August 12, 2006
Atmel Corporation's Mess
Floyd Norris wrote a nice piece in Fridays New York Times on "Atmel's Mess: You're Fired. No, You Are." (page C1, col. 1). A board of independent directors attempted to fire the CEO who, upon hearing the plans to do so, convened a special shareholder meeting to fire the independent directors. The whole mess is now in the Delaware courts to see who fired who. The case is just the beginning of a new focus on how the rules of the game work in corporations. With independent boards there will be more board/CEO conflicts and with such conflicts will be more gamesmanship over election, retention, and replacement struggles in senior management. Corporate codes are surprisingly open-ended and untested here (other than a few old well known cases), because the CEOs controlled the boards and such controversies were settled in the back-room. Now the rules matter and many state corporate codes will find that they have holes in them that have to be addressed in these contests. Consider the basis issue of whether shareholder have the power to pass by-laws that bind the board's discretion, for example. Unclear in most states.
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