- CEO Compensation and Corporate Governance
Posted May 15, 2008, 7:50 am
Kevin LaCroix on his D & O Diary reports here on recent studies that he highlights as follows: Excessive CEO pay remains a widely perceived marker for poor corporate governance and even for securities litigation risk. But recent scholarly analysis of senior corporate executive compensation suggests that outsized CEO pay may not only indicated weak governance, but may also be associated with company underperformance.
- Ribstein and Bainbridge on Shareholder Activism
Posted May 15, 2008, 6:52 am
Prof. Ribstein comments here on a recent article by Professor Bainbridge entitled: Investor Activism: Reshaping the Playing Field? Excerpts from Ribstein's overview of the article follow: In this paper he announces that directors should have less power and that we should have more shareholder activism. Just kidding. Really, here's the abstract: Shareholders of U.S. corporations historically tended towards rational apathy. Holding small blocks that were unable to affect the outcome of the vote...
- New Edition of Seminal Treatise on Business Valuation
Posted May 13, 2008, 4:03 pm
Most corporate lawyers recognize the name Shannon Pratt as the author of several seminal and widely cited treatises on the valuation of businesses. He is in the process of publishing a new edition of The Lawyer's Business Valuation Handbook, which should be available by the summer. I am flattered to have been requested to write the foreword to the upcoming edition. I am sure that many of my readers have relied on the book and have cited it in their briefs (as I know it has been cited in many...
- New Authoritative Book on Corporate Governance
Posted May 13, 2008, 9:53 am
Professor Stephen Bainbridge has just published yet another book on corporate law. His most recent publication is entitled: The New Corporate Governance in Theory and Practice The summary on Amazon.com here (where it can be pre-ordered for delivery in about 6 weeks), describes the book as follows: Forty years ago, managerialism dominated corporate governance. In both theory and practice, a team of senior managers ran the corporation with little or no interference from other stakeholders....
- Chancery Gives Victory to "Freedom of Contract" and Refuses to "Find" Fiduciary Duties in LLC Agreement When Not Clearly Stated
Posted May 9, 2008, 11:53 am
Fisk Ventures, LLC v. Segal, 2008 WL 1961156 (Del. Ch., May 7, 2008), read opinion here. This Chancery Court opinion, I predict, will be cited often by scholars and practitioners alike as part of the ongoing discussion about the difference between applying fiduciary duty concepts to LLCs--or not--as compared with the conventional application of those duties in the corporate context. This case began as an action to dissolve an LLC pursuant to 6 Del. C. Sections 18-801 and 802 but this decision...
- Chancery Rejects Claims that Directors Breached Fiduciary Duties to Creditors by Company Filing for Chapter 11 Bankruptcy; Excessive Compensation Claims Also Rejected
Posted May 9, 2008, 11:30 am
Nelson v. Emerson, 2008 WL 1961150 (Del. Ch., May 6, 2008), read opinion here. This Chancery Court decision provides a cornucopia of useful and important statements of Delaware law for those lawyers whose practice overlaps corporate governance and creditors' rights, including bankruptcy proceedings. Although one could appropriately write a lengthy article about this case, the constraints of time and paying-clients compel me to highlight just a few key points from the opinion, with copious...
- Chancery Applies "Course of Performance" and "Quasi-Estoppel" in Contract Dispute
Posted May 7, 2008, 3:41 pm
Personnel Decisions, Inc. v. Business Planning Systems, Inc., 2008 WL 1932404 (Del. Ch., May 5, 2008), read opinion here. This Chancery Court decision is 15 pages long in the Westlaw format which usually is the equivalent of over 40 pages in the original slip opinion format. This opinion contains precious iterations of Delaware law on contract principles, and explains civil procedure rulings that deserve thorough review, but in this post I will only highlight 5 key points that I have extracted:...
- Custodian of Condominium Association Discharged
Posted May 7, 2008, 2:53 pm
In the Matter of Burnbrae Maintenance Association, 2008 WL 1952166 (Del. Ch., May 5, 2008), read opinion here. This is an example of the broad variety of cases that the Chancery Court handles on occasion. This case involves a custodian that was appointed to oversee a condominium association and who now seeks to be discharged and have his fees paid, relying on Section 226 of Title 8 of the Delaware Code.
- Chancery Denies Motion to Dismiss Despite Recommendation of Special Litigation Committee
Posted May 7, 2008, 7:33 am
Sutherland v. Sutherland, 2008 WL 1932374 (Del. Ch., May 5, 2008), read opinion here. [This is one of four opinions issued on May 5 by the Chancery Court, two of which were written by the same vice-chancellor. I hope to post on the other 3 opinions issued on May 5 by tomorrow.] Factual background details can be obtained from the three prior decisions by the Chancery Court involving these parties, and summarized on this blog here, here and here. This latest opinion in this ongoing internecine...
- Chancery Addresses Adverse Possession Issues
Posted May 7, 2008, 5:42 am
Del-Chapel Associates v. Conectiv, 2008 WL 1934503 (Del. Ch., May 5, 2008), read opinion here. The Chancery Court decided issues of adverse possession and those instances where trespass occurs when the scope of a license is exceeded by one's actions. This is one of 4 cases promulgated by Chancery Court on May 5, and one of about 10 published this week, many of which were over 40 pages long in original format. That's my excuse for not making this a long summary, in addition to the fact that the...
- Delaware Leads in Race for LLCs
Posted May 6, 2008, 11:53 pm
Prof. Bill Sjostrom on Truth on the Market Blog posts about an article on SSRN that provides an empirical study which concludes that among those LLCs formed outside the state of their principal place of business, more LLCs choose Delaware to form their LLC in, with suggested reasons why. Good stuff for those interested in why certain jurisdictions are chosen over others for the formation of entities.
- Ribstein and Bainbridge on Yahoo and Microsoft
Posted May 6, 2008, 7:19 pm
Prof. Bainbridge analyzes here the applicable standard under Delaware corporate law that would apply to the defensive measures taken by Yahoo to spurn the advances of Microsoft. He explains why the case of Blasius v. Atlas Corp. would not apply. Blasius imposes a heightened standard of review when the shareholder franchise is interfered with by the board. Yahoo amended its bylaws in reply to Microsoft's bid so that the date by which nominations for board members had to be submitted was delayed...
- Chancery Clarifies and Admonishes: eFiling Passwords for Delaware Lawyers Only
Posted May 6, 2008, 12:32 am
The Delaware Chancery Court issued a clarification yesterday to lawyers in order to clarify that passwords for eFilings of pleadings and other submissions with the Court are only to be used by Delaware lawyers and shall not be "lent to" (my words) or shared with non-Delaware lawyers, nor shall non-Delaware lawyers be added to the "electronic service list" through which those who eFile documents with the court are sent notice of eFilings by other lawyers in the case. Here is the text of the...
- Leading Experts Propose Changes to Delaware Corporate Law
Posted May 5, 2008, 11:10 pm
An all-day seminar yesterday at Widener University Law School featured leading members of the judiciary as well as practitioners and academics who proposed changes to Delaware corporate law on (or about) the 40th anniversary of the last major overhaul of the Delaware General Corporation Law in 1967 (although minor updates have been made each year since then.) Unlike most other jurisdictions, Delaware recognizes practitioners and academics from other states as being well-versed enough about...
- Court of Chancery Again Rejects a One Person Special Litigation Committee
Posted May 5, 2008, 2:04 pm
Sutherland v. Sutherland, C.A. 2399-VCL (Del. Ch. May 5, 2008) Once again, the Court of Chancery has shot down a motion to dismiss a derivative suit based on the work of a one person SLC. This time while finding the SLC was independent, the Court felt its work was not adequate because of a lack of effort in reviewing accounting records. The opinion is a useful collection of SLC law, particularly what not to do if you are going to use a SLC.
- Lethal Injection Moratorium Lifted
Posted May 5, 2008, 1:29 am by Michele
A recent Supreme Court ruling, Baze v. Rees, ended the Federal moratorium on lethal injections in the United States. In Delaware, a State Supreme Court judge rejects lethal injection challenge but a Federal Court appeal is still pending. What I find particularly outrageous about the lethal injection challenge is that Robert Jackson III, the criminal that first made the claim that the lethal injection in Delaware is ?cruel and unusual punishment,? murdered his victim with an ax in her home. Did...
- Chancery Denies Demand for Books and Records by Limited Partner
Posted May 4, 2008, 3:55 pm
Madison Real Estate Immobilien-Anlagegesellschaft Beschrankt Haftende Kg v. Kanam USA XIX Ltd. Partnership, 2008 WL 1913237 (Del.Ch., May 01, 2008), read opinion here. (Yes, that is the correct spelling of the unusual and long case name.) Before I address the substantive parts of the opinion, allow me three brief introductory comments about this recent Chancery Court decision involving the denial, after trial, of a demand by a limited partner for books and records of a limited partnership. (...
- Attorneys' Fee Request Carefully Examined--and Approved
Posted May 4, 2008, 12:45 am
Weichert Co. of PA v. Young, 2008 WL 1914309 (Del. Ch., May 1, 2008), read opinion here. In this Chancery Court decision the court reviews objections to a fee application pursuant to a fee shifting provision in an agreement. The pro se defendant lost the argument that he violated his covenant not to compete. Even though the monetary award was only about $7,500, the fee request was about $90,000. The court awarded the whole amount requested, finding it reasonable under the applicable case law...
- Guest Contributor to Harvard Corporate Governance Blog
Posted May 2, 2008, 2:58 pm
The Harvard Law School Corporate Governance Blog has graciously added my name to their masthead as a "Guest Contributor", in light of the several prior posts I have written on their blog, as well as one that will appear shortly based on my summary I posted here of a recent Delaware opinion applying Caremark principles to an officer (as opposed to a director) of a company.
- Chancery Court's Policy on Public Access to Documents
Posted May 2, 2008, 11:49 am
Here is the formal policy announced today for public access to administrative records of the Delaware Court of Chancery.