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Corporate Power Is Corporate Purpose I: Evidence From My Hometown, Leo E. Strine Jr. Dec 2016

Corporate Power Is Corporate Purpose I: Evidence From My Hometown, Leo E. Strine Jr.

Faculty Scholarship at Penn Law

This paper is the first in a series considering a rather tired argument in corporate governance circles, that corporate laws that give only rights to stockholders somehow implicitly empower directors to regard other constituencies as equal ends in governance. By continuing to suggest that corporate boards themselves are empowered to treat the best interests of other corporate constituencies as ends in themselves, no less important than stockholders, scholars and commentators obscure the need for legal protections for other constituencies and for other legal reforms that give these constituencies the means to more effectively protect themselves.

Using recent events in the ...


Corporate Power Is Corporate Purpose Ii: An Encouragement For Future Consideration From Professors Johnson And Millon, Leo E. Strine Jr. Oct 2016

Corporate Power Is Corporate Purpose Ii: An Encouragement For Future Consideration From Professors Johnson And Millon, Leo E. Strine Jr.

Faculty Scholarship at Penn Law

This paper is the second in a series considering the argument that corporate laws that give only rights to stockholders somehow implicitly empower directors to regard other constituencies as equal ends in governance. This piece was written as part of a symposium honoring the outstanding work of Professors Lyman Johnson and David Millon, and it seeks to encourage Professors Johnson and Millon, as proponents of the view that corporations have no duty to make stockholder welfare the end of corporate law, to focus on the reality that corporate power translates into corporate purpose.

Drawing on examples of controlled companies that ...


Hedge Fund Activism, Poison Pills, And The Jurisprudence Of Threat, William W. Bratton Aug 2016

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

Faculty Scholarship at Penn Law

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 ...


How Corporate Governance Is Made: The Case Of The Golden Leash, Matthew D. Cain, Jill E. Fisch, Sean J. Griffith, Steven Davidoff Solomon Jan 2016

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

Faculty Scholarship at Penn Law

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 ...