Blog Posts from Business Law Professors
Two days after the US election, I moderated and participated on a Society of Corporate Compliance and Ethics (SCCE) panel on ESG through the life cycle of a business with Eugenia Maria Di Marco, who focused on startups and international markets, and Ahpaly Coradin, who focused on M&A, private equity, and corporate governance.
I shared these stats with the audience before we delved into the discussion:
The Society of Corporate Compliance and Ethics is hosting a virtual ESG and Compliance Conference on November 7. I love to hear academics talk about these issues at conferences but because I still engage in the practice of law and I teach about compliance, governance, and sustainability, I find the conversations are very different when listening to practitioners.
My panel is titled ESG Due Diligence Across the Corporate Lifecycle From Start-Up to Maturity: The Roles of Compliance, Ethics, Legal, and the Board. My co-panelists, Ahpaly Coradin, Partner, Pierson Ferdinand, and Eugenia di Marco, a startup founder and international legal advisor, and I will focus on:
Date & Time: Thursday, November 7 from 12:45 PM – 1:45 PM central time
Other topics that speakers will discuss include:
…
Last month I had the privilege of presenting some of my current work at Bocconi University in Milan, Italy. The promotional poster for the event is included below. All of the workshop presentations (present company excepted) were engaging.
I presented on part of an ongoing research project–a series of papers on environmental, social, and governance (ESG) information. The first two papers on the series, The Materiality of ESG Information: Why It May MatterT, 84 LSU L. Rev. 1365 (2024), and ESG and Insider Trading: Legal and Practical Considerations, 26 U. Penn. J. Bus. L. __ (forthcoming 2024), address the significance of ESG information under the U.S. federal securities laws and the potential and actual involvement of ESG information in insider trading. In Milan, I shared my ideas and preliminary research for a third paper currently titled Corporate Information Compliance in an ESG World. I expect to turn to work on this paper in earnest in the coming months. I will briefly lay out my current thoughts here in the hope that you may have some feedback.
ESG information plays a role in many business operational settings that are invoked in legal compliance and addressed in compliance policies…
I am please to be able to publish this post authored by our former BLPB editor/co-blogger Stefan Padfield. We miss his voice here, but he is doing good work in his current role, as this post shows! Thanks for contributing this, Stefan.
+++++
On November 14, 2023, the National Center for Public Policy Research (NCPPR) – where I work – submitted a shareholder proposal to Johnson & Johnson that sought disclosures related to overboarding. (For the uninitiated, overboarding refers to the issue of corporate directors sitting on too many boards but can also be extended, as it is here, to other commitments.) On March 1, 2024, the SEC staff informed J&J that no action would be recommended against the company by the staff if J&J excluded NCPPR’s proposal. This no-action relief arguably represents a change in the long-standing SEC practice of supporting proposals related to overboarding and is thus worthy of further examination. (The underlying documents can be accessed here; the SEC staff also granted no-action relief to Verizon and Lowe’s on the same proposal.)
By way of background, the SEC staff is on record as saying that an overboarding proposal “relates to director qualifications.” Accordingly, the SEC…
Many in the business law world have been following the saga involving the adoption of S.B. 313 by Delaware's General Assembly last week. S.B. 313 adds a new § 122(18) to the General Corporation Law of the State of Delaware (DGCL) that broadly authorizes corporations to enter into free-standing stockholder agreements (not embodied in the corporation's charter) that restrict or eliminate the management authority of the corporation's board of directors. See my blog posts here and here and others cited in them, as well as Ann's post here.
In the floor debate on S.B. 313 last Thursday in the Delaware State House of Representatives, a proponent of the legislation stated that fiduciary duties always trump contracts. That statement deserves some inspection in a number of respects. I offer a few simple reflections here from one, limited perspective.
The historical centrality of corporate director fiduciary duties (which were the fiduciary duties referenced on the House floor) is undeniable. Those who have taken business associations or an advanced business course with me over the years know well that I emphasize in board decision making that the directors’ actions must be both lawful and consistent with their fiduciary duties in order to…
Further to Ann's post on Sunday sharing the text of her comment letter on Delaware's S.B. 313 (and more particularly the proposal to add a new § 122(18) to the General Corporation Law) and my post on § 122(18) last week, I share below the text of my comment letter to the Delaware State House of Representatives Judiciary Committee. Although Ann and I each got one minute to deliver oral remarks at the hearing held by the Judiciary Committee on Tuesday, 60 seconds was insufficient to convey my overarching concerns–which represent a synthesis and characterization of selected points from my post last week. The comment letter shared below includes the prepared remarks I would have conveyed had I been afforded additional time.
Madame Chair and Committee Members:
I appreciated the opportunity to speak briefly at today’s hearing. As I explained earlier today, although I am a professor in the business law program at The University of Tennessee College of Law, my appearance before the committee relates more to my nearly 39 years as a corporate finance practitioner, which has included bar work (most recently and extensively in the State of Tennessee) proposing and evaluating corporate and other business…
Like so many others, I have wanted to say a word about West Palm Beach Firefighters’ Pension Fund v. Moelis & Company, 311 A.3d 809 (Del. Ch. 2024). My angle is a bit different from that of many others. It derives from my 15-year practice background, my 24-year law teaching background, and my 39-year bar service background. It focuses on a doctrinal analysis undertaken through a policy lens. But I want to note here the value of Ann Lipton’s existing posts on Moelis and the related proposed addition of a new § 122(18) to the General Corporation Law of the State of Delaware (DGCL). Her posts can be found here, here, here, and here. (Sorry if I missed one, Ann!) Ben Edwards also published a related post here. They (and others offering commentary that I have read) raise and touch on some of the matters I address here, but not with the same legislative policy focus.
I apologize at the outset for the length of this post. As habitual readers know, long posts are “not my style” as a blogger. This matter is one of relatively urgent legislative importance, however, and I am eager…
Check out High-Status Versus Low-Status Stakeholders, an intriguing paper authored by one of our business school brethren, Justin Pace. In this work, Justin approaches an important, yet difficult, topic at the intersection of corporate governance and the class divide. The SSRN abstract follows.
The literature on stakeholder theory has largely ignored the difficult and central issue of how judges and firms should resolve disputes among stakeholders. When the issue is addressed, focus has largely been on the potential for management to use stakeholder theory as cover for rent seeking or on disputes between classes of stakeholders. Sharply underappreciated is the potential for disparate interests within a stakeholder class.
That potential is particularly acute due to a (largely education-driven) stark and growing class divide in the United States. There is a substantial difference between the interests of a highly educated professional and managerial elite and a pink-collar and blue-collar working class who mostly do not hold four-year degrees. Despite their smaller numbers, the professional and managerial elite will frequently win out in intra-stakeholder disputes with working class stakeholders due to their greater status, power, and influence.
Because this class divide is cultural, social, and political as well as economic, these…
I had the opportunity to attend one of the sessions in the Interdisciplinary Workshop on Corporations, Private Ordering, and Corporate Law last week. The program was co-hosted by Foundations of Law and Finance (Goethe University Frankfurt, Center for Advanced Studies) and Columbia Law School. Luckily for me, the piece of the program I attended featured Nizan Geslevich Packin presenting a work-in-progress she is co-authoring with Anat Alon-Beck entitled Board Observers: Shadow Governance in the Era of Big Tech.
Although a draft of the paper is not yet posted, here is the SSRN abstract:
This Article examines the rise in corporate governance practice of appointing board observers, especially in the context of private equity, venture capital (VC), and corporate venture capital (CVC). Board observers are non-voting members attending board meetings to gain knowledge and insight. They arguably also provide valuable feedback, an outside perspective, and can even help ensure corporate operations. In recent years, board observer seats – a notion also existing in the nonprofit sector – have become increasingly popular in the for-profit business world, where investors have various market and business justifications for using board observers, including corporate governance considerations, minimizing litigation exposure, navigating antitrust issues, CFIUS regulation…
We just finished our second week of the semester and I’m already exhausted, partly because I just submitted the first draft of a law review article that’s 123 pages with over 600 footnotes on a future-proof framework for AI regulation to the University of Tennessee Journal of Business Law. I should have stuck with my original topic of legal ethics and AI.
But alas, who knew so much would happen in 2023? I certainly didn’t even though I spent the entire year speaking on AI to lawyers, businesspeople, and government officials. So, I decided to change my topic in late November as it became clearer that the EU would finally take action on the EU AI Act and that the Brussels effect would likely take hold requiring other governments and all the big players in the tech space to take notice and sharpen their own agendas.
But I’m one of the lucky ones because although I’m not a techie, I’m a former chief privacy officer, and spend a lot of time thinking about things like data protection and cybersecurity, especially as it relates to AI. And I recently assumed the role of GC of an AI startup. So…
