September 9, 2011
10 years on.
Boston College news:
Twenty-two alumni of Boston College lost their lives on that fateful day. This weekend, we remember by reading their names at each of the Masses on campus. Our alumni - along with the many relatives, friends and all those affected by the tragedy - will never be forgotten. The campus labyrinth, dedicated to their memory, is among 9/11 memorials across the nation that can be visited for reflection and prayer: http://bit.ly/qwghsY
Exclusive forum provisions on the move
Although the collapse of the IPO market seems to have put an end to new adoptions of exclusive forum provisions in IPO charters, Davis Polk reports that several firms have begun trying to get exclusive forum charter amendment passed and with some success.
Seeking to strengthen their exclusive forum provisions against Galaviz-like challenges, several companies this year proposed exclusive forum charter provisions for shareholder approval, including three large-cap companies: Allstate, Altera and DIRECTV 4 The results so far have been mixed. At Altera and DIRECTV, the proposed amendments were approved by healthy majorities of the votes cast but only narrowly received the majorities of the outstanding shares (50.3% and 53.2%, respectively) required to adopt a charter amendment. At Allstate, however, the exclusive forum amendment was rejected by a majority of the votes cast and received the support of only 41.9 percent of the outstanding shares.
I've got a draft paper on the exclusive forum provision that will be coming out soon in the UC Davis Law Review in which I take up some reasons why I think these kinds of amendment aren't more prevalent.
September 8, 2011
Strine on Banker Conflicts, Standstill Agreements, Deal Protections, and Fiduciary Outs
Pepper Hamilton reports here on observations made by Judge Strine (recently promoted to Chancellor of the Delaware Court of Chancery) at a recent hearing on a motion to expedite litigation involving Validus Holdings’s hostile bid to acquire Transatlantic Holdings.
Hillbilly hand-fishing and Transatlantic Holdings
What!? You thought that just because Chancellor Strine got promoted that Strinisms would go away? Forget it! Late last month in a motion to expedite hearing in In re Transatlantic Holdings Chancellor Strine gave us his thoughts on hillbilly hand-fishing, which has apparently replaced Jersey Shore on the top of his DVR playlist. Oh ... and he made some relevant comments about deal protections, banker conflicts, and standstill agreements, but for now, let's focus on the important stuff:
THE COURT: … And I’m not saying on this third scenario, that you may not have provided, you know, the color that you and Mr. Zimet are providing to the room because you've been, you know, vacationing, or just writing briefs in ties.
MR. ZIMET: Fishing.
THE COURT: Did you catch something?
MR. ZIMET: Always.
THE COURT: Always?
MR. OFFENHART: That's a little optimistic.
MR. ZIMET: It's shooting fish in a barrel. A little pond behind the house.
THE COURT: I thought you hired associates to go under the water and put them on the hook. It's a new Skadden summer associate program. I was so excited.
“What did you do today?”
“I put a five-and-a-half-pound large-mouth bass on Mr. Zimet's hook.”
Do you do any hillbilly hand-fishing?
MR. ZIMET: What's that?
THE COURT: It's my son's new favorite show.
MR. ZIMET: Wrestling the catfish?
THE COURT: They go and they surround these holes, and put their hand in there, and the fish bite at them, and they pull it out. No other nation has anything like that. We may not be able to pay our debts, but we can pull a catfish out of a hole!
So back to I guess more serious things than hillbilly hand-fishing, but it's taken very seriously by those who participate in it …
For those of you not in the know - here it is! As Chancellor Strine noted, we may not be able to pay our debts, but we can do this:
September 7, 2011
Canadians to reconsider the poison pill?
It seems Canadians are starting to rethink their approach to the shareholder rights plan. The Globe and Mail report on a paper published by former Ontario Securities Commission chief Edward Waitzer (now at Osgoode Hall Law School) and his colleague at Strikeman Elliot, Sean Vanderpol. They think it might be time for Canada to take a more US approach to regulating the pill:
Traditionally, Canadian regulators have tended to toss aside the poison pills and other defences used by corporate boards to fend off hostile takeovers – an approach long criticized for leaving domestic companies too vulnerable to foreign predators, resulting in what some call a “hollowing out” of Corporate Canada. ...
In Canada, securities regulators have generally allowed poison pills to stand for limited time periods, usually 40 to 70 days, long enough only to give boards time to seek alternative buyers, not to “just say no” to an unwanted takeover bid.
This seems like a replay of the debate that has gone here for years about the "defining tension" in the corporate law. From former Justice Veasey's piece:
The defining tension in corporate governance today is the tension between deference to directors' decisions and the scope of judicial review. Decisions of directors which can be attributed to any rational business purpose will be respected if they are made by directors who are independent and act with due care and in good faith. Otherwise, courts may becalled upon to apply some form of enhanced scrutiny.
Indeed, in Airgas, the Chancery Court drew the line on the side of deference to the board in the context of unsolicited bids. Boards are permitted, even required, to be active in the defense of the corporation from an unwanted bid.
Canadians are looking around now and, I guess, taking stock of where their current hands off approach leaves them. The hollowing out of corporate Canada has led Waitzer and Vanderpol to weigh in that courts, rather than the securities regulators, are better positioned to determine whether or not a board must pull its pill in the face of an unwanted bid.
This new paper, Mediating Rights and Responsibilities in Control Transaction, is now appearing in the current issue of the Osgoode Hall Law Journal. The paper provides a good overview of current Canadian jurisprudence on the pill for those of us uninitiated in the ways of The Great White North.
Abstract: There is a growing debate as to the relative merits and consequences of a shift to a more shareholder-centric corporate governance framework. How much “direct democracy” makes sense in corporate decision making? If power is to be transferred to shareholders, should responsibilities be imposed (and, if so, how)? These issues have long been addressed by courts and regulators in the context of unsolicited control transactions. In its recent Air Products & Chemicals v. Airgas decision, the Delaware Chancery Court canvassed the evolution of its law on this point and concluded that implicit in the power (and responsibility) of the board of directors to manage the business and affairs of the corporation is the power to determine the long-term strategy of the corporation, including when and if a sale of control of the corporation should be pursued. By contrast, Canadian securities regulation has consistently adopted a shareholder-centric approach to unsolicited change of control transactions. This is an approach that is increasingly difficult to reconcile with Canadian corporate law as it has evolved since these issues were first considered by securities regulators. The answer to this growing inconsistency, we suggest, is for Canadian securities regulators to repeal their “defensive tactics” policy in the recognition that our courts have become better equipped to adjudicate such matters. [I won't include the abstract in French. It seemed a bit much.]
Yahoo up for sale?
Last night came the bombshell that Yahoo has fired its CEO, Carol Bartz. Before the firm had a chance to announce it, Ms. Bartz sent out an all-hands email announcing that she was abruptly let go. Here it is in its entirety:
I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s Chairman of the Board. It has been my pleasure to work with all of you and I wish you only the best going forward.
Sent from my iPad
From her iPad. I like that. In any event, Bartz's firing comes some three years or so after she was brought in to clean up the mess made by Jerry Yang following the whole debacle with Microsoft. Yahoo passed on a chance to be bought by Microsoft back then, hoping to make it big on their own. That hasn't panned out. Now, everything - including a sale - is under consideration (AllThingsD):
The board of Yahoo, which ousted its CEO Carol Bartz today in a unanimous decision, is exploring a range of possible strategies to turn around its moribund growth, including possible acquisitions, shedding units, bringing in new investment partners and even taking the company private or selling it.
A sale is the least likely of options, said sources close to the situation, but — given today’s news — Yahoo might attract a lot of attention from investors seeking to take advantage of the company’s powerful but troubled assets.
“It is all on the table,” said one source close to the company.
I wonder if Jerry is searching the back of his desk drawer for that old Balmer business card. The board hasn't made any decisions, yet, so there are no Revlon obligations triggered at this point, so there is no sale. But, unlike before, they are at least open to one now. And if Yahoo is really looking to hire a new CEO, there are already people lining up for the job (see below).
For those of you on the academic calendar, school's back in session, we're all back to a more or less regular schedule again with classes, etc.
September 4, 2011
The Business Lawyer seeks editors
The Business Lawyer is seeking editors:
The Business Lawyer (TBL) plans to appoint at least one additional editor beginning with Volume 67. The responsibilities of an editor will be to:
(i) edit approximately sixty manuscript pages of each of the four issues that TBL publishes in each volume;
(ii) ensure that each statement of fact has an accurate citation that supports it;
(iii) conform all citations to the Blue Book; and
(iv) make sure that manuscripts satisfy TBL Author Guidelines.
Over the course of a volume, each editor should expect to work on a combination of articles, reports, and surveys that are published in TBL.
Since Volume 64, Professor Gregory Duhl of the William Mitchell College of Law has been responsible for all style editing, cite-checking, and Blue-Booking of TBL. Professor Duhl is the current Associate Editor-in-Chief, and the editors would work in collaboration with him, the Editor-in-Chief, who rotates yearly, and the Production Manager, Diane Babal, to ensure that TBL maintains its high quality and timeliness. The editors would also work closely with the Associate Editor-in-Chief to update the TBL Author Guidelines to maintain consistency in the journal.
TBL seeks editors from all business law disciplines, who have experience editing an academic publication, a keen attention to detail, and an ability to meet deadlines. Each editor would receive an honorarium upon completion of his or her work for that issue. If interested in this position, please e-mail a resume to Diane Babal, at Diane.Babal@americanbar.org. Any questions about the position can be addressed to Professor Duhl at Gregory.email@example.com.