"The management of public corporations should be given the space to implement sound long-term plans to make money by selling useful products and services. Without the distraction of constant tumult from transient stockholders having short-term interests, and a corporate governance industry that reaps profits from the perpetuation of strife." Legal Affairs magazine calls him the "hardest-working, wittiest and most outspoken judge on the world's most important court dealing with corporate law." Delaware Vice Chancellor Leo E. Strine, Jr., lived up to his reputation during the 2007 Dorsey & Whitney Foundation Lecture at the William Mitchell College of Law on May 10, commenting on the most controversial issues in corporate governance and M&A today, including:
Independent directors as governance panacea
"Increasingly, boards are comprised of one person who knows everything about the company and who has an intense interest in its future -- the CEO -- and nine or ten other people selected precisely because they have no possible interest in or connection to the company that might cause them to be perceived as conflicted -- or that might cause them to have any genuine concern for the corporation's future."
"CEOs don't seem to be having fun. Having to explain to employees why the corporation is off-shoring jobs and increasing the employees' share of health insurance costs, having to be lectured by a twenty-something analyst about a penny miss in the quarterly earnings, and having to consider at board meetings cosmetic measures to improve the corporation's corporate governance ratings lest the corporation be subject to any array of shareholder proposals -- these are really fun things to do."
"Though there may be deficiencies in the American system of corporate governance, the absence of opportunities for sell-side stockholders to receive acquisition premia hardly seems one of them."
Majority voting for directors
"Shareholder access has gone nowhere. But that does not mean that management won. To the contrary, institutional investors used their influence to obtain a less responsible and arguably more potent weapon to change the composition of the board, the conversion of a decisions to 'withhold authority' from a member of the management slate into an effective no vote. With this weapon in hand, institutional investors can pit the incumbent board against a platform of generalized outrage, with the very real threat that generalized outrage will win."
"[I]t is crazy from an investors' perspective for a target board not to have a traditional pill in place to stimulate a value-enhancing auction and to deter structurally coercive bids." If you missed the Dorsey & Whitney Foundation Lecture, "Toward Common Sense and Common Ground? Reflections on the Shared Interests of Managers and Labor in a More Rational System of corporate Governance," read the presentation here.