Friday, November 27, 2015
I try to read everything Lyman Johnson writes, so my Thanksgiving break reading is his recent book chapter The Reconfiguring of Revlon. The abstract is below:
Three decades later, an irksome uncertainty still impedes a settled understanding of the Delaware Supreme Court’s landmark ruling in Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc. For such a towering doctrine, Revlon’s underlying rationales remain controversial, its exact contours and demands continue to be surprisingly unclear, and it holds out scant hope for remedial relief. In spite of these troubling features of today’s Revlon jurisprudence, however, Revlon is slowly being worked back into the larger fabric of Delaware’s fiduciary duty law and away from being a gangling, standalone doctrine. The organizing themes of this judicial project are strong deference in the deal context to decisions made by independent directors without regard to deal structure, the substantially reduced likelihood of equitable or monetary remedies in all types of deal-related lawsuits, and a nascent effort at harmonizing Revlon with Delaware’s more general, and ill-defined, doctrine on corporate purpose.
This chapter discusses the original Revlon decision and its rapid expansion before turning to lingering uncertainties surrounding the reach of Revlon, the decline of Revlon’s remedial clout, and where Revlon stands today in relation to Delaware’s overall fiduciary duty law. Revlon’s sharp focus on immediate value maximization was a breakthrough pronouncement on corporate purpose, a subject of longstanding national debate but one on which the Delaware Supreme Court had been strangely silent. However, grave reservations about whether and when corporate directors should be required to pursue short term goals found useful cover in sustained judicial murkiness over the boundaries of Revlon. Only if Delaware courts resolve the underlying issue of corporate purpose more generally will Revlon either be fitted into the larger body of Delaware law or continue to stand uncomfortably to the side as a doctrinal loner of diminished significance.
Friday, November 20, 2015
This past Sunday afternoon, I attended a screening of the film Poverty, Inc.
The trailer is available here.
I share a few, somewhat disconnected, thoughts on Poverty, Inc. under the page break.
Wednesday, November 18, 2015
I recently received the following call for papers via e-mail
Law and Ethics of Big Data
Co-Hosted and Sponsored by:
Virginia Tech Center for Business Intelligence Analytics
The Department of Business Law and Ethics, Kelley School of Business
The Wharton School
Washington & Lee Law School
April 8 & 9, 2016
Indiana University- Bloomington, IN.
Abstract Submission Deadline: January 17, 2016
We are pleased to announce the research colloquium, “Law and Ethics of Big Data,” at Indiana University-Bloomington, co-hosted by Professor Angie Raymond of Indiana University and Professor Janine Hiller of Virginia Tech.
Due to the success of last year’s event, the colloquium will be expanded and we seek broad participation from multiple disciplines; please consider submitting research that is ready for the discussion stage. Each paper will be given detailed constructive critique. We are targeting cross-discipline opportunities for colloquium participants, and the IU community has expressed interest in sharing in these dialogues. In that spirit, the Institute of Business Analytics plans to host a guest speaker on the morning of April 8.th Participants are highly encouraged to attend this free event.
Submissions: To be considered, please submit an abstract of 500-1000 words to Angie Raymond at firstname.lastname@example.org and/or Janine Hiller at email@example.com by January 17, 2016. Abstracts will be evaluated based upon the quality of the abstract and the topic’s fit with the theme of the colloquium and other presentations. Questions may be directed to Angie Raymond at firstname.lastname@example.org or Janine Hiller at email@example.com.
Authors will be informed of the decision by February 2, 2016. If accepted, the author agrees to submit a discussion paper by March 26, 2016. While papers need not be in finished form, drafts must contain enough information and structure to facilitate a robust discussion of the topic and paper thesis. Formatting will be either APA or Bluebook. In the case of papers with multiple authors, only one author may present at the colloquium.
TENTATIVE Colloquium Details:
- The colloquium will begin at noon on April 8th and conclude at the end of the day on April 9th
- Approximately 50 minutes is allotted for discussion of each paper presentation and discussion.
- The manuscripts will be posted in a password protected members-only forum online. Participants agree to read and be prepared to participate in discussions of all papers. Each author will be asked to lead discussion of one other submitted paper.
- A limited number of participants will be provided with lodging, and all participants will be provided meals during the colloquium. All participants are responsible for transportation to Indiana University Bloomington, IN.
Friday, November 13, 2015
Last week I shared my thoughts on REI's #OptOutside campaign and concluded that the campaign appeared, in my opinion, to be more of a marketing ploy than anything truly socially responsible.
I promised to discuss what I think it takes to build a respected socially responsible brand.
In my opinion, respected socially responsible brands are: (1) Authentic; (2) Humble; and (3) Consistent.
These three work together. Authenticity comes, at least in part, from not over-claiming (also seen in humility) and from showing social responsibility in many areas over time (consistency). Authenticity with regard to social responsibility requires some serious sacrifice, at least in the short term. Humble companies admit their imperfections, work to right wrongs, and seek to improve. Building a socially responsible brand takes time, often decades. As Warren Buffett supposedly said, "It takes 20 years to build a reputation and 5 minutes to ruin it."
Patagonia's "Don't Buy This Jacket" campaign was probably one of the best socially responsible advertising campaigns I have seen. This campaign seemed authentic because of Patagonia's consistent history of social responsibility and because it seemed clear that Patagonia was going to take a serious financial hit from this campaign. Patagonia's add was also humble in admitting the social costs of the goods it produces. Patagonia is not a perfect company, and their executives often admit that, and Patagonia may experience mission drift, but they continue to be one of the most socially responsible companies I know.
Friday, November 6, 2015
REI recently announced that they will close their stores on the busiest day in retail, Black Friday. They are encouraging their customers and employees to spend time outside. REI is also paying their employees on Black Friday even though their stores will be closed.
At first, I was proud of REI for this move; Black Friday can be materialism at its worst.
But I think REI made a poor strategic move by over-promoting this announcement and buying numerous social media advertisements for their #OptOutside campaign. REI's self-congratulatory ads have been following me around the internet for the past few days.
Advertising about your social responsibility is really difficult to do well.
Convincing customers that you are socially responsible through advertising is like trying to convince your friends you are generous through social media posts. Both are likely to backfire. As Wharton professor Adam Grant recently wrote, you shouldn't say "I'm a giver;" that determination is for others to make.
In my opinion, praise of a company's socially responsible behavior should come primarily from its stakeholders. REI received plenty of third-party press regarding their announcement (see, e.g., here, here, and here), but their self-promotion has convinced me that this is primarily a financially-focused marketing ploy, not mainly a move to benefit society at large.
Next week, I will look at some companies that I think do a better job of building their socially responsible brand.
Friday, October 30, 2015
Jill Fisch (Penn) recently posted an essay entitled The Mess at Morgan: Risk, Incentives and Shareholder Empowerment.
The entire essay is worth reading, but I think her argument can be summed up with this quote:
This essay argues that the effort to employ shareholders as agents of public values and, thereby, to inculcate corporate decisions with an increased public responsibility is misguided. The incorporation of publicness into corporate governance mistakenly assumes that shareholders’ interests are aligned with those of non-shareholder stakeholders. Because this alignment is imperfect, corporate governance is a poor tool for addressing the role of the corporation as a public actor. (pg. 651)
Jill Fisch argues that economic regulation may be a better solution to the problem of protecting the public than shareholder empowerment. (pg. 684).
While I acknowledge the essay's mentioned limitations on shareholder empowerment, I don't think economic regulation is the only alternative solution to the problem of protecting public values. As Jill Fisch notes "shareholder empowerment might be defended on the basis that it is less intrusive than direct regulation." Corporate governance mechanisms other than shareholder empowerment may be both less intrusive and more effective than direct regulation. For example, (non-shareholder) stakeholder empowerment may make sense, as I plan to explain in a future article that is currently in its very early stages.
Thursday, October 29, 2015
I recently received information about this social enterprise & nonprofit clinical teaching fellowship position at Georgetown University Law Center. My friend, Georgetown law professor Alicia Plerhoples, is the director of the clinic, and the fellowship sounds like an excellent opportunity.
Georgetown Law Graduate Clinical Teaching Fellowship
Description of the Clinic
The Social Enterprise & Nonprofit Law Clinic at Georgetown University Law Center offers pro bono corporate and transactional legal services to social enterprises, nonprofit organizations, and select small businesses headquartered in Washington, D.C. and working locally or internationally. Through the Clinic, law students learn to translate theory into practice by engaging in the supervised practice of law for educational credit. The Clinic’s goals are consistent with Georgetown University's long tradition of public service. The Clinic’s goals are to:
- Teach law students the materials, expectations, strategies, and methods of transactional lawyering, as well as an appreciation for how transactional law can be used in the public interest.
- Represent social enterprises and nonprofit organizations in corporate and transactional legal matters.
- Facilitate the growth of social enterprise in the D.C. area.
The clinic’s local focus not only allows the Clinic to give back to the community it calls home, but also gives students an opportunity to explore and understand the challenges and strengths of the D.C. community beyond the Georgetown Law campus. As D.C. experiences increasing income inequality, it becomes increasingly important for the Clinic to provide legal assistance to organizations that serve and empower vulnerable D.C. communities. Students are taught how to become partners in enterprise for their clients with the understanding that innovative transactional lawyers understand both the legal and non-legal incentive structures that drive business organizations.
Description of Fellowship
The two-year fellowship is an ideal position for a transactional lawyer interested in developing teaching and supervisory abilities in a setting that emphasizes a dual commitment—clinical education of law students and transactional law employed in the public interest. The fellow will have several areas of responsibility, with an increasing role as the fellowship progresses. Over the course of the fellowship, the fellow will: (i) supervise students in representing nonprofit organizations and social enterprises on transactional, operational, and corporate governance matters, (ii) share responsibility for teaching seminar sessions, and (iii) share in the administrative and case handling responsibilities of the Clinic. Fellows also participate in a clinical pedagogy seminar and other activities designed to support an interest in clinical teaching and legal education. Successful completion of the fellowship results in the award of an L.L.M. in Advocacy from Georgetown University. The fellowship start date is August 1, 2016, and the fellowship is for two years, ending July 31, 2018.
Applicants must have at least 3 years of post J.D. legal experience. Preference will be given to applicants with experience in a transactional area of practice such as nonprofit law and tax, corporate law, intellectual property, real estate, or finance. Applicants with a strong commitment to economic justice are encouraged to apply. Applicants must be admitted or willing to be admitted to the District of Columbia Bar.
To apply, send a resume, an official or unofficial law school transcript, and a detailed letter of interest by December 15, 2015. The letter should be no longer than two pages and address a) why you are interested in this fellowship; b) what you can contribute to the Clinic; c) your experience with transactional matters and/or corporate law; and d) anything else that you consider pertinent. Please address your application to Professor Alicia Plerhoples, Georgetown Law, 600 New Jersey Ave., NW, Suite 434, Washington, D.C. 20001, and email it to firstname.lastname@example.org. Emailed applications are preferred. More information about the clinic can be found at www.socialenterprise-gulaw.org.
Teaching fellows receive an annual stipend of approximately $53,500 (taxable), health and dental benefits, and all tuition and fees in the LL.M. program. As full-time students, teaching fellows qualify for deferment of their student loans. In addition, teaching fellows may be eligible for loan repayment assistance from their law schools.
Friday, October 23, 2015
This week I thanked the law review editors at the West Virginia Law Review for their hard work on my forthcoming article. They seemed truly grateful for the thanks, which was well deserved, and it made me think that I should thank law review editors more often.
Law review editors put in a tremendous amount of time working on our articles, often well after-hours given all of their other commitments. Even when the process is frustrating, I think we need to be thankful and professional. Also, given that I have had a few rough editing experiences, I now state my preferences up front, which (at least this time) led to better results.
Personally, I don't have a problem with exploding offers, and I actually think more law reviews should use them. The submission game incentivizes submission to many journals and trading up multiple times. This process wastes an incredible amount of student editor time and they have every right to effectively shut down the expedite process.
As I have mentioned before, the exclusive submission window is an elegant solution to the expedite problem. Under this strategy, the law review promises a prompt decision and the professor promises to accept the offer if made. The only downside to the exclusive submission window is that the professor usually cannot shop the article during that window, so it slows the submission process.
Maybe the solution is to allow multiple submissions, but prevent professors from trading-up. If that were the rule, professors would be incentivized to submit only to journals where they would be happy to publish and the process would be faster.
Finally, I can't have a post about law reviews without asking, again, why more law reviews have not moved to blind review. I cannot think of a good reason, but am I missing something?
Thursday, October 22, 2015
BLPB guest-blogger Todd Haugh (Indiana University - Kelley School of Business) has a new article in the Vanderbilt Law Review entitled Overcriminalization's New Harm Paradigm. The abstract is reproduced below:
The harms of overcriminalization are usually thought of in a particular way—that the proliferation of criminal laws leads to increasing and inconsistent criminal enforcement and adjudication. For example, an offender commits an unethical or illegal act and, because of the overwhelming depth and breadth of the criminal law, becomes subject to too much prosecutorial discretion and faces disparate enforcement or punishment. But there is an additional, possibly more pernicious, harm of overcriminalization. Drawing from the fields of criminology and behavioral ethics, this Article makes the case that overcriminalization actually increases the commission of criminal behavior itself, particularly by white collar offenders. This occurs because overcriminalization, by lessening the legitimacy of the criminal law, fuels offender rationalizations. Rationalizations are part of the psychological process necessary for the commission of crime—they allow offenders to square their selfperception as “good people” with the illegal behavior they are contemplating, thereby allowing the behavior to go forward. Overcriminalization, then, is more than a post-act concern. It is inherently criminogenic because it facilitates some of the most prevalent and powerful rationalizations used by would-be offenders. Put simply, overcriminalization is fostering the very conduct it seeks to eliminate. This phenomenon is on display in the recently decided Supreme Court case Yates v. United States. Using Yates as a backdrop, this Article presents a new paradigm of overcriminalization and its harms.
Wednesday, October 21, 2015
As Steve Bradford mentioned in his post on Monday (sharing his cool idea about mining crowdfunded offerings to find good firms in which to invest), our co-blogger Haskell Murray published a nice post last week on venture capital as a follow-on to capital raises done through crowdfunding. He makes some super points there, and (although I was raised by an insurance brokerage executive, not a venture capitalist), my sense is that he's totally right that the type of crowdfunding matters for those firms seeking to follow crowdfunding with venture capital financing. I also think that, of the types of crowdfunding he mentions, his assessment of venture capital market reactions makes a lot of sense. Certainly, as securities crowdfunding emerges in the United States on a broader scale (which is anticipated by some to happen with the upcoming release of the final SEC rules under Title III of the JOBS Act), it makes sense to think more about what securities crowdfunding might look like and how it will fit into the cycle of small business finance.
Along those lines, what about debt crowdfunding as a precursor to venture capital funding? Andrew Schwartz has written a bit about that. Others also may have taken on this topic. Professor Schwartz may be right that issuers will prefer to issue debt than equity--in part because it may prove to be less of an impediment to later equity financings. But I don't necessarily have a warm feeling about that . . . .
And what about the crowdfunding of investment contracts (e.g., what I have previously called "unequity" in this article (and elsewhere, including in this further article) and perhaps even the newly popular SAFEs)? There is no equity overhang with unequity and some other types of investment contract, but crowdfunded SAFEs, which are convertible paper, may be viewed negatively in later financing rounds--especially if the conversion rights are held by a wide group of investors. While part of me is surprised that people are not taking the investment contract part of the potential securities crowdfunding market seriously (since folks were crowdfunding investment contracts before the JOBS Act came along--not knowing it was unlawful), the other part of me says that crowdfunded investment contracts would have a niche market at best.
So, thanks, Haskell, for the food for thought. No doubt, more will be written about this issue as and if the market for crowdfunded securities develops. Coming soon, says the SEC . . . .
Friday, October 16, 2015
Recently, a number of the sports media outlets, including ESPN, the Pac-12 Network, and Fox Sports featured a company called Oculus that makes virtual reality headsets used by Stanford University quarterback Kevin Hogan, among other players, to prepare for games.
In 2012, Oculus raised about $2.4 million from roughly 9,500 people via crowdfunding website Kickstarter. Following this extremely successful crowdfunding campaign, Oculus attracted over $90 million in venture capital investment. In mid-2014, Facebook acquired Oculus for a cool $2 billion.
Oculus is only one example, but it caused me to wonder how many companies are using crowdfunding to attract venture capital, and, if so, whether that strategy is working. This study claims that 9.5% of hardware companies with Kickstarter or Indigogo campaigns that raised over $100,000 went on to attract venture capital. Without a control group, however, it is a bit difficult to tell whether this is a significantly higher percentage than would have been able to attract venture capital money without the big crowdfunding raises.
If I were a venture capitalist (and I was raised by one, so I have some insight), I would see a big crowdfunding raise as potentially useful evidence regarding public support for the company and/or product demand. Crowdfunding, in some cases, might also be a helpful check on venture capitalist groupthink and biases.
As a venture capitalist, however, the type of crowdfunding used would matter to me. In most cases, I imagine I would see a large gift-based or rewards-based crowdfunding raise as a significant positive. Gift-based crowdfunding is essentially free money for the company, and reward-based crowdfunding usually comes with minimal costs or is simply pre-ordered product. Gift-based or rewards-based crowdfunders could create some negative press for the company when the company raises outside money, as the crowdfunders did in the Oculus case (see here and here), but that seems like a relatively small problem in most cases.
In contrast, the costs and risks associated with equity crowdfunding, in the states it is currently allowed, would raise at least a yellow flag for me. Equity crowdfunding comes with so many strings attached to various small shareholders that I could see it scaring off venture capitalists. The administrative headache, plus the risk of multiple lawsuits from uninformed investors seems significant. In addition, owners who have engaged in equity crowdfunding have a smaller percentage of equity in their hands and may have raised the crowdfunded money at an unattractive valuation.
At least two of my co-bloggers have written significant articles on crowdfunding (see, e.g., here and here), so perhaps they will weigh in on whether they have seen companies using crowdfunding as a strategy to attract venture capital, whether it is working, and whether the type of crowdfunding really matters.
Wednesday, October 14, 2015
Fellow BLPB editor Haskell Murray highlighted Laureate Education's IPO (here on BLPB) last week as the first publicly traded benefit corporation. Steven Davidoff Solomon, the "Deal Professor" on Dealbook at NYT, focused on the interesting issues that can be raised by public benefit corporations in his article, Idealism That May Leave Shareholders Wishing for Pragmatism, which appeared yesterday. Among the concerns he raised were the vagueness of the "benefit"provided by the company, the potential laxity or at least untested waters of benefit auditing, and the potential for management rent seeking at the expense of shareholder profit in the new form. Davidoff Solomon, who (deliciously and derisively) dubs benefit corporations the "hipster alternative to today’s modern company, which is seen as voracious in its appetite for profits," is certainly skeptical. But the concerns are valid and will have to be worked out successfully for this hybrid form to carve out a place in the securities market. What I found particularly interesting was his focus on the role of institutional investors, who as fiduciaries for their individual investors, have fiduciary obligations to pursue profits which may be in conflict with or at least require greater monitoring when investing in these alternative firms. The question of institutional investors' appetite for alternative purpose firms, like benefit corporations, is the focus of a recent article of mine, Institutional Investing When Shareholders Are Not Supreme, and a big question for the future success of these firms.
For those of you wanting to highlight alternative firms in a general corporations course or a seminar, this article would be a good introduction and an accessible summary of the issues on the forefront. I will be including this in my seminar reading next semester as it is surely to generate discussion.
I am happy to report that Tamika Montgomery-Reeves, currently a partner in Wilson Sonsini Goodrich & Rosati's Wilmington, DE office, has been nominated to become a Vice Chancellor on the Delaware Court of Chancery.
Tamika and I first met as summer associates at Miller & Martin after our 1L years. We both clerked on the Delaware Court of Chancery, albeit for different judges and during different years. We then worked together in the same practice group, as fellow associates, at Weil Gotshal in NYC.
All of that to say, I have worked with Tamika, or I guess I will soon be saying "Vice Chancellor Montgomery-Reeves," on a number of occasions and think she will do an excellent job. Tamika has both the intelligence and personality to be a global ambassador for the court, as a number of Delaware judges before her have been. She will be a great addition to the Delaware Court of Chancery. I look forward to reading her opinions and following her career.
Friday, October 9, 2015
Like many of you, I have been discussing the Volkswagen emission scandal in my business law classes.
Yesterday, Michael Horn, President and CEO of Volkswagen Group of America testified before the House Committee on Energy and Commerce Subcommittee on Oversight and Investigations. Horn's testimony is here.
West Virginia University, home of co-blogger Joshua Fershee, is featured on the first page of the testimony as flagging possible non-compliance issues in the spring of 2014.
The testimony includes multiple apologies, acceptance of full responsibility, and the statement that these "events are fundamentally contrary to Volkswagen’s core principles of providing value to our customers, innovation, and responsibility to our communities and the environment."
I plan to follow this story in my classes as the events continue to unfold.
My wife and I both have many close family members in South Carolina, so the recent flood has been on our minds recently.
My first thoughts are with all of those affected by the flood.
Relevant to this blog, the flood also reminds me of one of the opening passages in Conscious Capitalism by Whole Food's co-CEO John Mackey. In that passage, Mackey recalls the massive flood in Austin, TX in 1981. At that time, Whole Foods only had one store, and the flood filled that store with eight feet of water. Whole Foods had loses of $400,000 and no savings and no insurance.
Mackey notes that "there was no way for [Whole Foods] to recover with [its] own resources" and then:
- "[a] wonderfully unexpected thing happened: dozens of our customers and neighbors started showing up at the store....Over the next few weeks, dozens and dozens of our customers kept coming in to help us clean up and fix the store...It wasn't just our customers who helped us. There was an avalanche of support from our other stakeholders as well [such as suppliers extending credit and deferring payment]. . . . It is humbling to think about what would have happened if all of our stakeholders hadn't cared so much about our company then. Without a doubt, Whole Foods Market would have ceased to exist. A company that today has over $11 billion in sales annually would have died in its first year if our stakeholders hadn't loved and cared about us--and they wouldn't have loved and cared for us had we not been the kind of business we were." pgs. 5-7
I have two questions. First, what decisions lead to that sort commitment from stakeholders? Second, does this sort of commitment only attach to small businesses?
Asked another way, would Whole Foods still have that sort of stakeholder turnout today? If not, is it because they have not continued to make decisions that inspire stakeholders or simply because they have grown so large that stakeholders assume the company can fend for itself.
It is seemingly easier to make connection with a small, local business than with a large chain, but there do seem to be a few larger companies that still reach their stakeholders on an individual and personal level. Companies, of all sizes, seem to reach stakeholders through making thoughtful decisions in hiring, training, producing, and giving. Authenticity seems to be quite important, as does listening to stakeholders and taking action to address stakeholder needs.
Wednesday, October 7, 2015
I recently received the following e-mail announcement. Accordingly, I have updated my list of law professor positions outside of law schools:
The Department of Management in the College of Business and Economics, Boise State University, invites applications for a tenure track faculty position in the area of Legal Studies in Business.
Management hosts the most majors in the College of Business and Economics, with over 1000 students currently majoring in General Business, Entrepreneurship Management, Human Resource Management, or International Business, and provides courses in four MBA programs. We are housed in the impressive Micron Business and Economics Building, which opened in the summer of 2012. The College of Business and Economics is AACSB-accredited.
Recognized as a university on the move, Boise State University is the largest university in Idaho, with enrollment of more than 22,000 students. The University is located in the heart of Idaho’s capital city, a growing metropolitan area that serves as the government, business, high-tech, economic, and cultural center of the state. Time Magazine ranked Boise #1 in 2014 for ‘getting it right’ with a thriving economy, a booming cultural scene, quality health care, and a growing university. Livability.com also ranked Boise first among the top 10 cities to raise a family in 2014 thanks to an abundant quality of life, a family-friendly culture, a vibrant downtown, and great outdoor recreation. To further enhance the superb quality of life Boise offers, the University has committed to sustaining the conditions necessary for faculty to enter and thrive in their academic careers, while meeting personal and family responsibilities.
Boise State University embraces and welcomes diversity in its faculty, student body, and staff. Accordingly, candidates who would add to the diversity and excellence of our academic community are encouraged to apply and to include in their cover letter information about how they can help us further these goals.
- J.D. degree with an excellent academic record from an ABA accredited law school.
- Potential for outstanding teaching and research.
- Willingness to be active in professional, university, and community service activities.
- MBA or other advanced business related degree.
- Demonstrated ability to engage in high quality teaching, including online teaching experience.
- Journal publications in refereed, peer-reviewed business journals, legal journals, or law reviews.
- Significant professional experience as a lawyer.
- Ability and experience teaching and doing research across disciplines (e.g. accounting, health care law, economics) is a plus.
Monday, October 5, 2015
Alicia Plerhoples (Georgetown) has the details about the first benefit corporation IPO: Laureate Education.*
She promises more analysis on SocEntLaw (where I am also a co-editor) in the near future.
The link to Laureate Education's S-1 is here. Laureate Education has chosen the Delaware public benefit corporation statute to organize under, rather than one of the states that more closely follows the Model Benefit Corporation Legislation. I wrote about the differences between Delaware and the Model here.
Plum Organics (also a Delaware public benefit corporation) is a wholly-owned subsidiary of the publicly-traded Campbell's Soup, but it appears that Laureate Education will be the first stand-alone publicly traded benefit corporation.
*Remember that there are differences between certified B corporations and benefit corporations. Etsy, which IPO'd recently, is currently only a certified B corporation. Even Etsy's own PR folks confused the two terms in their initial announcement of their certification.
October 5, 2015 in Business Associations, Corporate Finance, Corporate Governance, Corporations, CSR, Delaware, Haskell Murray, Research/Scholarhip, Securities Regulation, Social Enterprise | Permalink | Comments (0)
Friday, October 2, 2015
Unfortunately, touting a business as socially-consious does not seem to lessen the chance of scandal.
Some companies known for their commitment to social causes have been in the news for all the wrong reasons. A few are noted below:
- BP's Deepwater Horizon oil spill
- Plum Organics (a Delaware Public Benefit Corp.) baby food recall
- Whole Food's pricing scandal involving mislabeling weights of food and the company's layoffs
- Volkswagen's emission scandal
Predictably, the media latches onto these stories and claims of hypocrisy fly. See, e.g., Here's The Joke Of A Sustainability Report That VW Put Out Last Year and Whole Foods Sales Sour After Price Scandal and BP's Hypocrisy Problems.
No business is perfect, so what should social businesses do to limit the impact of these scandals? First, before a scandal hits, I think social businesses need to be candid about the fact that they are not perfect. Second, after the scandal, the social business needs to take responsibility and take significant corrective action beyond what is legally required.
Patagonia's founder does a really nice job of admitting the imperfection of his company and the struggles they face in his book The Responsible Company. Whole Foods supposedly offered somewhat above-market severance packages to laid off employees and took some corrective action in the price scandal, but I wonder if they went far enough, especially given the lofty praise for the company's social initiatives by the Whole Food's co-CEO in his book Conscious Capitalism. Whole Foods quickly admitted mistakes in the pricing scandal, but then lost points in my mind when they backtracked and claimed they were a victim of the media.
Even if social businesses take the appropriate steps, I think scandals probably hit them harder than the average business because social businesses have more customer goodwill at risk. I would love to see some empirical work on impact of scandal on social business as compared to those that do not market themselves as such; please pass any such studies my way.
Thursday, October 1, 2015
The Midwest Academy of Legal Studies in Business (MALSB) Annual Conference - Chicago, IL - April 2016
Currently, I am planning to attend the MALSB Annual Conference in Chicago this coming April. The conference is described by the organizers below. While ALSB regional meetings like this one are usually attended mostly by legal studies professors in business schools, I am told that the conference is open to all.
The Midwest Academy of Legal Studies in Business (MALSB) Annual Conference is held in conjunction with the MBAA International Conference, long billed as “The Best Conference Value in America.”
The MBAA International Conference draws hundreds of academics and practitioners from business-related fields such as accounting, business/society/government, economics, entrepreneurship, finance, health administration, information systems, international business, management, and marketing. Although the MALSB will have its own program track on legal studies, attendees will be able to take advantage of the multidisciplinary nature of this international conference and attend sessions held by the other program tracks.
[More details are available under the break.]
Wednesday, September 30, 2015
I recently learned, via e-mail, that Albany Law School has a number of open positions that may interest our readers. The positions, and links to the postings, are provided below:
- Associate Dean for Strategic Initiatives and Information Systems
- Tenure-Track Position in Commercial Law
- Tenure-Track Position in Tax and Transactions Clinic
- Visiting or Contract Faculty Position-Business Transactions and Entrepreneurship
- Visiting or Contract Faculty Position-Patents/Technology Transfer, Innovation and Entrepreneurship