Law Commons^™

Shareholder Activism As A Corrective Mechanism In Corporate Governance, Bernard S. Sharfman

Bernard S Sharfman

No abstract provided.

What's Wrong With Shareholder Empowerment?, Bernard S. Sharfman

Bernard S Sharfman

In his keynote address at the Journal of Corporation Law spring banquet (March 8, 2012), Mr. Sharfman discusses the negative impact shareholder empowerment has on the efficiency of decision making at public companies. Shareholder empowerment is the shifting of decision making from the board of directors and executive management to shareholders.

Why Proxy Access Is Harmful To Corporate Governance, Bernard S. Sharfman

Bernard S Sharfman

Historically, the SEC has allowed public companies to exclude from their proxy materials shareholder proposals for the nomination of directors by shareholders. This rule has allowed the nomination of directors to remain under the control of the board of directors and its nominating committee. However, under amended Rule 14a-8(i)(8), shareholders will now be able to include proposals on proxy access in a public company’s proxy materials. Public companies can now expect to receive such proposals for inclusion in their proxy materials for the 2012 proxy season.When voting on proxy access proposals, shareholders need to understand that proxy access is a …

Midwest Corporate Law Scholars Conference Presentation: Mitigating The Harmful Effects Of Proxy Access (Sec Rule 14a-11), Bernard S. Sharfman

Bernard S Sharfman

Presentation given at the Midwest Corporate Law Scholars Conference (June 15, 2011)

How The Strong Negotiating Position Of Wall Street Employees Impacts The Corporate Governance Of Financial Firms, Bernard S. Sharfman

Bernard S Sharfman

Several prominent figures in the field of corporate governance have put the blame for the financial crisis of 2008 squarely on the shoulders of greedy shareholders. Moreover, they argued that the financial crisis of 2008 was the result of directors and managers of financial firms focusing too strongly on the short-term interests of its shareholders. If so, the financial crisis can be understood as a corporate governance failure relating to a pernicious form of shareholder primacy.

Yet, how can that argument be reconciled with the behavior of Wall Street firms in regard to the large bonus payments it made to …

Corporate Governance And The Impact Of Controlling Shareholders, Bernard S. Sharfman

Bernard S Sharfman

Good corporate governance practices at a publicly held firm will not necessarily be good practices at a publicly traded firm in which there is a controlling shareholder. This is because board independence, a key concept in structuring appropriate corporate governance practices, has a different meaning when a controlling shareholder is present.

However, identifying whether or not a board is truly independent is just the first step in evaluating the quality of corporate governance at a controlled corporation. After all, a controlling shareholder still has the power to dominate an independent board through his direct voting power and by threats of …

A Team Production Approach To Corporate Law And Board Composition, Bernard S. Sharfman, Steven J. Toll

Bernard S Sharfman

In today’s world of corporate governance, the board of directors of a publicly held firm (“public company”) will almost certainly be made up of a majority of independent directors. Armed with such independence, it is hoped that corporate boards can better monitor for managerial opportunism and enhance firm performance relative to management dominated boards.

The criterion for selecting outside board members is to choose members who enhance the efficiency of board decision-making. For that to occur, we must have an understanding of how the corporate board of a public corporation is to operate in an efficient manner. As proposed by …

Wall Street's Corporate Governance Crisis, Bernard S. Sharfman, Steven J. Toll, Alan Szydlowski

Bernard S Sharfman

The board of directors of a public company is only responsible for a relatively few of the almost infinite number of decisions that are made at a public company over any period of time. Yet, when a corporate board does make a decision, for example, the appointment of a chief executive officer or the approval and recommendation to shareholders of a merger agreement, the decision can have a major impact on the firm. Now, based on the fallout from the financial crisis of 2008, we can add corporate board approval of company-wide compensation policies to the list of board decisions …

Enhancing The Efficiency Of Board Decision Making: Lessons Learned From The Financial Crisis Of 2008, Bernard S. Sharfman

Bernard S Sharfman

As a result of the financial crisis of 2008, the employment compensation policies and decisions of Wall Street corporate boards have come under close scrutiny. More specifically, the willingness to approve company wide compensation plans that resulted in the paying out of billions of dollars in bonuses even in the face of deteriorating financial and economic conditions. If only these and other Wall Street firms had retained the bulk of these large annual bonuses over the last several years when the financial markets were noticeably in decline, perhaps the economic impact of the current financial crisis would have been less …

Dysfunctional Deference And Board Composition: Lessons From Enron, Bernard S. Sharfman, Steven J. Toll

Bernard S Sharfman

It has been over seven years since the public was first made aware that Enron (or the "Company") was a troubled firm, ultimately doomed to bankruptcy and much litigation, both civil and criminal. Yet, the Enron debacle continues to fascinate researchers and the general population alike. Over a recent one year period, the Social Science Research Network posted 71 papers that referenced Enron in their abstracts. What appears most baffling to many observers, specifically those interested in corporate governance, was the inability of the Enron board of directors to get a handle on the massive fraud that occurred under its …

The Enduring Legacy Of Smith V. Van Gorkom, Bernard S. Sharfman

Bernard S Sharfman

It is hard to envision an introductory law school course in corporate law that does not devote at least one or two classes to the study of Smith v. Van Gorkom (Van Gorkom), possibly the most famous corporate law case decided by the Delaware Supreme Court. It has become such a foundation case for the beginning study of corporate law that one prominent corporate law commentator has likened the failure to teach Van Gorkom to the omission of Brown v. Board of Education in a first year constitutional law course.

The challenge for teachers of Van Gorkom is to explain …

Being Informed Does Matter: Fine Tuning Gross Negligence Twenty Plus Years After Van Gorkom, Bernard S. Sharfman

Bernard S Sharfman

This article first establishes that there are still a number of reasons why being informed does matter, despite the ability to incorporate an exculpation clause into a Delaware corporation’s certificate of incorporation. This is followed by an explanation of how Delaware’s business judgment rule became transformed from a doctrine of abstention to a standard of review in the context of procedural due care. Throughout this article, it is understood that the business judgment rule exits within a framework of corporate authority and accountability and that it serves as a significant tool for the protection of corporate board authority. The article …

Understanding Maryland's Business Judgment Rule, Bernard S. Sharfman

Bernard S Sharfman

No abstract provided.