Law Commons^™

Hidden Agendas In Shareholder Voting, Scott Hirst, Adriana Z. Robertson

Faculty Scholarship

Nothing in either corporate or securities law requires companies to notify investors what they will be voting on before the record date for a shareholder meeting. We show that, overwhelmingly, they do not. The result is “hidden agendas”: for 88% of shareholder votes, investors cannot find out what they will be voting on before the record date. This poses an especially serious problem for investors who engage in securities lending: they must decide whether the expected benefit of voting exceeds the expected benefit of continuing to lend their shares (or making them available for lending) without knowing what they will …

The Evolution Of Entrepreneurial Finance: A New Typology, J. Brad Bernthal

Publications

There has been an explosion in new types of startup finance instruments. Whereas twenty years ago preferred stock dominated the field, startup companies and investors now use at least eight different instruments—six of which have only become widely used in the last decade. Legal scholars have yet to reflect upon the proliferation of instrument types in the aggregate. Notably missing is a way to organize instruments into a common framework that highlights their similarities and differences.

This Article makes four contributions. First, it catalogues the variety of startup investment forms. I describe novel instruments, such as revenue-based financing, which remain …

What Default Rules Teach Us About Corporations; What Understanding Corporations Teaches Us About Default Rules, Tamar Frankel

Faculty Scholarship

This Article addresses corporate law's default rules, which allow corporations to waive their directors' liability for damages based on a breach of their fiduciary duty of care. Most large publicly held corporations have adopted such a waiver in their articles of association. This Article suggests that courts should limit the range of the waivers to the circumstances that existed when the voters voted and to the information they received before they voted. This Article distinguishes between public contracts (legislation) and private contracts (commercial transactions) and the default rules that apply to each. The Article shows that courts view corporations and …

The Conundrum Of Executive Compensation, Mark J. Loewenstein

Publications

Much of the scholarship on executive compensation that appears in law reviews assumes that large U.S. corporations overpay their chief executive officers ("CEOs"). This assumption is understandable, as many of these compensation packages are indeed stunning. The question of whether CEOs are overpaid, however, is complicated. Some scholars in other disciplines, principally in economics and management science, have studied the issue but, as this Article demonstrates, this literature does not confirm the assumption. Indeed, some studies suggest that CEO pay is competitive. Moreover, efforts to reduce the level of executive compensation may have the unintended consequence of achieving the opposite …

Removal Of The Corporate Director During His Term Of Office, Arthur H. Travers Jr.

Publications

The traditional rules governing the removal of corporate directors have evolved so as to insulate the board of directors from the shareholders who elect them. Professor Travers in his article examines initially the interests being advanced by protecting the board members from removal by their electorate. He then critically analyzes the law as it relates to these interests in order to suggest a more rational approach.