Law Commons^™

Hedge Fund Activism, Poison Pills, And The Jurisprudence Of Threat, William W. Bratton

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This chapter reviews the single high profile case in which twentieth century antitakeover law has come to bear on management defense against a twenty-first century activist challenge—the Delaware Court of Chancery’s decision to sustain a low-threshold poison pill deployed against an activist in Third Point LLC v. Ruprecht. The decision implicated an important policy question: whether a twentieth century doctrine keyed to hostile takeovers and control transfers appropriately can be brought to bear in a twenty-first century governance context in which the challenger eschews control transfer and instead makes aggressive use of the shareholder franchise. Resolution of the question …

The Rise Of Corporate Religious Liberty, Micah Schwartzman, Chad Flanders, Zoe Robinson

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This Introduction to our edited book, The Rise of Corporate Religious Liberty (Oxford University Press, 2016), offers an account of the “corporate turn” in law and religion. Here the term “corporate” refers to any organized body of people - groups, associations, organizations, and institutions - and, more specifically, to for-profit corporations. Our contention is that the relationship between law and religion has shifted dramatically in the last decade, moving from a conception of religious freedom focused mainly on individual liberty toward one that privileges the rights of religious organizations. We trace this development in two stages, describing the initial movement …

How Corporate Governance Is Made: The Case Of The Golden Leash, Matthew D. Cain, Jill E. Fisch, Sean J. Griffith, Steven Davidoff Solomon

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This Article presents a case study of a corporate governance innovation—the incentive compensation arrangement for activist-nominated director candidates colloquially known as the “golden leash.” Golden leash compensation arrangements are a potentially valuable tool for activist shareholders in election contests. In response to their use, several issuers adopted bylaw provisions banning incentive compensation arrangements. Investors, in turn, viewed director adoption of golden leash bylaws as problematic and successfully pressured issuers to repeal them.

The study demonstrates how corporate governance provisions are developed and deployed, the sequential response of issuers and investors, and the central role played by governance intermediaries—activist investors, institutional …

Line Drawing In Corporate Rights Determinations, Elizabeth Pollman

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This essay was written for the 21st Annual Clifford Symposium: The Supreme Court, Business, and Civil Justice. The essay argues that existing lines drawn between corporations may be a useful starting place for analyzing the rights of corporations, but caution must be used because the lines drawn in other areas were done for various policy reasons in different contexts that may not map onto the corporate rights determination. Attention should be paid to the specific characteristics of corporations that are relevant to the right at stake and the basis for extending protection. The key contribution of this essay is to …

Corporate Law And Theory In Hobby Lobby, Elizabeth Pollman

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Does a business corporation constitute a “person” that can “exercise religion” under the Religious Freedom Restoration Act of 1993? In Burwell v. Hobby Lobby Stores, Inc., the Supreme Court answered this novel question in the affirmative, but this chapter shows that its anemic treatment of corporate law and theory provided little guidance on how to implement and limit the landmark ruling. This chapter critically examines the issues of corporate law and theory driving the Court’s analysis: (1) the theory of the corporation as a right holder; (2) corporate purpose; (3) the “closely held” category; and (4) state corporate law as …

The New Governance And The Challenge Of Litigation Bylaws, Jill E. Fisch

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Corporate governance mechanisms designed to ensure that managers act in shareholders’ interest have evolved dramatically over the past forty years. “Old governance” mechanisms such as independent directors and performance-based executive compensation have been supplemented by innovations that give shareholders greater input into both the selection of directors and ongoing operational decisions. Issuer boards have responded with tools to limit the exercise of shareholder power both procedurally and substantively. This article terms the adoption and use of these tools, which generally take the form of structural provisions in the corporate charter or bylaws, the “new governance.”

Delaware law has largely taken …

Does Majority Voting Improve Board Accountability?, Stephen Choi, Jill E. Fisch, Marcel Kahan, Edward B. Rock

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Directors have traditionally been elected by a plurality of the votes cast. This means that in uncontested elections, a candidate who receives even a single vote is elected. Proponents of “shareholder democracy” have advocated a shift to a majority voting rule in which a candidate must receive a majority of the votes cast to be elected. Over the past decade, they have been successful, and the shift to majority voting has been one of the most popular and successful governance reforms.

Yet critics are sceptical as to whether majority voting improves board accountability. Tellingly, directors of companies with majority voting …

Governmental Intervention In An Economic Crisis, Robert K. Rasmussen, David A. Skeel Jr.

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This paper articulates a framework both for assessing the various government bailouts that took place at the onset of Great Recession and for guiding future rescue efforts when they become necessary. The goals for those engineering a bailout should be to be as transparent as possible, to articulate clearly the reason for the intervention, to respect existing priorities among investors, to exercise control only at the top level where such efforts can be seen by the public, and to exit as soon as possible. By these metrics, some of the recent bailouts should be applauded, while others fell short. We …

The Law And Policy Of People Analytics, Matthew T. Bodie, Miriam A. Cherry, Marcia L. Mccormick, Jintong Tang

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Leading technology companies such as Google and Facebook have been experimenting with people analytics, a new data-driven approach to human resources management. People analytics is just one example of the new phenomenon of “big data,” in which analyses of huge sets of quantitative information are used to guide decisions. Applying big data to the workplace could lead to more effective outcomes, as in the Moneyball example, where the Oakland Athletics baseball franchise used statistics to assemble a winning team on a shoestring budget. Data may help firms determine which candidates to hire, how to help workers improve job performance, and …

Constitutionalizing Corporate Law, Elizabeth Pollman

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The Supreme Court has recently decided some of the most important and controversial cases involving the federal rights of corporations in over two hundred years of jurisprudence. In rulings ranging from corporate political spending to religious liberty rights, the Court has dramatically expanded the zone in which corporations can act free from regulation. This Article argues these decisions represent a doctrinal shift, even from previous cases granting rights to corporations. The modern corporate rights doctrine has put unprecedented weight on state corporate law to act as a mechanism for resolving disputes among corporate participants regarding the expressive and religious activity …