Below is an interesting and perhaps Twitter-relevant excerpt from Charles Korsmo & Minor Myers, What Do Stockholders Own? The Rise of the Trading Price Paradigm in Corporate Law, 47 J. Corp. L. 389, 394 (2022).

Expressed in the conventional analytical framework, Delaware now protects the stockholder’s entitlement in a public corporation with a liability rule, where the stockholder’s entitlement may be taken in a non-consensual exchange like a merger at any price exceeding the prevailing trading price.

This paradigm shift augurs dramatic change not simply in appraisal, but in all of merger law. Most obviously, the shift will necessarily affect the basic measure of damages in other contexts. Indeed, the Court of Chancery has already confronted this scenario: a breach of fiduciary duty that gave rise to no damages because the transaction was at a premium to the market price. But perhaps the most notable doctrinal reckoning involves Unocal and its progeny, which afford directors the power to defend against the threat of acquisitions where the price is “too low.” That power reached is fullest expression in the 2011 Air Products v. Airgas decision, a ruling that remains controversial. The board of Airgas blocked a $70 acquisition offer from…

I recently posted (here) a link to, and brief overview of, a letter from twenty-two of the nation’s leading professors of law and finance urging the SEC to withdraw its climate disclosure proposal. Brett McDonnell submitted an interesting comment to that post, highlighting a potential tension between espousing views that prioritize shareholder wealth maximization while at the same time rejecting the calls of some of the world’s largest shareholders for greater climate-related disclosures. (Please be sure to read his full comment.) In response, Lawrence Cunningham suggested I post an additional excerpt from the letter, which addresses this issue in more detail. You’ll find that excerpt below. However, this all reminded me of a recent article by Amanda Rose, and so I’ll start my excerpts with a quote from that article.

Traditional asset managers claim their commitment to ESG is motivated by a desire to improve long-term fund performance for the benefit of investors. But agency costs offer an alternative potential explanation: embracing the ESG movement may help asset managers curry political favor, enabling them to fend off greater regulation of the industry; it may advance the personal sociopolitical commitments of those who ran them; or it may offer a way to attract investors to fund offerings without imposing any meaningful limitations on how a fund is managed.

Amanda M. Rose, A Response to Calls for SEC-Mandated ESG Disclosure, 98 Wash. U.L. Rev. 1821, 1824–25 (2021).

Now, on to the letter (the full version is here):

As per the relevant press release (via Lawrence Cunningham): “Twenty-two of the nation’s leading professors of law and finance this week wrote the Securities and Exchange Commission (SEC) to dispute the agency’s authority to adopt a new far-reaching climate disclosure regime and to urge an immediate withdrawal of the proposal.” You can find the full letter here. Here is a hopefully useful excerpt:

The following analysis raises concerns that the Proposal is neither necessary nor appropriate for either investor protection or the public interest and will not promote other statutory goals. The SEC would do better to withdraw the Proposal and revisit the subject with a fresh approach focused on America’s ordinary investors rather than an elite global subset. The three parts of this letter address each statutory issue in turn, as follows:

I. “Investor Demand” versus “Investor Protection”
    A. Investor Varieties: Diverse Institutions and Individuals
    B. Climate Shareholder Proposals: Few Are Made, Most Lose, Many Are Political
    C. The Ample Supply of Climate Disclosure
    D. Correlation of Climate Practices with Economic Performance Is Not Causation
II. Authority of Others and the “Public Interest”
    A. The Environmental Protection Agency’s Statutory Jurisdiction
    B. State Corporate Law Prerogatives on Purposes…

As reported by The American Civil Rights Project (here):

After months of pressure from concerned stockholders, Coca-Cola’s General Counsel Monica Howard Douglas recently let it be known that the illegal discriminatory outside-counsel policies Coke announced with great fanfare last year “have not been and are not policy of the company.” …

In January 2021, Douglas’s predecessor, Bradley Gayton, published the policies in a highly publicized open letter addressed to “U.S. Firms Supporting The Coca-Cola Company.” Under it, Coke’s law firms were required to staff Coke matters so that that “diverse” attorneys performed at least 30% of all hours billed, with “Black attorneys” performing “at least half [15%] of that amount” …. The letter stated that non-compliance for two successive quarters “will result” in Coke’s unilateral reduction of a firm’s future legal fees and that all future consideration for both new legal work and inclusion in Coke’s preferred-vendor list would turn on compliance….

[T]he ACR Project wrote to Coke, its officers, and its directors, on behalf of several shareholders, demanding the public retraction of the discriminatory policies. If Coke had refused, these shareholders would hold Coke’s officers and directors personally liable for breaching their fiduciary duties to investors.

After…

The following comes to us from the Law & Economics Center at the Antonin Scalia Law School at George Mason University.

The Law & Economics Center is pleased to announce that we are now accepting applications to the Workshop for Law Professors on Teaching Capitalism. This program will be held at the Park Hyatt Beaver Creek Resort and Spa in Beaver Creek, Colorado with attendees arriving on Sunday, July 10 and departing on Thursday, July 14.

The Workshop for Law Professors on Teaching Capitalism is a five-day program that will deepen law professors’ understanding of the fundamentals of capitalism, educate the participants in methods and techniques for teaching about capitalism as a stand-alone course in their own law schools, and help guide these professors in ways to integrate lessons learned from capitalism and discussions around the topic into their subject-specific doctrinal courses like corporations, constitutional law, or on common law subjects. The workshop is designed to enrich the curricula of law schools across the country by encouraging a more robust discussion of capitalism and its relationship with the law in courses, by giving its attendees the tools necessary to take this instructional guidance back to their home institutions.  Across…

The following comes to us from the Law & Economics Center at Scalia Law.

The Law & Economics Center at Scalia Law to Hold Virtual Panel Discussion Analyzing Reforms to the Bankruptcy Code and Examining Case Law Developments in Mass Tort Bankruptcies Next Week

On Friday, March 18, 2022, from 12:00 PM – 1:00 PM EST, the Law & Economics Center at the George Mason University Antonin Scalia Law School will host a virtual event entitled Bankruptcy and Mass Torts: Examining the Economics, Purposes, and Structure of Bankruptcy Law in Light of Developments in Congress and the Courts. A panel of experts will address the questions and concerns facing Congress as it debates reforms to the Bankruptcy Code and discuss case law developments.

The time-tested law that has developed under the United States Bankruptcy Code creates a sophisticated set of rules, structures, and procedures to preserve value in distressed businesses to protect stakeholders and maximize the return to creditors. Recent uses of legal mechanisms to take advantage of Chapter 11 and other provisions of the Code—including corporate restructuring and divisional mergers by companies facing liabilities from mass tort litigation—have drawn criticism in Congress and challenges in court.

Are these…

Robert Miller has posted How Would Directors Make Business Decisions Under a Stakeholder Model? on SSRN (here).  The abstract:

Strong forms of the stakeholder model of corporate governance hold that, in making business decisions, directors should consider the interests of all corporate constituencies (employees, customers, suppliers, shareholders, etc.) in such a way that directors may sometimes decide to transfer value to a non-shareholder constituency even though doing so produces no net benefit for shareholders even in the long-term. This article makes four main points about the stakeholder model. First, although its advocates often speak as if the model placed all corporate constituencies on a par, in fact the model uniquely disadvantages shareholders: since the claims of other constituencies arise in contract or by law, directors have no power to invade these claims for the benefit of shareholders; hence, business decisions made under a stakeholder model will often transfer value from shareholders to other constituencies but never from other constituencies to shareholders. Second, although critics of the stakeholder model have long argued that the model provides no definite standard by which directors may decide what to do in particular cases, this greatly understates the point. In fact, the stakeholder…