Sky Blog
When does a shareholder become powerful enough to control a corporate vote?
That question has taken on unusual importance in Delaware. Unlike ordinary shareholders, controlling shareholders are subject to fiduciary duties. And after litigation over Elon Musk’s compensation package, in …
The equitable remedy known as piercing the corporate veil lacks coherence and consistency. No one knows when or why a request to hold shareholders personally liable for a judgment against their corporation might occur. This uncertainty persists despite numerous, comprehensive …
The charters for Boeing and Google, two of the largest corporations in history, run just seven and eleven pages long, respectively. These charters say almost nothing about the nature of the company’s business and do not contain policies on business …
Over the past decade, many companies have embraced the language and practices of stakeholder governance. Corporate mission statements, sustainability reports, and ESG disclosures frequently highlight commitments to employees, communities, and environmental sustainability. Boards authorize charitable-giving programs, diversity initiatives, and policies …
In a significant ruling last month, the Delaware Supreme Court reversed a Chancery Court decision that had invalidated an 18-month, nationwide noncompete agreement at the pleading stage. The decision in Payscale Inc. v. Norman, __ A.3d __, No. 297, …
A corporation is perpetual by default – but its lifespan can easily be limited through either a charter provision or contract. Does anyone actually do that? Indeed they do – and for good reason – as I explain in a …
Delaware is dead, long live Delaware? To a U.S. M&A practitioner, much of the “Dexit” debate about whether corporations should exit Delaware as their jurisdiction of incorporation in favor of another state feels as if it may come full circle …
Around the time Tesla’s board granted CEO Elon Musk a massive 10-year, $2.3 billion equity award, a small number of companies offered similar “mega grants” to their CEOs. The outcome of Musk’s grant is known, but the outcomes of these …
The new optional legal form for startup companies, EU Inc., which launched last week as a so-called 28th regime, is a strategic instrument aimed at promoting incorporation, innovation, and growth across the European Union. In a period of increasing geopolitical …
Under the law and practice of corporate governance, the board of directors is the keystone of corporate accountability. Yet, in large, modern corporations with extensive management hierarchies, authority is widely dispersed among senior managers below board level. In a recent …
Scholars have long debated the merits and legitimacy of “corporate democracy.” But largely absent from the debate is what courts mean by “corporate democracy”– or at least how courts use the phrase. In a forthcoming article, I analyze the more …
The Delaware Supreme Court’s recent decision in Moelis & Company v. West Palm Beach Firefighters’ Pension Fund distinguished “void” corporate acts from “voidable” ones in a way that will significantly affect future stockholder litigation.[1] The distinction is important because …
Many companies approaching an initial public offering face a familiar concern: whether the underwriters responsible for marketing the deal are fully aligned with the issuer’s interests. IPO underpricing – the tendency for shares to jump in price on the first …
AI adoption is now mainstream: 88% of businesses use AI in at least one function, with global spending expected to exceed $1.5 trillion in 2025 and approach $2 trillion in 2026. As organizations race to scale AI, many have relied …
Why do we still mark the beginning of corporate existence with the filing of a charter? Why file charters publicly when the content is overwhelmingly focused on internal stock rights? Why does the leading jurisdiction of Delaware make charters so …
The Modigliani-Miller (MM) Theorem and the Coase Theorem are two of the most important contributions to modern economics. Their insights earned Nobel Prizes for their authors, with MM transforming how economists and legal scholars analyze corporate financial policy and Coase …
Too often, for-profit and nonprofit boards are passive, deferential, or both. Their failures to engage their critical faculties have resulted in serious harms as diverse as Boeing planes crashing and the NRA squandering millions of dollars. Boeing’s massive safety failures …
Corporate oversight under Delaware law rests on the two bases for liability, each identified in In re Caremark International Inc. Derivative Litigation (“Caremark”) and reaffirmed in Stone v. Ritter. The first is a failure to implement any reporting …
Boards face increasingly demanding requirements for oversight. It is no longer enough to have a compliance program on paper. Regulators, courts, and investors expect boards to ensure that compliance systems function to prevent, detect, and respond to misconduct. That expectation …