There is always something new to discover.

For example, I was reviewing the CLC version (as one does), and I noticed that in the sections providing for stockholder approval (either for director-conflict transactions, or controller-conflict transactions), language was deleted that would specifically have required stockholders be informed as to the nature of a director’s conflict and involvement in the negotiation of the transaction, and the “material facts” of a controller transaction – though this language was retained for approval at the board/committee level. Though stockholder approval must still be “informed,” I rather suspect the deletions were intended to assist with future arguments that conflicts, or flawed “negotiations,” do not undermine the effect of a stockholder vote, when the stockholders were at least informed as to the material terms of the deal.

Screenshots of the relevant deletions, here:

And here:

This is, I believe, the language included in the version of the bill that passed the Delaware Senate.

In recent years, of course, the Delaware Supreme Court has rejected many attempts at stockholder ratification on the grounds that various conflicts or negotiating flaws were concealed from stockholders, and there were the grounds on which Chancellor McCormick concluded that the stockholder vote in favor of Elon Musk’s pay package at Tesla was not fully informed. The Tornetta defendants argued, unsuccessfully, that stockholders only needed to be informed of the economic terms of the pay package, and they advance a similar argument on appeal.

Which means, I guess, that we can add City of Dearborn Police & Fire Revised Ret. Sys. v. Brookfield Asset Management, City of Sarasota Firefighters’ Pension Fund v. Inovalon Holdings, Morrison v. Berry (for a second reason), and, hell, maybe even Smith v. Van Gorkom to Eric Talley’s running list of Delaware Supreme Court cases that SB 21 will overrule.

Back to the drawing board on the BizOrgs syllabus….

And another thing. New Shareholder Primacy podcast is up! Mike Levin interviews Jeff Gramm of Bandera Partners. Here at Apple, here at Spotify, and here at YouTube.

The recording of the March 6 program on “Law Students Learning to Lead through Non-Profit Board Service” (which I earlier wrote about here) can be found here. The webinar was offered by the Section on Leadership of the Association of American Law Schools. I was able to attend and ask a bunch of questions. Many of the the tips for those engaging in experiential business law teaching could be valuable to you (as they were for me). So, I am recommending the recording here. The entire event was an hour in length, in case that is valuable information for you in considering whether to watch or listen to the program.

Assistant Professor of Business Law

9-Month Tenure-Track Position

The AACSB accredited College of Business at Louisiana State University Shreveport (LSUS) seeks applications for a tenure-track scholar position from qualified scholars at the rank of Assistant Professor of Business Law starting August 2025. Applications will be considered from all candidates who meet our AACSB qualifications.

The selected candidate will report to the Chair – Department of Accounting and Business Law, and will be expected to teach at both the undergraduate and graduate levels in face-to-face and online settings. Candidate will be expected to produce scholarship at a level consistent with our AACSB Scholarly Academic standards, and actively engage in service to the department, college, university, and community.

Minimum Qualifications: Applicants must possess a Juris Doctor degree from an ABA-accredited law school and be admitted to practice law by the highest court of at least one of the United States.  Candidates must demonstrate teaching excellence.

Preferred Qualifications: Preference will be given to candidates who have at least one year of experience teaching Business Law classes.

Application: To apply for this position, a CV, cover letter, statement of teaching philosophy, copies of all transcripts that include relevant course work, and contact details of three references should be sent electronically to Tingtsen (Robbie) Yeh, Chair – Business Law Search Committee at  Tingtsen.Yeh@lsus.edu. The search will remain open until the position is filled. Selected candidates for the interview will be asked to provide three letters of recommendation. LSUS is an Affirmative Action and Equal Opportunity Employer. To be considered, the email subject must be “Tenure Track Faculty Application.” 

About LSUS: In addition to a collegial faculty, our University boasts a high percentage of faculty with terminal degrees. The LSUS College of Business currently enrolls over 700 undergraduate students pursuing majors in accounting, finance, general business, management, and marketing. Our graduate enrollment currently exceeds 5000 students in our accelerated online Master of Business Administration and Master of Health Administration programs.

About Shreveport: The Shreveport-Bossier City area offers an attractive quality of life, combining the conveniences of a big city with the warmth and hospitality of a smaller town. With a metropolitan population of more than 319,000, the Shreveport-Bossier City area offers a low cost of living, affordable housing, and many diverse dining and entertainment options. Exceptional outdoor recreation opportunities abound. Frequently called “A Sportsman’s Paradise,” the area’s mild climate, various lakes and rivers, and beautiful parks create the perfect setting for jogging, bicycling, water skiing, jet skiing, hunting and fishing. For other recreational activities, Shreveport-Bossier is home to riverboat casinos and horse racing at Louisiana Downs. Additional entertainment venues include the Brookshire Grocery Arena which hosts numerous musical events, comedians, rodeos, children’s events, ice-skating

productions, and other entertainment activities. Shreveport also hosts dozens of festivals with regional food and music, and offers regular theatrical productions, ballet performances, as well as performances by the Shreveport Symphony and the Shreveport Opera. Shreveport is also home to the American Rose Garden.

Like this Walgreen’s deal with Sycamore.

Very quick thing I note about it: It includes the equivalent of an earnout, namely, in addition to the cash consideration Walgreen’s shareholders receive, they also receive a “Divested Asset Proceed Right,” or DAP Right, which will entitle them to an additional $3 per share if Sycamore is able to sell VillageMD, (They get 70% of the net proceeds of the sale, up to $3 per share).

I don’t think the merger agreement is public yet, but this from the press release caught my eye:

WBA shareholders will receive, at closing of the Sycamore transaction, one non-transferable DAP Right per WBA share.

Why non-transferable? After all, it would be more valuable to shareholders if they could sell their DAP right, and that way informed traders could price it based on the likelihood of it reaching the $3 max payout, etc etc.

After all, that’s how Bristol did this not long ago, when it acquired Celgene:

If the merger is completed, Celgene stockholders immediately prior to the completion of the merger will be entitled to receive $50.00 in cash, one share of Bristol-Myers Squibb common stock and one contingent value right (each, a “CVR”) for each share of Celgene common stock held by them…The merger agreement obligates Bristol-Myers Squibb to use its reasonable best efforts to cause the Bristol-Myers Squibb common stock and the CVRs to be issued in the merger to be listed on the NYSE…

But look what happened! And also…. (There’s also an ongoing contract dispute). And a similar thing happened when Genzyme acquired Sanofi and paid with CVRs.

So the next time Bristol got the bright idea to buy a company using a CVR component, well:

Section 2.1 CVRs. Each CVR represents the contractual right of a Holder (granted to each Initial Holder as part of the consideration of the Merger pursuant to the terms of the Merger Agreement) to receive the Milestone Payment pursuant to, and subject to the terms and conditions of, this Agreement.

Section 2.2 Nontransferable. The CVRs shall not be sold, assigned, transferred, pledged, encumbered or in any other manner transferred or disposed of, in whole or in part, other than through a Permitted CVR Transfer; the foregoing restrictions shall apply notwithstanding that certain of the CVRs will be held through DTC. Any attempted sale, assignment, transfer, pledge, encumbrance or disposition of CVRs, in whole or in part, in violation of this Section 2.2 shall be void ab initio and of no effect. The CVRs will not be listed on any quotation system or traded on any securities exchange.

I can only assume the change was made so that the CVR would look less like a security – more like a contractual agreement – and therefore could not be the subject of a class action securities fraud claim.

And my guess is, that’s the same logic for the Walgreens/Sycamore DAP Right. Whether that’s enough to defeat the Howey test … well, that would be an intriguing Section 12(a)(1) claim, let me tell you.

And another thing. I lied, I’m still talking about SB 21, only this time in a Shareholder Primacy podcast with Mike Levin (we cover the original version as introduced by the Delaware legislature last month). Here at Apple, here at Spotify, and here at YouTube.

The University of Oklahoma (OU) College of Law seeks outstanding applicants, entry-level, for a Visiting Assistant Professorship (VAP) starting in the 2025-26 academic year.  Our search is focused on a candidate with experience and expertise in Securities Fraud.  Applicants must demonstrate potential for scholarly achievement and classroom teaching.  Applicants must have a JD from an ABA-accredited law school, outstanding academic credentials, and significant law-related practice and/or clerkship experience. 

The VAP is appointed to a 9-month term with the possibility of renewal.  The program is designed for promising scholars who plan to pursue a career in law teaching.  This is a full-time position, and the VAP will be expected to be in residence at OU and participate broadly in the intellectual life of the law school, develop a scholarly agenda, publish at least one law-review article, and make substantial headway on one work in progress.

The VAP will teach one course per semester and receive mentoring in their teaching and scholarly work from an advisory faculty team, the Associate Dean for Academic Affairs, and the Associate Dean for Faculty Development and Research.  The VAP will also receive financial support for their scholarship, including access to research assistants, coverage of professional travel, and access to faculty development activities. 

Qualifications

The VAP will be eligible to apply for a full-time position at OU College of Law as part of a national search subject to the College of Law’s needs.  Salary will be commensurate with experience.  The successful candidate will possess a J.D. degree from an ABA-accredited law school, possess a professional record of excellence, a commitment to excellence in teaching, and the potential for excellence in scholarly endeavors.

Application Instructions

Review of candidates will begin immediately.   Expressions of interest should be submitted as soon as possible to Phyllis Taite, Associate Dean for Academic Affairs, University of Oklahoma College of Law, c/o Rachael Davis at rdavis@ou.edu.  Please include “Wilkinson Visitor Application” in the re: line.  Applications will be reviewed on a rolling basis until the position is filled.  Applicants should submit the following documents:

  • Statement of interest;
  • Curriculum vitae;
  • Contact information for two academic references (including name, title, email address, and telephone number);
  • Copies of or link to any scholarly legal articles published, unpublished, or in draft form you wish to be considered (optional); and
  • A research proposal or agenda of (no more than 2,000 words).

Equal Employment Opportunity Statement

The University of Oklahoma, in compliance with all applicable federal and state laws and regulations, does not discriminate on the basis of race, color, national origin, sex, sexual orientation, genetic information, gender identity, gender expression, age, religion, disability, political beliefs, or status as a veteran in any of its policies, practices, or procedures. This includes, but is not limited to:  admissions, employment, financial aid, housing, services in educational programs or activities, or health care services that the University operates or provides.

Why You Belong at the University of Oklahoma

The University of Oklahoma fosters an inclusive culture of respect and civility, belonging, and access, which are essential to our collective pursuit of excellence and our determination to change lives. The unique talents, perspectives, and experiences of our community enrich the learning, and working environment at OU, inspiring us to harness our innovation, creativity, and collaboration for the advancement of people everywhere. 

Mission of the University of Oklahoma

The Mission of the University of Oklahoma is to provide the best possible educational experience for our students through excellence in teaching, research and creative activity, and service to the state and society.

The first webinar hosted by the Association of American Law Schools Section on Leadership for the 2025 membership year is scheduled for Thursday (March 6) from 1 pm – 2 pm ET/12 pm – 1 pm CT/11 am – 12 pm MT/10 am – 11 am PT.  The speaker is Elsbeth Magilton, Lecturer and Director of Externships at the University of Nebraska College of Law.  She will be speaking on “Law Students Learning to Lead through Non-Profit Board Service.”  The abstract for her talk is set forth below.  

This presentation showcases the work of attorneys on nonprofit boards, how the Nebraska Law Nonprofit Board Service Program has succeeded at Nebraska, and what challenges it is still overcoming. The program places law students with an area nonprofit board of directors for an academic year to observe, support, and engage with the nonprofit governance process, under the mentorship of an attorney board member. The Nonprofit Board Service Program “courses + shadow experience” model is an opportunity for students to learn about board service, engage with area attorneys and nonprofits, and reflect on how they can use their developing professional skills to benefit and lead in their community.

The session will be moderated by Professor Beth Ford, Interim Director of the Institute for Professional Leadership at The University of Tennessee College of Law.  Registration is available here.  

I hope that some of you can attend.  Teaching law leadership through business associations doctrine, policy, theory, and practice is something so many of us natively do.  I am sure that we all can learn some “tricks of the trade” from Elsbeth!

Sometimes I post for a naive audience, sometimes I want to get something out quickly and assume a more sophisticated audience, and with so much movement on SB 21 right now I’m opting for the latter.

So, first – the CLC offered some proposed changes to the law, which you can see here. (Mike Levin and I had just recorded a Shareholder Primacy podcast about the original flavor SB 21; that will still drop tomorrow morning; you can be the judge whether the overall assessment remains good in light of the proposed amendments). Brian Quinn says all that needs to be said about the CLC’s concept of retroactivity; I’ll just highlight what I think is significant.

Under the original version of the law, if the transaction did not involve a controlling shareholder, board level cleansing was achievable even if the board was majority-conflicted. As long as the disinterested directors voted in favor of the deal, it was cleansed – meaning, a board 4-1 conflicted could still cleanse the deal, so long as that single director voted in favor. If the transaction did involve a controlling shareholder, board-level cleansing required the creation of a majority-independent committee, but there was no specification as to how many committee members were necessary – one, in other words, would do.

The new statute says that board level cleansing, either for controller transactions or simply transactions where the board is majority-conflicted, requires the creation of a committee. The committee must have at least two people. All committee members must be disinterested. That’s an improvement, and even tightens the standards of existing law. But. As I understand it, disinterest in committee creation is measured by the board’s determination. In other words, the board – potentially a conflicted board – gets to decide who is disinterested, and put those people on the committee.

Once that occurs, if the deal is subsequently challenged, then – as I read the rule – the court cannot revisit whether the committee was in fact completely disinterested (maybe subject to a good faith challenge? I do not know). What the court can do is determine whether a majority of the actually disinterested people voted in favor of the transaction.

In other words, there’s a conflicted board. The board creates a 3 person committee that it determines is completely disinterested. Later, a shareholder brings a lawsuit, and establishes 2 of the 3 people were not, in fact, disinterested. The transaction still passes muster if that 1 disinterested person favored the deal, because that one person constitutes a majority of the disinterested directors on the committee. That’s how I understand the revisions, anyway.

Here is the relevant language, providing the deal is cleansed if:

The material facts as to the director’s or officer’s relationship or interest and as to the act or transaction, … are disclosed or are known to all members of the board of directors or a committee thereof, and the board or committee in good faith and without gross negligence authorizes the act or transaction by the affirmative votes of a majority of the disinterested directors then serving on the board or such committee (as applicable), even though the disinterested directors be less than a quorum; provided that if a majority of the directors are not disinterested directors with respect to the act or transaction, such act or transaction shall be approved (or recommended for approval) by a committee of the board of directors that consists of 2 or more directors, each of whom the board of directors has determined to be a disinterested director with respect to the act or transaction…

Whether all this is necessary to make incorporators feel comfortable, I do not know, but I really do need to emphasize again: Despite the fact that, under current law, controlling shareholder transactions require approval of both an independent board committee and disinterested shareholder approval – and conflicted director transactions need just one – if the claim concerns an ordinary course type of transaction, the vast majority of the time, the claim will be derivative, and it will be dismissed on the pleadings if there is an independent board. In other words, for many, if not most, transactions under current law, you can get the claim dismissed if there is a majority independent board with no further hullaballoo. I do think that layer of protection for boards/controllers should be a greater part of the conversation.

Beyond that, I keep thinking about the broader problem, namely, how did Delaware get to this place? One answer, that I offer in my The Legitimation of Shareholder Primacy paper, is that the normalization of certain governance practices in private/Silicon Valley companies ultimately clashed with standards that had been established for public companies.

But I think we can actually go further and trace the problems to something else: the Delaware Supreme Court’s decision in C&J Energy, which prohibited preliminary injunctions in most cases.

When I wrote Legitimation of Shareholder Primacy, I was very influenced by Ed Rock’s Saints and Sinners paper. He argued that Delaware decisions are like morality plays, where “bad managers” are called out in storytelling. But, critically, bad managers were rarely actually sanctioned – the jawboning was sufficient to induce discipline – because even when preliminary injunctions were denied, the court was able to weigh in early on problematic processes, which could induce a course correction and/or settlement. The cases never had to proceed to trial or – god forbid – judgment on the merits, because the process of seeking preliminary injunctions was sufficient to invoke court supervision, which could then be supplied without a definitive (and potentially offensive-to-corporate-insiders) ruling.

So I wonder if C&J, by cutting off the option of a preliminary injunction, also cut off an avenue of influence, which meant that court decisions on now-final deals became more high stakes, raising the temperature overall.

Friend of the BLPB Paolo Farah reached out to let me know about severl discussion groups, described below, that he is organizing for the 2025 Southeastern Association of Law Schools Conference this summer. If you have interest in participating, please contact Paolo at PDFarah@mail.wvu.edu.

* * *

“Transforming Global Agriculture and Cultivating Tomorrow: Farmers’ Rights, Animal Law, Trade, Sovereignty, Ethics, and Innovation for Sustainable Progress“

This session unites diverse perspectives to explore challenges and opportunities in agriculture. By integrating disciplines like law, trade, ethics, and innovation, the panel addresses critical issues such as protecting farmers’ rights, evolving animal law, the effects of international trade, and food sovereignty’s role in sustainable development. Topics include ethical considerations, technological advancements, and policy frameworks essential for navigating transformation. Panelists will offer insights into fostering global and domestic collaboration to build equitable, sustainable agricultural systems while tackling climate change, biodiversity loss, and food security challenges, driving meaningful progress for a sustainable future.

“Enhancing Experiential Learning in Environmental, Energy, and Sustainability Law and Policy Education“

This discussion group explores innovative ways to integrate real-world experiences into legal education. Bringing together educators, practitioners, and policymakers, it highlights approaches to teaching environmental, energy, and climate law, focusing on legal clinics, simulations, fieldwork, and community projects addressing sustainability challenges. The group will also discuss the impact of the NextGen Bar Exam on doctrinal courses and the importance of collaboration among doctrinal, clinical, and legal writing faculty. Participants will share best practices, trends, and case studies demonstrating experiential learning’s effectiveness in preparing future lawyers to address complex global and domestic challenges, fostering a transformative shift in legal education for the 21st century.

“Current Trends in Corporate Governance, Corporate Democracy, Business and Human Rights, Sustainable Development, Labor Issues, Technology Governance, and ESG”

Analyzes how international, transnational, and domestic legal systems address challenges posed by multinational corporations and global value chains. Key topics include the EU’s Corporate Sustainability Due Diligence Directive, the U.S. legacy of the Alien Tort Claims Act, ESG due diligence, materiality assessment, duty to report, rating agencies, the experience from other countries, U.N. Guiding Principles on Business and Human Rights, assessing their impact on the evolving regulatory landscape. Through case studies and practical insights, the group will emphasize reconciling corporate interests with human rights and sustainable development globally.

“Current Trends on Emerging Technologies and the Law from an International, Comparative and Domestic Perspective”

As technologies like artificial intelligence, data privacy, cybersecurity, and blockchain evolve, the legal landscape must adapt. The group will examine how various jurisdictions are responding to these issues, drawing on international frameworks and comparing legal approaches in different countries. Emphasis will be placed on how these regulatory paradigms reflect local values, policy priorities, and their potential convergence on the global stage. The discussion will also explore the implications of emerging technologies for business, intellectual property, and corporate governance, considering how legal frameworks can evolve to balance innovation with safeguarding individual rights and public interests.

Previously, I blogged about whether the proposed legislation is good or bad, including whether it’s good or bad for Delaware.

What I neglected to mention is that it is unequivocally bad for Delaware when normal people start to pay attention to Delaware’s fights.

Exhibit A:

Why Are Delaware Democrats Trying to Give Elon Musk $55 Billion?

For over a century now, Delaware has been the home of most large American corporations. The state government has set up an incredibly corporate-friendly regulatory, tax, and legal regime, and so big companies locate their official headquarters there. Many trusts and on-paper shell corporations are Delaware-based as well, for the same reasons. It’s a classic race-to-the-bottom dynamic where, because the federal government does not set a consistent baseline, states competed as to who could pander the hardest to big business, and Delaware hit bottom first. Most Fortune 500 companies locate there, and in return the state gets about a third of its budget from corporate franchise fees and taxes.

But Delaware’s incorporation laws also provide some rights to shareholders. While shareholders have extremely limited ability to sue over the business judgment of corporate managers, corporations must prioritize them and treat them fairly. Due to these precedents, Elon Musk has been losing repeatedly in Delaware Chancery Court over a proposed pay package for himself worth an estimated $55 billion. Musk responded by moving Tesla’s headquarters from Delaware to Texas to try to get his cash.

As a result, legislators from both parties, in short, panicked. As CNBC reported, Musk’s own lawyers drew up a sweeping reform to state law that would weaken protections and powers for small investors and almost certainly let things like Musk’s big pay package through.

Delaware is a tiny state with 0.2% of the American population, yet it has an enormous role in regulating our economy. It is bad for Delaware when the other 99.98% start asking why they don’t get a say.