Corporate Governance

Free Enterprise Fund v. PCAOB: Regulation, the Free Market, and the Constitution (More Legal Arguments) (Part 6)

Posted on July 02, 2008
The other argument about the removal authority is that the Commission, which is itself an independent agency, can only remove members of the PCAOB "for cause."  In other words, the President's influence over the PCAOB is even more attenuated...

Free Enterprise Fund v. PCAOB: Regulation, the Free Market, and the Constitution (More Legal Issues) (Part 5)

Posted on July 02, 2008
What of the other two issues? There is almost no law interpreting the particular language of a “for cause” restriction. It is possible, therefore, that while some limitations on removal are permissible, there may be some that go too far. A for cause restriction that is excessively narrow means that there is no real right of removal, something that might more readily impair the President's ability to execute the laws, and also might suggest no real supervision for purposes of the Appointments Clause...

As Predicted: The SEC and the Further Denial of Shareholder Access

Posted on July 01, 2008
When the battle raged over the access proposal, the Commission adopted amendments to Rule 14a-8(i)(8) that included extremely broad language.  The release, however, promised that the broad language would not be used to exclude existing types of proposals that had been held by the staff to be consistent with the exclusion...

Free Enterprise Fund v. PCAOB: Regulation, the Free Market, and the Constitution (More Legal Arguments) (Part 4)

Posted on July 01, 2008
The second cluster of legal issues is a bit more complex.  They go not to the power of appointment but to removal authority.  The plaintiffs challenge the SEC's authority to remove members of the PCAOB only "for cause."  SOX generally requires cause to be some type of wilful misbehavior...

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Free Enterprise Fund v. PCAOB: Regulation, the Free Market, and the Constitution (The Legal Issues Involved) (Part 3)

Posted on July 01, 2008
The case has produced a nice volume of paper but few truly interesting issues. The PCAOB brief (and the one filed by the SEC Commissioners as amicus) contends that the case is a renewed attack on independent federal agencies, a fight that was quelled long ago, with the Supreme Court giving up the ghost on that issue in Morrison v...

The Senate Confirms

Posted on June 30, 2008
Without much fanfare, the Senate confirmed the three nominees to the SEC on Friday.  This brings the SEC up to its full complement of five and witnesses the departure of Paul Atkins, a Repubilican who often seemed more hostile than helpful towards the work of the Commission...

Free Enterprise Fund v. PCAOB: Regulation, the Free Market, and the Constitution (The Structure of the PCAOB) (Part 2)

Posted on June 30, 2008
There is much debate in the record about whether the PCAOB is nothing new (just another SRO) or something never seen before.  The answer, perhaps unsurprisingly, falls in the middle.   In some respects, the PCAOB looks like a private sector organization...

Free Enterprise Fund v. PCAOB: Regulation, the Free Market, and the Constitution: Introduction (Part 1)

Posted on June 30, 2008
We will spend a couple of days on an important but little reported case, FEF v. PCAOB.  Back in the early days of Sarbanes Oxley (SOX), the knives were out.  Everything about the Act was flawed, from the process used in adoption to each of the specific provisions...

Law Blogs v. Rockers: Sentencing Law and Policy Responds

Posted on June 29, 2008
We put up a post comparing the number of court citations of rocker and law blogs, with the rock stars narrowly edging out the law blogs.  Doug Berman, at Sentencing Law and Policy, the most cited law blog (and surpassing the most commonly cited rocker, Bob Dylan) has responded, with the result that Bob Dylan now has one additional law blog citation...

Law Blogs v. Rockers: CItations in Court Opinions

Posted on June 29, 2008
We have reported on this Blog the growing number of courts that have cited law blogs.  The numbers are relatively small when compared with traditional law reviews but are growing.  The NYT on Sunday provided another benchmark for assessing the number of citations:  The most cited rockers...

Beneficial Ownership, Equity Swaps, and Proxy Contests: CSX v. The Children's Investment Fund (The Second Circuit Rules) (Part 16)

Posted on June 28, 2008
The sturm und drang at CSX continues.  The company has indicated that it may take a month to develop a final tally.  Because directors serve for one year or until their successor has been elected, this extends the time period for the incumbents...

Bear Stearns, Hedge Funds, and the Criminalization of Corporate Law (Part 2)

Posted on June 27, 2008
Should the two managers at the Bear Stearns hedge funds have been indicted?The funds were highly invested in CDOs--mortgages, in other words.  The indictment indicates that the two defendants were aware that problems in the CDO market were affecting the funds in March 2007...

Bear Stearns, Hedge Funds, and the Criminalization of Corporate Law (Part 1)

Posted on June 27, 2008
It is a tough time to be a hedge fund.  For one thing, the economy is not cooperating and solid returns are hard to come by.  For another, the term "hedge" fund has become pejorative, a term that stands for short term investors who elevate their profit making goals over all other interests...

The SEC Nominees and the Senate Confirmation Process

Posted on June 26, 2008
Yesterday, the Senate Banking Committee voted to confirm the three nominees to the SEC, Republican Troy Paredes and Democrats Elisse Walter and Luis Aguilar.  Full confirmation by the Senate is the last step.  No vote is currently scheduled...

More Shareholders Say on Pay

Posted on June 26, 2008
Risk Metrics has noted the continuing progress of Say on Pay.  According to the post, shareholders at eight companies have passed say on pay proposals, up from seven last year.  As the post notes:As reported previously, “say on pay” proposals have received majority support at Apple, Lexmark International, PG&E, South Financial Group, Tech Data, Motorola, and Alaska Air this year...

Executive Compensation and "Informed" Decisions: Delaware Law and the Problem of Compensation Consultants

Posted on June 26, 2008
We have from time to time discussed the role of compensation consultants in the realm of executive compensation.  Their role is critical.  Under Delaware law, a board decision on executive compensation is all but free from legal challenge if approved by "independent" directors and done on an "informed" basis...

Beneficial Ownership, Equity Swaps, and Proxy Contests: CSX v. The Children's Investment Fund (The Results, Sort Of) (Part 15)

Posted on June 25, 2008
The CSX annual meeting was held today, with two hedge funds running a minority slate of five directors.  What happened?  The results are too close to call.  The company will reconvene the meeting on Friday and receive certification of the final tally.

Blogging, Scholarship and Conversations on the Internet

Posted on June 25, 2008
We note a recent addition to the field of online scholarship, Criminal Law Conversations.  Oriented towards academics, the site seeks nominations for law pieces worthy of discussion.  The site seeks to encourage "conversation" about a published piece in the criminal law area...

Henry Paulson and Fed Regulation of Investment Banks

Posted on June 25, 2008
The regualtory structure for investment banks has been back in the news, with allegations in the WSJ that the SEC is asleep at the switch and Henry Paulson, a lame duck secretary of the treasury, giving a speech calling again for an overhaul of the regulatory system for financial institutions, including investment banks...

Importing International Litigation: Bobin v. Lagardere (Rube Goldgberg Governance)

Posted on June 24, 2008
In many ways, EADS represents a company with corporate governance gone wild.  Until 2007, the company was a two headed hydra, with two controlling shareholders (Daimler and Sogeade) each getting to designate a CEO and each getting to designate a Chairman...

Importing International Litigation: Bobin v. Lagardere (the Complaint)

Posted on June 24, 2008
As the US economy suffers and oil prices escalate upward, perhaps comfort can be taken from the knowledge that we continue to import foreign litigation.  A recent example is the securities litigation brought against Lagardere and Daimler, the two owners of Airbus...

Beneficial Ownership, Equity Swaps, and Proxy Contests: CSX v. The Children's Investment Fund (The Influence of Blogs) (Part 14)

Posted on June 23, 2008
Interestingly, the brief filed by the hedge funds in the CSX case (which has been posted on the DU Corporate Governance web site) referenced the "extensive practitioner commentary" on the case and provided a quote from Steve Davidoff at the Dealbook Blog, a modest demonstration of the continuing role played by law blogs in the development of the law...

Beneficial Ownership, Equity Swaps, and Proxy Contests: CSX v. The Children's Investment Fund (The Second Circuit Rules) (Part 13)

Posted on June 23, 2008
The hedge funds (The Children's Investment Fund and 3G Capital Partners) have opposed the motion for emergency relief and expedited appeal.  As their brief notes:That headlong rush to judgment on important issues of first impression makes no sense and is unnecessary...

Beneficial Ownership, Equity Swaps, and Proxy Contests: CSX v. The Children's Investment Fund (The Second Circuit Rules) (Part 12)

Posted on June 23, 2008
The annual meeting for CSX is this week, June 25.  The two hedge funds that have nominated five directors have somewhere around 8.7% of the shares.  In addition, they presumably still have their large swap position, with the counterparties (mainly Citigroup and Deutsche Bank) holding large positions in CSX...

CEOs and the Shift in Markets

Posted on June 21, 2008
At one time, banks and other financial institutions generally considered it important that their CEOs have experience serving in the position of MoFTan, the person within the company responsible for relations with the powerful Ministry of Finance...

Law School Rankings, SSRN and Blogging

Posted on June 20, 2008
We are a corporate governance blog but sometimes can't help weighing in on the issue of law school rankings.  I have written a paper on the subject that contends law blogging can help a law school's ranking:  Of Empires, Independents, and Captives:  Law Blogging, Law Scholarship, and law School Rankings...

Starbucks, Social Responsibility, and Profit Maximization

Posted on June 20, 2008
Starbucks is in trouble.  Per store earnings are falling.  Competition is on the horizon, with McDonalds planning to insert baristas into its 20,000 franchises.  Starbucks coffee, as a commodity, will find the competition from McDonalds stiff, with the fast food giant likely to be able to make high quality coffee drinks at competitive prices in often more convenient locations...

US News and the Scourage of Law School Rankings

Posted on June 19, 2008
It is a popular refrain in the law academic business to criticize the US News rankings.  In fact, they often force law schools to raise spending, maximize the number of full time faculty, improve the faculty-student ratio, and engage in steps design to increase their reputatonal ranking, a litany of actions that are not exactly harmful...

Executive Compensation and the Highest Paid CEOs

Posted on June 19, 2008
Who are the top ten highest paid CEOs for 2007?  According to the Associated Press:1. John Thain, Merrill Lynch, $83.1 million2. Leslie Moonves, CBS Corp., $67.6 million3. Richard Adkerson, Freeport-McMoran Copper & Gold Inc., $65.3 million4...

Beneficial Ownership, Equity Swaps, and Proxy Contests: CSX v. The Children's Investment Fund (Congress Speaks) (Part 11 1/2)

Posted on June 18, 2008
The CSX case continues to attract attention, some in Congress.  Senator Schumer has sent a letter to the SEC indicating concern over the recent decision by Judge Kaplan, noting that he was "disturbed" by the outcome.  Mostly it appears to be concern over the remedy in the case (or lack of remedy) actually...

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