http://blogs.law.harvard.edu/corpgov Sponsored by the HLS Corporate Governance Program Fri, 09 May 2008 18:30:38 +0000 http://backend.userland.com/rss092 en I have recently distributed a memorandum entitled "A United Nations Proposal Defining Corporate Social Responsibility For Human Rights," which discusses a report by a Special Representative to the U.N. Secretary-General. The report has broad implications for global business and particularly for companies operating on a global basis, in emerging markets, ... http://blogs.law.harvard.edu/corpgov/2008/05/09/a-united-nations-proposal-defining-corporate-social-responsibility-for-human-rights/ In Miller v. McDonald, et al., ( D. Del., Bankr., April 9, 2008), the Bankruptcy Court for the District of Delaware decided an issue of great importance to those who follow corporate governance issues related to the fiduciary duties of officers and directors. In this opinion on a motion to ... http://blogs.law.harvard.edu/corpgov/2008/05/08/court-imposes-caremark-fiduciary-duty-on-corporate-officer/ We have recently distributed a memorandum entitled Delaware Court Rejects Per Se Rules for Financial Advisor Proxy Disclosures, which discusses the ruling of the Delaware Court of Chancery in In re BEA Systems Inc. Shareholders Litigation, a lawsuit arising out Oracle's $8.5 billion acquisition of BEA Systems. The court ... http://blogs.law.harvard.edu/corpgov/2008/05/07/delaware-court-rejects-per-se-rules-for-financial-advisor-proxy-disclosures/ The Financial Times recently published the following op-ed piece of mine, entitled Judgment Too Important to be Left to the Accountants. Two serious asset bubbles–the dotcom explosion of the late 1990s and the recent dizzying ascension in housing prices–have developed in the US economy within the past decade. Given their damaging consequences, ... http://blogs.law.harvard.edu/corpgov/2008/05/06/judgment-too-important-to-be-left-to-the-accountants/ Electronic Arts, Inc. recently submitted to the SEC a no-action request seeking concurrence of the SEC Staff that a shareholder proposal I submitted may be excluded from the company’s proxy materials for the 2008 annual meeting. In response to the company’s no-action request, I filed a complaint, through my ... http://blogs.law.harvard.edu/corpgov/2008/05/05/electronic-arts-attempt-to-exclude-my-precatory-shareholder-proposal/ My colleagues, Amy Goodman, Gillian McPhee and I have recently published our thoughts on issues to be considered by boards of directors in setting their own compensation. We outline recent trends in compensation practices, particularly since the passage of the Sarbanes-Oxley Act, and discuss issues confronting boards of directors ... http://blogs.law.harvard.edu/corpgov/2008/05/02/director-compensation-in-turbulent-times/ Recently, I blogged about a case brought in the US District Court, Southern District of Texas, by Apache Corporation, who sought a declaratory judgment supporting its exclusion of a shareholder proposal submitted by the New York City Employees' Retirement System. The case sought to enjoin a lawsuit brought by NYCERS ... http://blogs.law.harvard.edu/corpgov/2008/05/01/apache-corporation-v-nycers-injunction-denied/ (Editor’s note: This post comes to us from Brian Cadman at the Kellogg School of Management at Northwestern University) I, along with my co-authors Mary Ellen Carter and Stephen Hillegeist, have recently posted a new working paper entitled The Role and Effect of Compensation Consultants on CEO Pay. The paper examines how ... http://blogs.law.harvard.edu/corpgov/2008/04/30/the-role-and-effect-of-compensation-consultants-on-ceo-pay/ You are cordially invited to a very special symposium that marks and celebrates the 40th anniversary of the landmark 1967 revision of the Delaware General Corporation Law: The Delaware General Corporation Law for the 21st Century The Symposium will be held on May 5th at Widener University School of Law ... http://blogs.law.harvard.edu/corpgov/2008/04/29/the-delaware-general-corporation-law-for-the-21st-century/ The Delaware Court of Chancery recently held in Levitt Corp. v. Office Depot, Inc., that a bylaw restricting business that could be conducted at annual meetings to (i) matters contained in the meeting notice and (ii) matters otherwise properly brought by the board or by stockholders (in accordance with advance ... http://blogs.law.harvard.edu/corpgov/2008/04/28/levitt-corp-v-office-depot-inc/ (Editor’s note: This post is by John Savarese of Wachtell, Lipton, Rosen & Katz.) My colleague David B. Anders and I have written a memorandum commenting on the guidance recently provided by the Acting Deputy Attorney General Craig S. Mortford concerning principles that DOJ will now consider when negotiating and finalizing ... http://blogs.law.harvard.edu/corpgov/2008/04/26/doj-establishes-guidelines-for-corporate-monitors/ On April 14, my co-author Mark Roe and I presented our paper entitled Public and Private Enforcement of Securities Laws: Resource-Based Evidence at the Law and Economics Seminar here at the Law School. Recent academic work in finance has generally found that private enforcement for investor protection via disclosure and ... http://blogs.law.harvard.edu/corpgov/2008/04/25/public-and-private-enforcement-of-securities-laws/ (Editor's note: This post is by Randall D. Guynn of Davis Polk & Wardwell.) Treasury Secretary Henry M. Paulson, Jr. has proposed a sweeping overhaul of the U.S. financial regulatory system that, for the first time, would bring insurance companies, hedge funds, private equity funds, venture capital funds and mortgage originators ... http://blogs.law.harvard.edu/corpgov/2008/04/24/treasury-proposes-financial-regulatory-overhaul/ It is not often that the Southern District of New York (aka The Mother Court) rules on a stockholder derivative case. Here is a recent ruling in which Judge Swain of the SDNY forcefully applied Delaware law in dismissing a stockholder attack on the Morgan Stanley board arising ... http://blogs.law.harvard.edu/corpgov/2008/04/23/federal-district-court-reaffirms-board-primacy/ (Editor's note: This post is by Matteo Tonello of The Conference Board Governance Center.) The Conference Board's Working Group on Hedge Fund Activism, established in May 2007, recently released a set of proposed recommendations for those public companies and institutional investors who might find themselves involved in an activism campaign mounted ... http://blogs.law.harvard.edu/corpgov/2008/04/22/responding-to-hedge-fund-activism/ (Editor's note: The blog featured earlier posts on the option backdating and its corporate governance implications by Larry Ribstein here, by Ted Mirvis and Paul Rowe here, and by Lucian Bebchuk here, here, here, here, and here.) I have just posted on SSRN a paper that analyzes three forms of secret ... http://blogs.law.harvard.edu/corpgov/2008/04/21/option-backdating-and-its-implications/ NYCERS v. Apache Corp: Remember Cracker Barrel? Ah, Cracker Barrel. A decade ago, the biggest Corp Fin-related controversy was the shareholder proposal's "ordinary business" exclusion basis and the SEC Staff's Cracker Barrel no-action letter under Rule 14a-8(c)(7) (the basis has since been renumbered to 14a-8(i)(7)). Those were much simpler times. Back ... http://blogs.law.harvard.edu/corpgov/2008/04/20/nycers-v-apache-corp-remember-cracker-barrel/ On March 28, the Delaware Court of Chancery issued a decision in Schoon v. Troy Corporation, upholding a board-approved bylaw amendment that cut-off advancement rights to a former director. I previously posted here on related litigation between the parties where the court held that directors do not have standing ... http://blogs.law.harvard.edu/corpgov/2008/04/19/delaware-court-upholds-bylaw-amendment-that-cuts-off-advancement-rights-to-former-directors/ The General Counsel of the Securities and Exchange Commission and Harvard Law School graduate, Brian G. Cartwright, recently gave the Distinguished Scholar Address at Widener University School of Law. Entitled The Role of the States (Foreign and Domestic), the speech addressed the question of what the increasingly global nature of ... http://blogs.law.harvard.edu/corpgov/2008/04/18/the-role-of-the-states-foreign-and-domestic/ (Editor’s note: The Agrawal study is described on our blog here; the initial AFL-CIO response is available on our blog here; two reactions to that AFL-CIO response - from Ashwini Agrawal and from Steven Kaplan - are available here; the subsequent AFL-CIO response is available here). I am writing to respond ... http://blogs.law.harvard.edu/corpgov/2008/04/17/afl-cio-proxy-voting-a-response-by-agrawal/ The Program on Corporate Governance has recently issued as a discussion paper my piece, entitled Ringling Bros.-Barnum & Bailey Combined Shows v. Ringling: Bad Appointments and Empty-Core Cycling at the Circus. On the surface, the Ringling case appears to be an irrational spat over board seats by the heirs of ... http://blogs.law.harvard.edu/corpgov/2008/04/16/ringling-bros-barnum-bailey-combined-shows-v-ringling/ Chancellor Chandler in litigation captioned TravelCenters of America LLC v. Brog, et al., C.A. No. 3516-CC decided, among other issues, two significant legal questions worthy of broader publication. Since both rulings are contained in memorandum opinions, they will not be reported officially. The first ruling was contained in ... http://blogs.law.harvard.edu/corpgov/2008/04/15/travelcenters-of-america-llc-v-brog/ My colleague Laura A. McIntosh and I have written an article entitled Corporate Governance Update: Advice for Directors in Complicated Times: The Fundamentals Still Apply. The article considers directors' oversight responsibility in a volatile business environment, including directors' obligations as a company approaches the zone of insolvency and the extent ... http://blogs.law.harvard.edu/corpgov/2008/04/14/corporate-governance-update-advice-for-directors-in-complicated-times-the-fundamentals-still-apply/ (Editor’s note: This post is by Linda McKenzie of Ernst & Young.) In light of all of the recent market turmoil, the importance of transparency and risk management has certainly been elevated. These issues along with some of the shifts in global capital markets activity are at the center of a ... http://blogs.law.harvard.edu/corpgov/2008/04/11/the-changing-dynamics-of-global-capital-markets/ (Editor’s note: This post by Jun-Koo Kang and Jin-Mo Kim is part of the series of posts on corporate governance articles accepted for publication in prominent Finance Journals.) Our forthcoming article in the Journal of Finance entitled The Geography of Block Acquisitions, extends the literature on geographic proximity by studying ... http://blogs.law.harvard.edu/corpgov/2008/04/10/the-geography-of-block-acquisitions/ It is often said of Congress that it can't act on anything important except in a crisis. What is seldom noticed is the corollary that Congress puts off acting until ordinary problems develop into crises. For years, Congress has had before it two serious problems—the gradual loss of U.S. ... http://blogs.law.harvard.edu/corpgov/2008/04/09/dangerous-dithering/ Vice Chancellor Lamb's recent memorandum opinion in the Delaware Court of Chancery, In Re SS&C Technologies, Inc. Shareholders Litigation, adds an interesting twist to the "readily available plaintiff" question. The SS&C opinion and order imposes sanctions on the plaintiffs and their counsel for filing, in bad faith, a motion to withdraw. ... http://blogs.law.harvard.edu/corpgov/2008/04/08/litigation-kennel/ In a decision issued on March 13, 2008, the Delaware Chancery Court in JANA Master Fund, Ltd. v. CNET Networks, Inc. held that CNET's advance notice bylaw applied only to shareholder proposals that are sought to be included in the company's proxy materials pursuant to Rule 14a-8 under the Securities ... http://blogs.law.harvard.edu/corpgov/2008/04/07/jana-master-fund-ltd-v-cnet-networks-inc/ The Delaware Chancery Court has issued its decision in the closely watched trial between Barry Diller and John Malone and their respective companies, IAC and Liberty Media. Liberty owns all the high-voting stock and a majority of the votes in IAC but it has granted Diller, IAC's CEO, an ... http://blogs.law.harvard.edu/corpgov/2008/04/04/diller-vs-malone/ JCPenney became the third company this proxy season to reach an agreement with me to amend its by-laws to limit the adoption of poison pills. The adopted by-law is based on a shareholder proposal to amend the company’s by-laws that I submitted for the company’s upcoming annual meeting. Following my ... http://blogs.law.harvard.edu/corpgov/2008/04/03/jcpenney-joins-firms-agreeing-to-adopt-my-poison-pill-bylaw/ The materials generated in the drafting of the 1967 revision to the Delaware General Corporation Law (including the report by Professor Ernest Folk to the Corporation Law Revision Committee and the minutes of that committee's deliberations) are now available online here. These materials, not widely available before, provide extensive background about ... http://blogs.law.harvard.edu/corpgov/2008/04/02/delaware-general-corporation-law/