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A while back, I posted about what was then the new voting choice programs being adopted at large mutual fund complexes, giving retail shareholders the right to choose voting policies that would apply to their pro rata share of fund ownership.

Well, Alon Brav, Tao Li, Dorothy S. Lund, and Zikui Pan have a new paper out, The Proxy Voting Choice Revolution, that dissects the early results for Vanguard’s funds, and what is actually the thing that stands out to me is not what the choices reveal about retail shareholders, but what they reveal about proxy advisors.

The thing is, proxy advisors have a benchmark policy of standard voting recommendations, and they have custom policies that can be tailored to the needs of their individual clients, and they also have “themed” policies which are somewhere in between – “off the rack” so a client doesn’t have to pay for tailoring, but specialized beyond the basic policy.  Except we don’t have a lot of insight into exactly how ballots are cast for these themed policies – until, apparently, now.

The authors are able to use the data from Vanguard to infer how Glass Lewis’s ESG themed voting policy…

Yesterday, the Nevada Supreme Court officially created a Commission to Study the Adjudication of Business Law Cases. I previously covered the Supreme Court’s proposal here and submitted a letter in support of the proposal.

The order creating the Commission contemplates a continuing public process. It provides that the Commission “shall conduct all hearings in public and post all meeting minutes and documents considered by the Commission on the Supreme Court’s website.”

At present, I have not been able to find a page set up specifically for the Commission on the Supreme Court’s website. Of course, much of Nevada’s state government has been struggling in recent weeks because of a large-scale cyber attack on Nevada systems–including the judiciary. The Supreme Court might also simply opt to continue to use the existing administrative docket. Or we could see something show up in the near future.

There are some changes from the Petition. The Petition identified 21 proposed members. The final order expands to 24 members, adding: (1) “Judge” as a Rural Representative; (2) “Attorney” as a Rural Representative; and (3) Virginia Valentine as a representative of the Nevada Resort Association.

Historically, it has been difficult to observe the operation of…

I keep explaining in various spaces so I may as well articulate it here too: It’s tough to make predictions, especially about the future, but I would be surprised if Texas wins the current chartering race, or at least, wins the race it’s currently running.

The issue for Texas is that it keeps demonstrating that it is not interested in crafting a well-designed – even manager-friendly – corporate law; instead, it is interested in using corporate governance as another cudgel in the culture war.

Let’s look, for example, at two recent amendments to its corporate code: allowing corporations to limit shareholder proposals by those who hold either less than $1 million worth of stock or 3% of voting shares; and the proxy advisor law that puts a variety of restrictions on proxy advisor advice.

These laws explicitly take aim at liberal-coded measures; shareholder proposals, for example, have historically been oriented toward liberal causes (despite a recent upsurge in anti-ESG proposals), and the proxy advisor law is targeted at “ESG” advice.

The laws are also a model of poor drafting. The shareholder proposal law, for example, does not apply to corporations chartered in Texas, but does apply…

Last week, I posted about the SEC’s proposal to reconsider its stance on arbitration of federal securities claims – today, they went and did what was entirely obvious and greenlighted the inclusion of securities arbitration provisions in charters and bylaws.

As I posted last week, Delaware just banned these in September, more in anticipation of bylaws that select a forum without jurisdiction to hear a dispute than arbitration provisions. Commissioner Atkins’s statement all but called on Delaware to change its law and/or invited other states to compete by offering a more favorable law; I expect we’ll see movement along those lines soon.

(I also imagine there will be a resurgence of arguments that arbitration provisions in corporate constitutive documents are not, in fact, contracts, and their enforceability, especially with respect to federal claims, is not controlled by the chartering state. I of course find that argument persuasive, but a number of courts have already rejected it in the context of forum selection bylaws; let’s see if they start to walk that back).

The thing is, it feels like we’re seeing an attack on public information on a number of fronts. To the attacks on the BLS and…

As you start in on the new work week, I want to let you know about the Section on Leadership’s webinar on Wednesday, September 17th, 1:00 pm – 2:00 pm ET/12:00 pm – 1:00 pm CT/11:00 am – 12:00 am MT/10:00 am – 11:00 am PT.  The title for the program is “Adaptive Leadership Theory & Rule of Law as Resources in Challenging Times for Law & Legal Education.” The program description is set forth below.

Under authoritarian pressure, law schools may be tempted to self-censor or compromise their missions. Adaptive leadership offers deans and administrators strategic and moral tools to regulate stress, preserve mission integrity, and cultivate leadership across their communities. Complementing this, the Rule of Law Working Group—through the Holloran Center and Mellon-funded “Pluralizing” Legal Professional Identity project—is creating resources to embed democracy, equity, justice, and the rule of law into the curriculum.

You can register here.

The session has been organized, and is being led, by the section’s chair-elect, Tania Luma.  She is joined by Kendall Kerew and Kelly Terry.  This program promises to offer much wisdom to faculty and staff both in our institutional and instructional lives at work.  I am excited to…

Seems like I’ve been writing about litigation limits in corporate constitutive documents since 2014 (because I have).  So many blog posts I can’t search them all, and multiple papers (here, here, here, and here)

The issue on the table specifically right now is arbitration.

The idea that corporations could use charter and bylaw provisions to require mandatory arbitration has been floating around for quite some time.  And it’s not arbitration they’re after; the point would be to require individualized arbitration, so that stockholder claims could not be brought as class actions.

Back in 2016, I published a paper arguing, among other things, that any such provisions could only apply to state claims, not federal securities claims.  But then the Delaware Supreme Court disagreed with me.

I have also argued that if such bylaw and charter provisions are considered potentially “contractual,” they are not governed by the internal affairs doctrine, and the law of the state of incorporation should not apply. The Delaware Supreme Court agrees on the former point and not the latter, leading to much confusion in courts outside of Delaware.

I have also argued that bylaws and charters…

The Lowell Milken Institute for Business Law and Policy at UCLA School of Law is pleased to announce its second annual Business and Tax Roundtable for Upcoming Professors (“BATRUP”). This in-person Roundtable will take place at UCLA from Monday evening June 1st through Wednesday afternoon June 3rd.  The program will feature commentary by invited senior scholars as well as an opportunity to meet fellow aspiring scholars while enjoying Los Angeles.  We warmly invite scholars preparing for the academic job market to participate.

Roundtable Purpose and Eligibility
The Roundtable is designed to offer mentorship and feedback to aspiring legal scholars who plan to pursue tenure-track positions at law schools. It is open to scholars who hold a JD, master’s degree, or PhD, who have not yet secured a tenure-track law faculty appointment, and who are not yet listed in this academic year’s Faculty Appointments Register. Selected authors must be able to attend the Roundtable in person at UCLA.

We welcome submissions on any topic within business law or tax law. Co-authored papers are eligible provided all authors meet the submission criteria. To ensure the Roundtable’s focus on evolving scholarship, we ask that submitted papers not be published or…

Mortals plan and the gods laugh.

With the caveat that it’s 5 in the morning here and I may be misreading, in which case I will correct this post or delete it entirely to hide my shame…

Tesla’s new proxy asks shareholder approval for Musk compensation, which we expected. But there are two elements.

The first is a go-forward plan which pays out massive amounts of shares if Musk meets dramatic new targets. I don’t have a whole lot to say about this one, except that the targets are meaningfully different from the package awarded in 2018 (and rescinded in 2024 by Delaware) in that they don’t just include share price increases; they also include sales targets. The 2018 grant only included share price increases and revenue/EBITDA targets that were pretty much matched to the share price increases, leaving the price increases as the only meaningful hurdles. I will let others weigh in on whether it’s a similar situation with the new proposal, but the sales/subscription requirements are a new feature that was not present previously – and, dare I say it – could in fact accomplish the task of forcing Musk to focus on Tesla rather than his…

I have previously blogged about the SPV phenomenon, whereby investors can get access to private company shares by investing through a vehicle dedicated to that purpose. As I previously explained, the trend has recently exploded, with numerous LLCs selling interests to retail investors through platforms like EquityZen, often with high fees and opaque pricing.  Among other things, the SPV phenomenon allows capital-hungry startups to raise money while (nominally) staying below the 2,000 investor threshold that would trigger mandatory reporting – and startups are increasingly pushing the limits of the law by coordinating with SPV sponsors.

Which is why I was fascinated by recent reports that some startups – particularly Anthropic and OpenAI – have gotten concerned about the number of uncontrolled SPVs selling interests in their shares.

I agree it’s a wild west, and for sure some retail investors are being taken advantage of.  The more interesting question is why companies like Anthropic would care.  Investors in SPVs – and SPVs of SPVs – don’t have a direct relationship with the company and don’t have rights against it, so what are they concerned about? I have a couple of thoughts. 

First, as the Financial Times article explains, OpenAI…