Corporate Governance

More on Say on Pay

Posted on August 27, 2008
We noted yesterday about the role of Say on Pay in the current election cycle, the matter having become part of the Democratic Platform.  A small matter in the greater scheme of things perhaps, but nonetheless interesting that the matter has become part of the national campaign...

The DNC and Corporate Governance

Posted on August 26, 2008
This Blog operates out of Denver, the current location of the Democratic National Convention, which began yesterday.  It is the convention that will, on Thursday, nominate Barak Obama.  We have mentioned Obama a number of times on this Blog, including his endorsement by some former SEC chairmen, his support for "say on pay," and the inclusion of "say on pay" in the Democratic Platform...

Limits on Postponing a Shareholder Meeting: Steel Partners v. Point Blank Solutions

Posted on August 26, 2008
We have on this Blog occasionally dealt with Delaware cases that seemed to give inordinate discretion to management to manipulate the voting process.  Thus, Delaware courts have upheld the right of management to delay a meeting more or less because they know from the proxy tabulator that they are going to lose the vote...

Pangloss, Delaware Law, and the Duty of Loyalty: Julian v. Eastern States Development Co.

Posted on August 25, 2008
On this Blog, we often criticize the Delaware courts, whether for an anti-shareholder bias (go here and here for examples) or what we sometimes perceive as a lack of appropriate judicial disposition.  Mostly, though, these issues are symptomatic of a larger problem, the failure to impose meaningful standards of behavior on directors...

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Stock Market Competition: Bolsas & Mercados

Posted on August 23, 2008
As stock markets switch to for profit enterprises, a process of consolidation is taking place.  The NYSE merged with Euronext and Nasdaq acquired the Nordic Exchange.  There are some redoubts, however, and one of them is in Spain.  Currently, the Bolsas & Mercados Espanoles SA has managed to remain unacquired while doing, apparently, a booming business...

Starbucks and Social Responsibility: Loyalty Cards Just Aren't Working

Posted on August 22, 2008
Starbucks is floundering.  The latest reports indicate that the approach instituted over the last six months to stave off declining earnings through closed stores, new products and loyalty programs, is not working.  Earnings are down and at least one large shareholder has sold, a vote of no confidence in the company...

Qwest and and Exemplary Legal Department (Part 2)

Posted on August 21, 2008
We have had an opportunity to comment on this Blog about the legal department at Qwest, the telecommunications company that has a large presence in this community.  Not long ago it was listed as the best in house legal department for 2008 by Corporate Counsel...

US v. Stockman: What Happens When the D&O Insurance Is Gone?

Posted on August 21, 2008
From the indictment, Paul Barnaba appears to be a bit player in the criminal action against David Stockman. Yet he is in the middle of a criminal case involving at least two other defendants and some 12 million documents, with no trial date in sight. He has sought severance (along with dismissal) in order to get his criminal exposure resolved...

U.S. v. Nacchio: Government Chooses New Attorney for Rehearing En Banc

Posted on August 20, 2008
The Race to the Bottom previously followed Joe Nacchio?s trial. Earlier this year a Tenth Circuit panel overturned Nacchio?s conviction. As covered by the Race to the Bottom, the Tenth Circuit recently decided to hold an en banc review of that decision, which is scheduled to begin next month...

Private Equity and SOX: The Critics Get It Wrong (Again)

Posted on August 20, 2008
When SOX was adopted, it engendered a fusillade criticism, with opponents focusing on everything from the need for independent audit committees to the separation of accounting and consulting functions.  Or, as Roberto Romano so colorfully labeled, SOX was "quack corporate governance...

Conference Announcement: The "Obama Phenomena"

Posted on August 19, 2008
On this Blog, we usually stick to matters of corporate governance. Nonetheless, with the Democratic National Convention about to descend on our fair city, we feel compelled to note a conference being held by the Univesity of Denver Sturm College of Law called the "Obama Phenomena: Facets of a Historic Campaign...

Independent Investment Banking Firms and the Disappearing Act

Posted on August 19, 2008
We have discussed before about the gradual disappearance of independent investment banking firms.  With the repeal Glass Steagall back in the 1990s, the day of investment banking firms not owned by commercial banks are increasingly numbered.  Why?  Because commercial banks have natural advantages, including lower cost funding sources and the perceived safety of the Federal Reserve Board...

Delaware Courts and the Charade of Director Independence: Ryan v. Lyondell Chemical (It's Hard Being A Plaintiff in Delaware) (Part 2)

Posted on August 18, 2008
We are discussing the recent case, Ryan v. Lyondell Chemical.  In that case, the Delaware Chancery court found that the plaintiffs had alleged sufficient facts that the board violated its duties under Revlon to overcome a motion for summary judgment...

The Delaware Courts and the Charade of Director Independence: Ryan v. Lyondell Chemical (Part 1)

Posted on August 18, 2008
The Delaware courts have relied on independent directors as a mechanism for insulating managerial behavior from judicial review. Conflicts of interest approved by independent directors are reviewed not under the duty of loyalty but the almost impossible to overcome business judgment rule...

AIM and the Race to the Bottom

Posted on August 16, 2008
With Paulson suddenly promoting massive government intervention to save the housing market, we haven't been hearing much about deregulatory measures such as repeal of SOX. At the height of the anti-SOX fervor, some of the evidence marshaled to show the damage from the act included an ostensible decline in the number of foreign companies cross listing in the United States...

Self Regulation and Insider Trading

Posted on August 15, 2008
Self regulation predates the adoption of the securities laws and has long been a component of the system of oversight for the capital markets.  There has always been problems with the approach, most noticeably concerns over adequate enforcement.  Particularly with respect to the exchanges, there has been the potential of capture by the industry being regulated and the possibility that requirements designed to protect investors would remain unenforced...

Shareholder Proposals and the North Dakota Publicly Traded Corporations Act

Posted on August 14, 2008
In the veritable race to the bottom, Delaware controls the corporate law of most public companies.  The state, including the courts, has developed a law that is decidedly anti-shareholder in approach.  We will explore this topic later this week or early next with a discussion of a recent case out of Delaware...

The Democratic Platform and Say on Pay

Posted on August 14, 2008
The topic of corporate governance does not play a large role in the proposed democratic platform published last week.  Nonetheless, there was some discussion of regulatory reform, most of it bland and vague.  But at the end of the one operative paragraph was a specific mention of say on pay...

The Benefits of SOX

Posted on August 13, 2008
When this Blog began some twenty or so months ago (for a history of its foundation, go here), a central purpose was to write about Sarbanes Oxley and the benefits (as well as the problems) flowing from the law.  It was meant at least in part to offset what was a concentrated attack on the law by those who did not like the provisions or the way it was enacted...

Chipotle and Social Responsibility

Posted on August 12, 2008
When does social responsibility and profit maximization converge?  At Chipotle, the burrito manufacturer headquartered in Denver.  The first Chipotle opened 15 years ago.  Since then, the chain has grown to 778 stores with sales of $1.1 billion...

Social Responsibility and PAX World Management

Posted on August 12, 2008
We occasionally delve on this Blog into topics relating to social responsibility.  Much of our analysis involves the relationship between social responsibility and profit maximization. The importance of social responsibility can be seen with particular clarity in the mutual fund area...

Director Independence and SEC Enforcement (Part 2)

Posted on August 11, 2008
The SEC brought an administrative proceeding against Mark Thompson for failing to reveal to the boards of public companies where he served as directors that he had a business relationship with the outside auditor that impaired the auditor's independence...

Director Independence and SEC Enforcement (Part 1)

Posted on August 11, 2008
The other day, the Commission brought an action against Ernst & Young for violating accountant independent standards.  According to the administrative proceeding, E&Y was paying for services from Mark C. Thompson at the same time Thompson sat on the board of three public companies where E&Y conducted audits (two listed on the NYSE, one on Nasdaq) and, in one case, a a company's audit committee...

Monica Goodling and Corporate Governance

Posted on August 09, 2008
By now, most are familiar with the report issued by the Justice Department on July 28, 2008 concerning the use of political criteria in hiring civil service level employees in the Justice Department.  The report placed Monica Goodling at the center of the investigation, a 1999 graduate of Regent Law School...

US v. Stockman: Number of Documents Up, Remaining D&O Insurance Down

Posted on August 08, 2008
What's going on in the David Stockman case?  Sixteen or so months after the indictment, there is still no trial date and the parties are sweltering in more than 12 million documents.  As for the D&O policy, the fourth and last tier has been exhausted...

Miscounting Shareholder Votes

Posted on August 07, 2008
An issue that deserves far greater attention concerns the recent miscount of the votes in connection with the election of directors at Yahoo.  The commentary has been passing, although as usual Corporate Governance noticed and asked the right questions...

Paul Atkins and Precatory Shareholder Proposals

Posted on August 06, 2008
As a parting shot in departing from the SEC, now former commissioner Paul Atkins gave a speech on Rule 14a-8, the shareholder proposal rule.  Most of it was a warning about allowing shareholders access to the proxy statement and a self complementary discussion of the decision to refer the CA case to the Delaware Supreme Court...

SEC Commissioner Paredes' First Significant Act

Posted on August 06, 2008
On Friday, Commissioner Paredes took the oath of office and joined the Commission. Continuing a long line of law faculty who have served on the Commission, Paredes most significant contribution so far is to replace Paul Atkins. While one republican steps into the shoes of the other, it is hard to imagine that the change will do anything but improve the output of the Commission and reduce the shrill tone often emanating from the body...

The Appeal of Joe Nacchio and The 10th Circuit En Banc Hearing: A Prediction

Posted on August 05, 2008
We are sure that the Tenth Circuit agreed to rehear the case because of its possible impact on the trial courts in the circuit.  We also note that going into the case, Nacchio is at a disadvantage. In the original panel, he drew an unusually good draw...

Joe Nacchio and the Tenth Circuit: A Handicap

Posted on August 05, 2008
Last week we were posting daily on the CSX case and the proposed changes to the formula used by US News to rank law school.  As a result, we have been a bit remiss in commenting on the decision of the Tenth Circuit to hear en banc aspects of the appeal of Joe Nacchio...

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