I respectfully take issue with Professor Bebchuk’s analysis and conclusions. Professor Bebchuk’s empirical evidence consists basically of cherry-picked stock market prices and a unanimous vote in favor of shareholder-centric governance by institutional shareholders. Professor Bebchuk’s hyperbole cannot disguise the fact that his shareholder-centric model promotes short-termism and that it is this short-term focus on capital allocation and other business decisions that has led to the decline of the American economy and greater unemployment. When one attempts to parse his syllogism, it doesn’t hold-together. Apparently, Professor Bebchuk believes that classified boards can’t be bad unless directors are bad, or else they would have all committed ritual suicide rather than ever agree to declassification.
Editor’s Note: Martin Lipton is a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy. This post is a reply to a simultaneously published post by Professor Lucian Bebchuk, which in turn responds to several Wachtell Lipton memoranda. Professor Bebchuk’s post is available here, and the four memoranda to which he responds are available here, here, here, and here.