Sky Blog
In a recent article, I analyze the function of shareholder ratification in corporate governance and argue that understanding this function is critical to both refining shareholder-based cleansing mechanisms and appreciating their inherent limitations. Although I focus on Corwin cleansing in …
In Maffei v. Palkon, the Delaware Supreme Court unanimously held that the business judgment rule applies to a corporation’s decision to change its state of incorporation, even if the move arguably favors a controlling stockholder by reducing future liability …
Last week, in Maffei v. Palkon, the Delaware Supreme Court held that the decision to change the corporate domicile of a Delaware corporation with a controlling stockholder to Nevada is subject to the business judgment rule, making stockholder challenges …
It is well-known that equity is a central part of corporate law, and courts do not hesitate to remind litigants of that fact. Yet, a fuller appreciation of what equity means for corporate law is still lacking. In a recent …
New research provides evidence that legally nonbinding commitments from corporate managers to Environmental, Social, and Governance (ESG) principles may help predict subsequent corporate behavior. [1] This study provides cautiously optimistic evidence that CEOs who claim to consider the ethical implications …
Corporate politicization, when companies take sides in our culture war and risk alienating half their potential customers, is a serious concern. Recent examples of companies that have felt its negative impact on shareholder value abound, including Bud Light, Target, and …
In the wake of a judicial decision invalidating Tesla CEO Elon Musk’s stock-option package, Tesla’s shareholders have voted overwhelmingly to ratify Musk’s pay. Rather than respect investors’ judgment, however, the lawyers who brought the case claimed that the shareholder vote …
In recent years, boards of directors have confronted a strategic dilemma: whether to appoint specialized directors or engage external consultants to advise them on various aspects of their business. This decision has significant implications for a board’s accountability, the application …
When assessing the legality of actions by boards of directors, corporate officers, and shareholders, judges use five standards of review: the business judgment rule, Unocal, Revlon, the entire fairness standard, and, to some degree, Blasius.[1]
These …
On June 27, 2023, the Delaware Court of Chancery in Simeone v. The Walt Disney Company held that a stockholder’s disagreement with a corporation’s decision to speak on public policy did not constitute a “proper purpose” for making a books …
The importance of environmental, social, and corporate governance (ESG) is on the rise, with legislators, regulators, and non-governmental actors around the world creating laws and standards on ESG. Though most of the action has occurred in Europe, ESG is gaining …
The debate over the corporation’s purpose is today a central topic of corporate law scholarship. So far, the discussion has advanced little beyond a two-sided view, considering only the approaches known as shareholder primacy and corporate social responsibility (CSR). In …
Concerns about a lack of viewpoint diversity in stakeholder capitalism have been touched upon in commentary about the SEC’s recent climate change proposal. For those not caught up, the SEC has proposed a rule that would “require registrants to provide …
Historically, how a corporation invests and pursues its goals has been recognized as within the discretion of the board of directors. The business judgment rule insulates directors from liability for exercising that discretion by restricting second-guessing from shareholders absent a …
In 1985, the Delaware Supreme Court, in Unocal Corp. v. Mesa Petroleum Co.,[1] held that the “omnipresent specter” of a conflict of interest sufficiently clouds judicial review of anti-takeover measures to require application of enhanced scrutiny. Notably, the …
In re Dell Technologies Inc. Class V Stockholders Litigation (June 11, 2020) can be viewed as a routine decision analyzing the MFW prerequisites to post-closing review of a transaction proposed by a controlled company under the deferential business judgment standard. …
Prosecutors, regulators, investors, and the media are increasingly holding directors and officers accountable, while special interest groups, plaintiffs’ lawyers, and activist hedge funds are constantly looking for their next targets.
This new reality requires directors to be aggressive in overseeing …
In 2013, Michael Dell and his private equity partner, Silver Lake, brought the previously publicly-held Dell Corporation private at a price of $13.75 per share, a price that was approved by Dell’s board and by a 57 percent majority vote …
Delaware has reigned as the preeminent corporate law jurisdiction in the United States for over a century, weathering the rivalry of eager state competitors (such as Maryland and Nevada) and the looming presence of – and occasional intervention by – …
It has long been a policy of corporate law1 that the informed business decisions of independent and disinterested directors are protected by the presumption of the business judgment rule.2 Courts are reluctant to second-guess decisions that are made …