Law Commons^™

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

All Faculty Scholarship

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 …

Shareholders Vs Stakeholders Capitalism, Fabian Brandt, Konstantinos Georgiou

Comparative Corporate Governance and Financial Regulation

With the growth of the economies worldwide the debate between shareholder and stakeholder capitalism has never been more intense than nowadays. Each country though incorporates this debate differently in its interior market since its corporate governance’s structures present distinguished characteristics. Thus, by bringing into this debate countries like Germany and the USA, the distinction between shareholders and stakeholders’ interests becomes clearer. Countries based on the Anglo-Saxon business model like the USA are in favor of a “shareholder primacy” based system setting as their optimal goal the maximization of shareholder value. On the other hand, countries like Germany seem to have …

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

All Faculty Scholarship

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 …