Friday, July 6, 2007
Breakingviews yesterday had an interesting post on Wachtell's Mary Lipton and his legacy. The post questions the validity of his recent corporate governance advice to Home Depot, Morgan Stanley and Walt Disney among others. In each instance, Lipton recommended a "just say no" approach against corporate shareholder activism. In each case, the CEO was subsequently ousted. Breakingviews which is affiliated with the Wall Street Journal also criticizes his takeover advise to the Bancrofts, stating that "the family's tactics don't appear to have left the Dow Jones board in a strong position." The post closes with taking a swipe at Lipton by asserting that even the poison pill is in decline and that S&P 500 companies with the defense have decline from a majority to less than a third in only a few years.
Lipton is one of the leading proponents of the board as the center of corporate power as opposed to those like Lucian Bebchuk who advocate greater corporate control. And while shareholder activism is certainly on the increase, Breakingviews may be relying on wishful thinking when decrying his demise. Lipton is almost 80 and still is the go-to M&A attorney. And his firm has produced a host of other deal-makers and remains at the top of the league tables. Still, his no-holds barred defensive advice looks to be increasingly ill-considered as shareholder activism increases and certain in academia increasingly advocate increased shareholder power in corporations. Those advising corporate boards have not helped with some tone-deaf advice -- Nardelli's infamous Home Depot meeting where the board did not attend and Nardelli himself refused to take question being a prime example, and one attributable to Lipton himself.