010
Matrixx v. Siracusano represents perhaps the most significant business case in the Supreme Court this term. The case involves the materiality of reports filed by persons using over the counter drugs that suffer some type of adverse reaction. The adverse health effect may or may not be related to the drug (the occurrence may be coincidental)...

Derivative Action and the Continuous Ownership Requirment: Quinn v. Anvil Corp.

Posted on November 17, 2010
In Quinn v. Anvil Corp., No. 09-35101, 2010 WL 3307486 (9th Cir. Aug. 24, 2010), the Ninth Circuit Court of Appeals affirmed the district court's holding that a shareholder did not have standing to sue the corporation for failing to meet the continuous ownership requirement...

SEC v. Khan: Insider Trading and the Need for Specificity

Posted on November 16, 2010
In September 2010, the SEC brought an insider trading case against Dr. Bobby Khan ('Dr. Khan'). See SEC v. Khan, No. 10-cv-02865 (N.D. Ga. Oct. 10, 2010). The defendant filed a Motion to Dismiss both claims brought by the Securities and Exchange Commission ('SEC')...

Expanding Morrison to Bar 10(b) Claims for ADR Transactions Made on the OTC

Posted on November 15, 2010
Last term, the Supreme Court addressed the extraterritorial application of Rule 10b-5 in Morrison v. National Australia Bank, Ltd., 130 S.Ct. 2069 (2010). The Court essentially held that there was no extraterritorial jurisdiction. Cases could only be brought if they involved "transactions in securities listed on domestic exchanges, and domestic transactions in other securities, to which Section 10(b) applies...

In re Chiquita Brands: Final Judgment Entered in Derivative Shareholder Action

Posted on November 12, 2010
We have been following the Alien Tort Action and Derivative Shareholder Action brought against Chiquita Brands International ('Chiquita') since August 2007. In an earlier post, we reported the U.S. District Court for the Southern District of Florida had preliminarily approved a settlement order pertaining to the Derivative Action pending a Settlement Hearing...

Regulation FD and Winks and Nods: SEC v. Home Depot

Posted on November 11, 2010
Regulation FD was controversial when it was adopted (back in August 2000). Effectively overturning at least one aspect of SEC v. Dirks, it prohibited intentional selective disclosure to shareholders and market professionals (where the selective disclosure is unintentional, the information must be disclosed to the market within a symbolic 24 hours, long after it has any value)...

Regulation FD and Winks and Nods: SEC v. Office Depot

Shareholder Reimbursement, Private Ordering, and Delaware Law

Posted on November 10, 2010
Remember when Delaware adopted secctions 112 (access bylaws) and 113 (proxy reimbursement)? It was supposed to usher in an era of private ordering. Management and shareholders would come to agreement on access bylaws and reimbursement for proxy contests...

Corporate Governance, the Economist, and a Criticism without a Purpose

Posted on November 09, 2010
We don't have much of an opportunity to comment on the approach taken by The Economist on corporate governance. When we do, however, it is usually to disagree. This weeks edition provides an opportunity. Schumpeter, Corporate Constitutions takes issue with corporate governance reform...

Cuban v. SEC [Partial Summary Judgment on FOIA Claims]

Posted on November 08, 2010
In Cuban v. SEC, No. 09-0996 (RBW) (D.D.C. Sept. 22, 2010) (a parallel case regarding the insider trading case against Mark Cuban), the court granted in part and denied in part cross motions for summary judgment regarding Freedom of Information Act ('FOIA') claims...

SEC v. Cuban: Cuban Offers to Fund the SEC FOIA Document Review

Posted on November 08, 2010
Mark Cuban's ('Cuban') Freedom of Information Act ("FOIA") suit against the Securities and Exchange Commission ('SEC') took a strange turn when he offered to finance the agency's document review for records requested under FOIA and the Privacy Act. In a recent court hearing, the SEC claimed it could not begin document review until March 2011 and could not deliver requested records until 2012...

Say on Pay and SEC Rulemaking (Limiting Shareholder Rights)

Posted on November 05, 2010
The SEC has put out a rule proposal designed to implement the say on pay provisions in Dodd-Frank. See Exchange Act Release No. 63124 (Oct. 18, 2010).?? Rule 14a-21 mostly captures what Congress sought to imposed in Dodd Frank, with a few additional beneficial requirements (such as the obligation to explain how a board plans to respond to the advisory vote)...

The Top 25 Business Law Blogs of 2010: TheRacetotheBottom Included

Posted on November 05, 2010
Lexis-Nexis each year ranks the top 25 business law blogs. This year the list included TheRacetotheBottom. We are pleased to have made the list. Moreover, it is truly an illustrious group of business law blogs, including James McRitchie's Corp Gov Net, Broc Romanek's TheCorporateCounsel...

Say on Pay and SEC Rulemaking (The Impact of the Advisory Vote)

Posted on November 04, 2010
The SEC has put out a rule proposal designed to implement the say on pay provisions in Dodd-Frank. See Exchange Act Release No. 63124 (Oct. 18, 2010).?? Say on pay has always been structured as an advisory vote. Dodd Frank and Rule 14a-21 do nothing to change that...

Say on Pay and SEC Rulemaking (The Possibility of Private Ordering)

Posted on November 03, 2010
The SEC has put out a rule proposal designed to implement the say on pay provisions in Dodd-Frank. See Exchange Act Release No. 63124 (Oct. 18, 2010).? During the debate over access, much of the opposition centered on the interference with private ordering...

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