Corporate Governance

US v. Nacchio: The 10th Circuit Reverses

Posted on March 18, 2008
Thoughts on Tenth Circuit Reversal in Nacchio Case John Holcomb Department of Business Ethics & Legal Studies Daniels College of Business University of Denver Having read the Tenth Circuit’s opinions, I have the following thoughts:1. I think Judge Holmes has it right on the expert witness and Daubert issues, even though Judge McConnell is a real intellectual force on the bench...

Nacchio Conviction Reversed, As Predicted

Posted on March 17, 2008
The appeal of Joe Nacchio came out today.  The opinion is posted on the 10th Circuit web site, the panel reversing only on procedural grounds, the trial judge's exclusion of an expert witness without a hearing having been reversible error...

Congress, CEO Pay and the Use of Compensation Consultants

Posted on March 17, 2008
The Post by William Garehime reviews some of the testimony on executive compensation before the House Oversight Committee.  The Post demonstrates the fundamental weakness in the Delaware requirement that a board be informed.  The requirement has come to mean the presence of an expert opinion, with little attempt to qualitatively examine the information before the board or the board's actual use of the information...

Congress, CEO Pay and the Use of Compensation Consultants

Posted on March 17, 2008
According to a recent House Committee Report, Countrywide’s board of directors resisted advice from their outside compensation consultants who sought to reduce Mozilo’s excessive pay as CEO. Last Friday Countrywide CEO Angelo Mozilo spoke to the House Oversight and Government Reform Committee regarding the countries widening mortgage crisis and his excessive compensation...

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The Intellectual Justification for a Non-Judicial Temperment

Posted on March 17, 2008
We have been writing about the propensity of Delaware judges to give talks and write articles that set out views and positions on various matters in the corporate governance debate.  Specifically, we have discussed an article (really a speech) written by VC Strine and published in the Journal of Corporation Law by the University of Iowa...

The Intellectual Justification for a Non-Judicial Temperament

Posted on March 17, 2008
We have been writing about the propensity of Delaware judges to give talks and write articles that set out views and positions on various matters in the corporate governance debate.  Specifically, we have discussed an article (really a speech) written by VC Strine and published in the Journal of Corporation Law by the University of Iowa...

Listing Standards and International Enforcement

Posted on March 15, 2008
The WSJ provided a short article on the resolution by OMX (the Nordic Stock Exchange recently acquired by Nasdaq) of an alleged violation of listing standards.  Here is the article in toto:Telefon AB L.M. Ericsson didn't violate OMX AB's listing regulations by making an announcement about sales forecasts at an analyst conference last year, the Nordic stock-exchange operator concluded...

Caremark--The Failed Revolution (pt. 3)

Posted on March 14, 2008
  Caremark–The Failed Revolution (Pt. 3)    I had originally hoped to wrap up my series on Caremark in this third part.  However, based partly on some reactions to my earlier posts, I’ve decided that the issue of what a director’s Caremark duties should be and how important they are deserves a post of its own...

Delaware Judges, Shareholder Rights, and the Appearance of Bias (Part 7)

Posted on March 13, 2008
We have been discussing the article recently published by VC Strine in the Journal of Corporation Law, "Toward Common Sense and Common Ground? Reflections on the Shared Interests of Managers and Labor in a More Rational System of Corporate Governance," 33 J...

CEO Pay: Legislation Not a Solution

Posted on March 13, 2008
Last week's congressional hearings on CEO pay are just another manifestation of a deep schism in fundamental values over the acceptability of greed. The dispute is less about shareholder interests and much more about whether it is appropriate that some people make staggering amounts of money when their contributions are difficult to quantify...

Delaware, The Courts, and The Race to the Bottom

Posted on March 12, 2008
We have been writing about the predilection of judges in Delaware to use the speaker circuit to expound upon issues relating to the corporate governance process. As the article by VC Strine illustrates, the judges go beyond narrow legal issues and speak on broad issues that include critiques of the players involved in the movement, creating the appearance of judicial bias...

Delaware Judges, Shareholder Rights, and the Appearance of Bias (Part 6)

Posted on March 12, 2008
We have spent a number of posts discussing an article written by VC Strine of the Delaware Chancery and the facets of the current system of corporate governance that he does not like (grasping institutions, lazy faculty, unaccountable press, and weak kneed "professional" directors)...

A Chink in the Armor? Say on Pay

Posted on March 11, 2008
Celia Taylor writes:Aflac, the well known (duck represented) insurance company announced on Wednesday that its shareholders will be given a non-binding vote on the compensation packages given to the company’s top five executives. Aflac is not alone in facing shareholder pressure; shareholder activists have long been clamoring for a voice on this issue and according to Del Jones writing in USA Today, approximately fifty companies face similar shareholder proposals...

The Delaware Courts and Say on Pay

Posted on March 11, 2008
We have noted the criticism of Say on Pay by VC Strine in his article published in the Journal of Corporation Law.  In addition, he does not like "professional" independent directors who give in to the demands of shareholders, presumably on matters such as Say on Pay...

Delaware Judges, Shareholder Rights, and the Appearance of Bias (Part 5)

Posted on March 11, 2008
We are discussing the article recently published by VC Strine in the Journal of Corporation Law, "Toward Common Sense and Common Ground? Reflections on the Shared Interests of Managers and Labor in a More Rational System of Corporate Governance," 33 J...

Executive Compensation, the Delaware Courts, and Congress (Part 3)

Posted on March 10, 2008
As we noted, Delaware courts defer to compensation decisions made by compensation committees so long as the directors are informed and independent.  We noted that the courts have not made the informed element meaningful.  Almost any report supporting the compensation decision will do, with the courts not permitting any real examination of the neutrality of the relevant consultant or the quality of the report...

Executive Compensation, the Delaware Courts, and Congress (Part 2)

Posted on March 10, 2008
In the hearings last Friday before the House Commitee on Oversight and Government Reform, Angelo Mozilo was apparently grilled with particular ferocity. Mozilo provided ammunition, both because of the amount he was paid but also because of an email in which he apparently threatened to resign if he did not get reimbursed on taxes paid as a result of his wife's personal use of corporate aircraft, something he apologized for at the hearings...

Executive Compensation, the Delaware Courts, and Congress

Posted on March 10, 2008
We have been discussing the article by VC Strine that was recently published in the Journal of Corporation Law. We note that he is unhappy with "professional" independent directors and the activism of institutional investors. He does not like majority vote provisions (that allow for withhold campaigns) and say one pay...

A Sunday Editorial: Social Responsibility and Homelessness

Posted on March 09, 2008
Social responsibility can be good for the bottom line but it isn't something that is always intuitively obvious to those seeking to maximize profits.  Sometimes corporate America needs to think outside the box, whether because of the thought process of a visionary CEO (take Chipotle as an example) or because it was pushed by government regulation (take the Community Reinvestment Act)...

Calpers and Sovereign Wealth Funds

Posted on March 08, 2008
As we discuss VC Strine's dislike of institutional investors, we note the assist provided by theeditorial in the WSJ on Friday, likening Calpers to a Sovereign Wealth Fund.  It is an attempt to use a pejorative label in place of actual analysis, the hedge fund approach to criticism...

Starbucks and Social Responsibility

Posted on March 07, 2008
We continue our saga on Starbucks and the competitive threat confronted by McDonald's decision to insert baristas in its 14,000 franchises.  We are watching the company's reaction to this competitive threat.  A week or so ago, Starbucks across the country closed for an evening, the baristas receiving a brush up on the coffee making process...

Delaware Judges, Shareholder Rights, and the Appearance of Bias (Part 4)

Posted on March 07, 2008
We are discussing the article recently published by VC Strine in the Journal of Corporation Law, "Toward Common Sense and Common Ground? Reflections on the Shared Interests of Managers and Labor in a More Rational System of Corporate Governance," 33 J...

The Delaware Chancery Court and the Treatment of Institutional Investors: Portnoy v. Cryo Cell

Posted on March 06, 2008
While we continue to discuss the article by VC Strine and recently published in the Journal of Corporation Law, we are reminded of Portnoy v. Cryo-Cell, a case examined at some length on this Blog.  In that case, VC Strine found that management had in fact acted in an improper fashion with respect to a shareholder election...

Delaware Judges, Shareholder Rights, and the Appearance of Bias (Part 3)

Posted on March 06, 2008
We are discussing the article recently published by VC Strine in the Journal of Corporation Law, "Toward Common Sense and Common Ground? Reflections on the Shared Interests of Managers and Labor in a More Rational System of Corporate Governance," 33 J...

London and the Consequences of Regulatory Lite

Posted on March 05, 2008
Remember, back in the day, when SOX was the culprit for everything going wrong in the US capital markets?  As evidence of the pernicious effect of SOX, critics pointed to the growth in the London stock market, almost entirely in the Alternative Investment Market or AIM...

Delaware Judges, Shareholder Rights, and the Appearance of Bias (Part 2)

Posted on March 05, 2008
We are discussing the article recently published by VC Strine from the Delaware Chancery Court in the Journal of Corporation Law, "Toward Common Sense and Common Ground? Reflections on the Shared Interests of Managers and Labor in a More Rational System of Corporate Governance," 33 J...

Stoneridge and Its Implications

Posted on March 04, 2008
The Federalist Society sponsors an Online Debate Series.  The format is to arrange for a group of persons knowledgeable on a particular subject to discuss and debate the matter by email, with the thread then posted on line...

Delaware Judges, Shareholder Rights, and the Appearance of Bias (Part 1)

Posted on March 04, 2008
We have written on this Blog about the Delaware courts and their efforts to expound on matters beyond the case and controversy in their courtroom.  Sometimes they do so in cases, the use of hypotheticals inDesimone a good example.  But other times they take advantage offorums outside the courtroom...

Executive Compensation Outpaces Earnings

Posted on March 03, 2008
Sometimes the argument about excessive executive compensation founders on the concept of excessive.  For some, the enormous dollar amounts speak for themselves (Stan O'Neil receiving $160 from Merrill Lynch when he stepped down in 2007).   For others, this is not enough...

Social Responsibility, Profit Maximization, and Sick Leave

Posted on March 03, 2008
NPR ran earlier in the week about an ordinance adopted in San Francisco requiring businesses to provide sick leave for their employees.  An audio version of the story is here.  This should be viewed in the context of a story indicating that half of all workers in the US do not get sick leave, with low wage workers particularly at risk...

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