Corporate governance - Vigil

The long-standing debate on dual-class structure has focused on whether dual-class stock is an efficient capital structure that should be permitted at the time of initial public offering (“IPO”). By contrast, we focus on how the passage of time since the IPO can be expected to affect the efficiency of such a structure.

The top-selling shoe on the market in 2016 didn’t come with any revolutionary technology. It wasn’t part of a collaboration with Drake, Rihanna, Kanye West or the many other celebrities and artists putting their stamp on footwear these days. And it definitely wasn’t something new.

A robust financial system is central to our economic well-being. The financial crisis and the Great Recession wreaked havoc on millions of American households and businesses, and much of this damage was due to a flawed regulatory framework.

The report will likely be studied by regulators, congressional committees, financial institutions, and other companies for insights into the causes of problematic sales practices and, more broadly, insights into how boards and senior management can improve their identification of and response to red flags.

In Do Staggered Boards Affect Firm Value?, forthcoming in the Iowa Law Review, we examine the controversial question of the economic effect of a staggered board.

Activist investor Marcato Capital Management is turning up the heat in its fight with Buffalo Wild Wings, calling on the restaurant chain to replace its chief executive.

Jonathan Litt seeks two seats on Bloomfield Hills-based mall operator's board of directors.

Last month, in Vento v. Curry, [1] the Delaware Chancery Court preliminarily enjoined the Consolidated Communication Holding (“Consolidated”) shareholder vote [2] on the company’s all-stock acquisition of FairPoint Communications (“FairPoint”) due to Consolidated’s failure to adequately disclose the compensation its financial advisor would receive for participating in the acquisition financing.

How and why Europe’s largest airport plans to manage a major expansion.

In a brilliant must-read article in the May-June 2017 issue of the Harvard Business Review, Joseph L. Bower and Lynn S. Paine show the fallacies of the economic theories and statistical studies that have been used since 1970 to justify shareholder-centric corporate governance, short-termism and activist attacks on corporations.

Next Tuesday, the 25th of April, the shareholders of Wells Fargo will meet for the first time since the news of the massive Wells Fargo mis-selling scandal broke last September when the firm was hit with penalties of $185 million for opening 1.5 million bank accounts and issuing 565,000 credit cards for customers without their consent.

Saba Software, Inc. Stockholder Litigation (March 31, 2017) is the first case that we are aware of in which the Delaware Court of Chancery has declined to apply “cleansing” under Corwin. The decision appears to be grounded in the unusual facts of the case, and, in our view, confirms the recent trend of Delaware decisions that indicate that Corwin cleansing of non-controller stockholder-approved transactions is likely to be precluded only in unusual and egregious circumstances.

Activist investors that believe an agency problem exists between shareholders and management may attempt a proxy contest aimed at specific issues or control of the board.  Research shows that, in anticipation of a proxy contest, managers make significant adjustments in favor of shareholders on a wide array of corporate policies, including R&D expenditures, capital expenditures, leverage, dividends, management compensation, and CEO tenure.  Furthermore, Brav, Jiang, Partnoy, and Thomas (2008) and Klein and Zur (2009) document that activist hedge funds often use a proxy threat to get what they want from incumbent managers. From this perspective, the threat of a proxy contest may be seen as a method for ensuring alignment between board policies and shareholders.