New reading recommendation:  The (Un)Enforcement of Corporate Officers’ Duties, by Megan Shaner at Univ. of Oklahoma COL, published in UC Davis Law Review, November 2015.

Abstract:  

Over the past few decades, officers have arguably become some of the most important individuals in the corporation. From the implosions of Enron and WorldCom, to the success of companies like Apple and Microsoft, to the Wall Street crisis that sunk the world into near global recession, corporate officers have played a role in each of these storylines and countless (albeit lesser known) others. In spite of the well-publicized scandals, officers continue to be given wide latitude to carry out their role of managing the day-to-day operations of their companies. The primary constraint on this power under state corporate law is the imposition of fiduciary obligations. Fiduciary duties thus play a vital role in checking the considerable power and authority of officers. Fiduciary duties will only affect officer behavior, however, if there is an effective enforcement scheme that holds officers accountable. This Article discusses how the development of corporate doctrine, coupled with the dynamic in today’s corporate management has created impediments and disincentives for the enforcement of officer fiduciary duties. In light of the problematic state of the current enforcement scheme, this Article evaluates possible changes that would alleviate deterrents in the enforcement process. This Article concludes that in order to regulate officer behavior with fiduciary duties, there must be a collective correction to the enforcement mechanisms in place for internal enforcers beginning with reevaluating stockholder derivative litigation burdens.

This is a great article for the arguments advanced and careful observations made.  It also provides such a thorough and useful discussion of officers that I plan to add it to a seminar reading list.  Professor Shaner’s article also earned the top prize at the 2014 George Washington University C-LEAF Junior Faculty Workshop.

-Anne Tucker

Megan Shaner at the University of Oklahoma College of Law first workshoped this paper at George Washington’s CLEAF Junior Faculty Workshop last spring.