Posts Tagged ‘Leo Strine’

Can We Do Better by Ordinary Investors? A Pragmatic Reaction to the Dueling Ideological Mythologists of Corporate Law

Posted by Kobi Kastiel, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Wednesday May 7, 2014 at 9:04 am
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Editor’s Note: The following post is based on a recent Columbia Law Review article, earlier issued as a working paper of the Harvard Law School Program on Corporate Governance, by Leo Strine, Chief Justice of the Delaware Supreme Court and a Senior Fellow of the Program. The article, Can We Do Better by Ordinary Investors? A Pragmatic Reaction to the Dueling Ideological Mythologists of Corporate Law, is available here. The article is a response essay to an earlier Columbia Law Review article by Professor Lucian Bebchuk, available here and discussed on the Forum here.

Leo Strine, Chief Justice of the Delaware Supreme Court Review and a Senior Fellow of the Harvard Law School Program on Corporate Governance, recently published in the Columbia Law Review a response essay to an essay by Professor Lucian Bebchuk published in the Columbia Law Review several months earlier. Professor Bebchuk’s essay, The Myth that Insulating Boards Serves Long-Term Value, is available here and was featured on the Forum here. Chief Justice Strine’s essay, titled Can We Do Better by Ordinary Investors? A Pragmatic Reaction to the Dueling Ideological Mythologists of Corporate Law, is available here.

The abstract of Chief Justice Strine’s essay summarizes it briefly as follows:

…continue reading: Can We Do Better by Ordinary Investors? A Pragmatic Reaction to the Dueling Ideological Mythologists of Corporate Law

Putting Stockholders First, Not the First-Filed Complaint

Posted by June Rhee, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Tuesday January 22, 2013 at 9:11 am
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Editor’s Note: The following post comes to us from Leo E. Strine, Jr., Senior Fellow for the Harvard Program on Corporate Governance and Austin Wakeman Scott Lecturer at Harvard Law School, Lawrence A. Hamermesh, Ruby R. Vale Professor of Corporate and Business Law at Widener University School of Law, and Matthew Jennejohn, an associate at Shearman & Sterling, LLP.

The prevalence of settlements in class and derivative litigation challenging mergers and acquisitions in which the only payment is to plaintiffs’ attorneys suggests potential systemic dysfunction arising from the increased frequency of parallel litigation in multiple state courts. After examining possible explanations for that dysfunction, and the historical development of doctrines limiting parallel state court litigation — the doctrine of forum non conveniens and the “first-filed” doctrine — this paper suggests that those doctrines should be revised to better address shareholder class and derivative litigation. Revisions to the doctrine of forum non conveniens should continue the historical trend, deemphasizing fortuitous and increasingly irrelevant geographic considerations, and should place greater emphasis on voluntary choice of law and the development of precedential guidance by the courts of the state responsible for supplying the chosen law. The “first-filed” rule should be replaced in shareholder representative litigation by meaningful consideration of affected parties’ interests and judicial efficiency.

Putting Stockholders First responds to the observation that in 2011, only 5% of settlements of shareholder litigation challenging mergers and acquisitions involved an additional payout to stockholders, 84% of such settlements were based on additional disclosure only, but all of such settlements involved payment of fees for plaintiffs’ attorneys. These figures reflect a significant change from 1999 to 2000, when 52% of suits filed on behalf of shareholders produced a financial benefit for the class, and only 10% of settlements were “disclosure-only.”

…continue reading: Putting Stockholders First, Not the First-Filed Complaint

The Most Influential People in Corporate Governance

Posted by Scott Hirst, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Tuesday October 30, 2012 at 9:11 am
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Each year, the National Association of Corporate Directors’ Directorship magazine publishes the Directorship 100 list, which seeks to identify “the most influential people in the boardroom community, including directors, corporate governance experts, journalists, regulators, academics and counselors.” A review of this year’s list indicates that, as in prior years, individuals affiliated with Harvard Law School and its Program on Corporate Governance play a central role in the corporate governance landscape.

This year’s Directorship 100 list includes 39 individuals who are Harvard Law School faculty or fellows, guest contributors to the Forum on Corporate Governance and Financial Regulation, and/or Harvard Law School alumni. The “Harvard 39” (with graduation year in parenthesis for those who are HLS alumni) are as follows:

The full Directorship 100 list is available here.

The Most Influential People in Corporate Governance

Posted by Scott Hirst, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Wednesday October 12, 2011 at 9:57 am
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A review of the most recent Directorship 100 list – a list of the most influential people in corporate governance put together each year by Directorship magazine – indicates that individuals affiliated with Harvard Law School and its Program on Corporate Governance play a central role in the corporate governance landscape.

This year’s Directorship 100 list includes forty individuals who are Harvard Law School faculty or fellows, guest contributors to the Forum on Corporate Governance and Financial Regulation, and/or Harvard Law School alumni. The “Harvard Forty” (with graduation year in parenthesis for those who are HLS alumni) are as follows:

The full Directorship 100 list is available here.

Strine Nominated for Chancellor

Posted by Scott Hirst, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Friday June 10, 2011 at 9:29 am
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The HLS Forum was pleased to learn that Vice Chancellor Leo Strine, Jr., a Senior Fellow of the Harvard Law School Program on Corporate Governance, has been nominated for the position of Chancellor of the Delaware Chancery Court.

Vice Chancellor Strine is the author of many important and influential decisions, as well as numerous insightful academic articles. Forum posts about his decisions appear here (relating to Yucaipa American Alliance Fund II, L.P. v. Riggio), here (discussing Production Resources Group v. NCT Group, Inc.), and here (discussing the American International Group, Inc. Consolidated Derivative Litigation).

At Harvard, Vice Chancellor Strine has been co-teaching the Mergers & Acquisitions course with Professor Robert Clark, and has participated in the activities of the Program on Corporate Governance, including most recently the Program’s M&A Roundtable. We wish Vice Chancellor Strine the best of luck with the important role of Chancellor.

Harvard Faculty and Fellows Contribute Most of the Top Ten Corporate and Securities Law Articles of 2010

Posted by Scott Hirst, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Tuesday June 7, 2011 at 9:09 am
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This year’s list of the Ten Best Corporate and Securities Articles, selected by an annual poll of corporate and securities law academics includes six articles authored or co-authored by six Harvard Law faculty and fellows. The top ten articles were selected from a field of 440 pieces, and the selected articles will be reprinted in an upcoming issue of the Corporate Practice Commentator.

The HLS faculty and fellows contributing one or more articles to the top ten list are:

…continue reading: Harvard Faculty and Fellows Contribute Most of the Top Ten Corporate and Securities Law Articles of 2010

The Airgas Ruling and the Professors

Editor’s Note: This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.

Chancellor Chandler’s monumental ruling in the Airgas case, which is available here, provides a comprehensive review and analysis of the evolution and current state of Delaware’s law concerning the use of defensive tactics and the limits to boards’ ability to “just say no.” In doing so, the opinion considers the body of academic work on the subject, and significantly engages with work done by academics affiliated with the Harvard Program on Corporate Governance, including the following:

Delaware’s Intermediate Standard for Defensive Tactics: Is there Substance to Proportionality Review? In reviewing the evolution of Delaware’s doctrine,  Chancellor Chandler devotes considerable attention to this article by Reinier Kraakman (co-authored with Ronald Gilson). This article introduced the idea, subsequently incorporated into Delaware doctrine, that defensive tactics can be justified by concerns about “substantive coercion” – that is, a board’s concerns that shareholders would tender to a non-coercive offer out of “in ignorance or mistaken belief” of the value of remaining independent.

The Powerful Antitakeover Force of Staggered Boards: Theory, Evidence, and Policy: Chancellor Chandler also relies on and engages with the 2002 Stanford Law Review article by Bebchuk, Coates, and Subramanian, the first academic work to highlight and empirically demonstrate the special significance of staggered boards in the age of the pill:

  • (1) Chancellor Chandler relies on the concept of an “effective staggered board” (ESB) as introduced and defined by Bebchuk, Coates, and Subramanian to refer to situations in which a firm’s governance documents do not provide shareholders and/or a bidder with ways to get around or weaken the impediments posed by a staggered board.
  • (2) Chancellor Chandler explains in detail why the case before him is different from the “paradigmatic case” on which the Bebchuk-Coates-Subramanian study focused. According to Chandler, that paradigmatic case is one in which a company has a fully effective ESB and the bidder won one election on a “let the shareholders decide” platform. Chandler notes that Vice Chancellor Strine expressed openness to considering redeeming a pill in such circumstances in his Stanford response to the professors’ article, The Professorial Bear Hug: The ESB Proposal as a Conscious Effort to Make the Delaware Courts Confront the Basic “Just Say No” Question, and in Strine’s opinion in the Yucaipa case.

Bebchuk vs. Lipton on Just Say No: In a section, titled “Pills, Policy and Professors,” Chancellor Chandler reviews the debate that has taken place over the past three decades over the role of takeover defenses. Chandler comments that “two of the largest contributors to the literature are Lucian Bebchuk (who famously takes the ‘shareholder choice’ position that pills should be limited and that classified boards reduce firm value) on one side of the ring, and Marty Lipton (the founder of the poison pill, who continues to zealously defend its use) on the other.” Bebchuk and Lipton have long debated the subject in print. The most recent exchange between the two was published in the University of Chicago Law Review in 2002, when Bebchuk published The Case Against Board Veto in Corporate Takeovers, a comprehensive statement of the case against board veto in such transactions, and Lipton published a response, Pills, Polls, and Professors Redux, in which he defended such board power.

…continue reading: The Airgas Ruling and the Professors

Panels Discuss International Mergers and Acquisitions

Posted by Scott Hirst, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Wednesday December 23, 2009 at 9:03 am
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Recently, Vice Chancellor Leo Strine, Jr. hosted two sessions on international aspects of mergers & acquisitions practice in his Mergers and Acquisitions class here at Harvard Law School.

In a presentation entitled Viva Là Difference: Anatomy Of A Cross-Border Deal, David Katz, a partner at Wachtell, Lipton, Rosen & Katz, discussed cross-border mergers and acquisitions, focusing on two French transactions that he’d been involved in, as well as discussing several recent developments relevant to cross-border mergers and acquisitions practice. In particular, he focused on Sanofi’s hostile acquisition of Aventis, and contrasted it with the merger of equals of Alcatel and Lucent. The video of this session is available here.

In the second panel, distinguished practitioners and academics discussed takeover transactions in Europe with the Vice Chancellor. The panel consisted of David Katz; Scott Simpson, co-head of Skadden’s Global Transactions Practice; Jaap Winter, a partner at De Brauw Blackstone Westbroek in Amsterdam and professor of international company law at the University of Amsterdam, as well as acting Dean of the Duisenberg school of finance; and John Coates, John F. Cogan, Jr. Professor of Law and Economics here at Harvard Law School. The panel discussed the differences in practice between European Union takeover law and the Delaware regime. Mr. Winter described the EU Takeover Directive, and the panel discussed its effects. A video of their discussion can be accessed here.

(Videos are in Quicktime .mov format. Click here to download the latest version of Quicktime.)

Division on the Buy-Side: The Structure Of Acquisitions By Private Equity Firms

Posted by Scott Hirst, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Friday December 11, 2009 at 9:10 am
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Recently, in the Mergers and Acquisitions course at Harvard Law School, three preeminent mergers and acquisitions practitioners discussed private equity transactions with Vice Chancellor Leo Strine, Jr., who teaches the class.

The panel consisted of Eileen T. Nugent, a mergers and acquisitions partner and Co-Head, Private Equity Group at Skadden, Arp, Slate, Meagher & Flom LLP; Robert B. Schumer, the chair of the Corporate Department at Paul, Weiss, Rifkind, Wharton & Garrison LLP and co-head of the firm’s Mergers and Acquisitions Group; and John G. Finley, a senior partner in the mergers and acquisitions group of Simpson Thacher & Bartlett LLP. Eileen and John are also members of the Advisory Board of the Program on Corporate Governance.

John took the class through the pre-2005 “traditional” structure of private equity transactions. The panel expressed their view that there was very little optionality in this structure, because of “corporate veil piercing” concerns that the sponsor may be liable, and also because of reputational factors in an environment in which neither sponsors nor banks tried to escape from transactions.

John explained how the situation changed with the SunGard transaction in 2005, with the advent of reverse termination fees, though there was also a reduction in the prevalence of financing outs. The panel then discussed how these changes in deal structure played out when the debt market crashed. The panel also made some comments about how deal terms have chnaged in strategic transactions since then, including the increasing use of reverse termination fees or liquidated damages in strategic transactions.

Vice Chancellor Strine provoked a spirited argument among the panel on the question of whether over-leveraging from private equity trends helped or damaged companies involved in those transactions.

The video of this discussion is available here. (.mov format – click here to get the latest version of Quicktime)

The Merger Agreement as a Contract

Posted by Scott Hirst, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Friday November 20, 2009 at 9:16 am
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Recently, in the Mergers and Acquisitions course at Harvard Law School, three preeminent M&A practitioners discussed the Merger Agreement as a Contract with Vice Chancellor Leo Strine, Jr., who teaches the class. The panelists were Rick Climan, a partner in the Mergers and Acquisitions group at Dewey & LeBoeuf LLP; Faiza Saeed, a partner in the Corporate Department of Cravath, Swaine & Moore LLP; and Kim Rucker, Senior Vice President and General Counsel of Avon Products, Inc.

The panel went through the main parts of an acquisition agreement, including:

  • Representations and warranties;
  • Disclosure schedules (“The power is in the disclosure schedules”, remarked Kim);
  • Pre-closing covenants that apply between signing and closing, including the strength of covenants and the difference between covenants and closing conditions;
  • Closing conditions, the standards to which they must be met, and the risk of a deal failing to close.  Faiza gave the example of the breakdown of the General Electric-Honeywell transaction, which led to a discussion of regulatory risks and their effect on the transaction, and the consequent standards of covenants to obtain necessary consents, such as “hell-or-high-water” provisions.

…continue reading: The Merger Agreement as a Contract

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