Sky Blog
A recent decision by the Delaware Supreme Court, In re Investors Bancorp, Inc. Stockholder Litigation (“Investors Bancorp”), increased the risk of litigation against directors, bucking a decades-long trend. The decision reversed a Chancery Court …
Following Corwin v. KKR Financial Holdings and other Delaware cases that have reinforced the standards that stockholder suits must meet to survive dismissal, would-be litigants have increasingly invoked Section 220 of the Delaware General Corporate Law (“Section 220”) to try …
In a recent paper, we use new and proprietary micro-data from company-ratings site Glassdoor for the period between 2008 and 2016 to investigate changes in employees’ perception of firms and managers during periods of financial misconduct and after the public …
This post lays out a new approach to shareholder voting designed to increase the voting power of long-term committed shareholders: adding votes to shares based on both long holding periods and high concentrations. Called quality voting, the approach would …
Class action reform could take a lesson from U.S. public company governance, I argue in a new working paper, available here.
Class actions and public companies have a lot in common. Class action scholars routinely explain problems in class …
Breach of the duty of oversight claims against Delaware directors are known as “possibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment.”[1] The plaintiff must successfully argue that the directors …
Proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis recently announced updates to their U.S. proxy voting policies for the 2020 proxy season. ISS’s new policies will apply to shareholder meetings held on or after February 1, 2020 and …
Recent regulatory reforms in advanced economies have empowered shareholders by letting them vote on executive compensation, corporate transactions, changes to the corporate charter, and social and environmental proposals. This shift of power from boards to shareholders assumes that shareholder voting …
Shareholder proposals urging corporate boards to report on climate‑related risk made headlines in 2017 when they earned majority support from investors at ExxonMobil, Occidental Petroleum, and PPL.[1] The key to this historic vote was the support of the Big …
In response to the sharp increase in campaigns by activist hedge funds in France and Europe generally, a French commission has conducted an extensive investigation and issued a carefully researched, reasonable and balanced report recommending regulatory and procedural changes to …
Leo E. Strine, Jr. has long had a bully pulpit in corporate law, first on Delaware’s Court of Chancery and then as chief justice of the Delaware Supreme Court. Bully pulpits are good things for the occupants but can be …
Shareholder cooperation is on the rise as a tool for active corporate ownership and a way to effectively voice concerns about corporate governance and performance. While “wolf packs” of activist hedge funds that aim to bring about significant corporate change …
There are three main theories of the corporation as a legal entity: the concession theory, the real entity theory, and the aggregate (contractarian) theory.[1] Once the most prominent of the three, the concession theory fell out of favor long …
Institutional investors have in recent years become the largest equity holders in the U.S., owning about 80 percent of the market value of S&P 500 index stocks and more than 70 percent of the shares of the 10 largest U.S. …
The Business Roundtable’s recent call for a commitment to long-term sustainable economic value creation has prompted a vigorous debate about the optimal corporate governance model for achieving that goal.
Certain familiar arguments have reappeared in reaction to the Business Roundtable’s …
In a recent opinion piece in the Financial Times[1], Harvard Law School Professor Jesse Fried makes a strong case that the Business Roundtable’s CEOs statement, in which they committed to “lead their companies for the benefit of all …
Directors of a Delaware corporation must act in the best interest of the corporation and its shareholders.[1] Other stakeholders – such as employees, creditors, customers, and suppliers – may only be considered by directors to the extent there …
Earlier this month, the Delaware Court of Chancery denied defendant directors’ motion to dismiss a duty-of-oversight claim brought by plaintiff shareholders in In re Clovis Oncology, Inc. Derivative Litigation.[1] This decision, together with a similar June 2019 ruling by …
Managerial entrenchment is detrimental to shareholder value (Faleye (2007), Cohen and Wang (2013), and Cohen and Wang (2017)). Managers are able to become entrenched by making specific investments whose value is higher under their watch than under that of the …
The rise and fall of The We Company IPO bubble is one of those events that, like the subprime mortgage bubble that preceded the financial crisis, calls for an examination of market structures that could have produced such a precipitous …