By Arthur Kohn, Partner, Cleary Gottlieb Steen & Hamilton LLP & Chuck Nathan, Partner & Senior Advisor, RLM Finsbury
The 2008 financial crisis and the slow recovery that has followed has brought further evidence tending to support the view that the structure of our corporate sector needs adjustment, and that its faults affect the competitiveness of our economy. The crisis has resulted, as would be expected, in a raft of new rules and regulations, which as usual have been implemented before there emerged any consensus about the nature of the problems. There has also been a vigorous competition of ideas over causes and remedies.
However, one principal “organic” focus of change has emerged, which is usually captured by the catchword “engagement,” the corporate governance concept du jour. It seems to us that the focus on engagement has been motivated by two principal factors. These are, first, a desire by interested stakeholders—including various types of institutional shareholders and other investors, directors, management, labor, politicians and others—to increase (or perhaps retain in some cases) their influence and leverage in the functioning of public corporations and, second, the idea that in the realm of corporate productivity, a collaborative, rather than adversarial, relationship between those stakeholders, based on broadly shared principles concerning the roles and objectives of the stakeholders is beneficial. Engagement is viewed as a means towards those ends. Read the rest of this entry »
By Martin Lipton, Partner, Wachtell, Lipton, Rosen & Katz; Michael W. Schwartz, Of Counsel, Wachtell, Lipton, Rosen & Katz; Theodore N. Mirvis, Partner, Wachtell, Lipton, Rosen & Katz; George T. Conway III, Partner, Wachtell, Lipton, Rosen & Katz; Jeffrey M. Wintner, Partner, Wachtell, Lipton, Rosen & Katz; William Savitt, Partner, Wachtell, Lipton, Rosen & Katz
||A Note from The Conference Board Governance Center: Earlier this month, Professor Lucian Bebchuck published a study with co-author Robert J. Jackson, Jr., Associate Professor of Law, Milton Handler Fellow, and Co-Director of the Millstein Center at Columbia Law School, titled Toward a Constitutional Review of the Poison Pill. A post outlining paper can be found here. The following is the response from Wachtell, Lipton, Rosen and Katz. At The Conference Board Governance Center, we have been closely following the debate on shareholder activism and have posted a recording of a live roundtable discussion between Professor Bebchuck and Martin Lipton, founding partner of the Wachtell Lipton law firm, regarding when activists should be required to disclose an accumulation of a large block of stock in a public company. You can view the full debate here.
In a recent paper, Professors Lucian Bebchuk and Robert Jackson have extended Professor Bebchuk’s extreme and eccentric campaign against director-centric governance into a new realm—that of the Constitution of the United States. They claim that “serious questions” exist about the constitutionality of the poison pill—or, more precisely, “about the validity of the state-law rules that authorize the use of the poison pill.” It is likely, they argue, that these state-law rules violate the Supremacy Clause of the Constitution, and are thus preempted, because they frustrate the purposes of the Williams Act, the 1968 federal statute that governs tender-offer timing and disclosure. Read the rest of this entry »
By Thomas Singer, Researcher, Corporate Leadership, The Conference Board
Despite a general acknowledgement that environmental, social, and governance (ESG) initiatives can affect a company’s brand value and reputation, the specifics of this relationship are not always well understood, leaving a number of questions and challenges to business leaders in charge of overseeing and reporting on sustainability. A new publication from The Conference Board explores the increasingly important link between sustainability, brand, and reputation to better understand how and when companies can leverage sustainability initiatives to drive brand value. Read the rest of this entry »
By Richard Leblanc, Associate Professor, Law, Governance & Ethics, York University
We’re already well on our way into 2014, but for my first post on The Conference Board Governance Center Blog I am sharing my ten key corporate governance trends for 2014. Read the rest of this entry »
By Joseph A. McCahery, Professor of International Economic Law, Tilburg University & Erik P.M. Vermeulen, Professor of Business and Financial Law, Tilburg University
The problem of the separation of ownership and control has always been central in the corporate governance debate. It is hard to overestimate the resources and research that policymakers and academics have devoted to better understand and manage the performance and risk associated with different ownership and control structures. In the main, two categories of structures (each with its specific benefits and problems) have been identified: (1) widely dispersed ownership and (2) controlling ownership. This short essay analyzes the practical and policy challenges presented by the ownership structures in relation to three dimensions of corporate governance (shareholder value, long-termism and sustainable growth). It is apparent that investors and other stakeholders appreciate diversity in ownership structures when it helps accelerate sustainable growth and value creation. Read the rest of this entry »