General counsel who want a peek into which issues will be occupying much of their time in the coming years should spend a few minutes reviewing the deluge of shareholder proposals that public companies are putting to a vote this proxy season. It’s a minefield of complex, and potentially expensive-to-address, topics. Let’s look at Amazon, for instance. At its annual meeting May 25, shareholders voted on a whopping 15 proposals on topics ranging from the safety of warehouse workers and gender pay differences to whether contracts with governments could violate human rights. … As the Harvard Law School Forum on Corporate Governance put it, “From climate change to racial injustice, expectations that companies will take these matters seriously have never been higher. The 2022 proxy season will show just how focused investors are on making sure the companies they invest in are addressing them.”
Raising money for an unknown purpose isn’t exactly an easy sell…As I explained yesterday, 19th-century industry titan Henry Villard was only able to pull it off because he spent years establishing a reputation as a rainmaker… and people were lining up to invest alongside him. That’s how Villard established the first of what would now be known as a special purpose acquisition company (“SPAC”). … According to the aforementioned Harvard Law School [Forum on Corporate Governance] study titled “A Sober Look at SPACs”… The dilution embedded in SPACs constitutes a cost roughly twice as high as the cost generally attributed to SPACs… For each share purportedly worth $10, there is $6.67 in cash and $3.33 in dilution overhanging the merger.
When you’re 98 years old you can say things others can’t, so bravo to Charlie Munger for daring to speak an important but too muffled truth about today’s financial markets. “We have a new bunch of emperors, and they’re the people who vote the shares in the index funds,” Warren Buffett’s Berkshire Hathaway partner said Wednesday. “I think the world of Larry Fink, but I’m not sure I want him to be my emperor.” Many CEOs no doubt privately agree. … “Many savvy governance observers were paying close attention to how Exxon’s top three investors—Vanguard, BlackRock, and State Street, in that order—voted,” a Harvard Law School Forum on Corporate Governance article noted. “The Big Three, which own roughly twenty percent of the S&P 500’s outstanding shares, had made significant climate commitments over the past several years.”
The legal journal Corporate Practice Commentator recently announced the 10 Best Corporate and Securities Articles of 2014. Half of those selected this year were written by Harvard Law School faculty members.
In an award ceremony held in New York City last month, the Investor Responsibility Research Center Institute (IRRCi) announced the winners of its the 2013 prize competition. The academic award went to Harvard Law School Professor Lucian Bebchuk LL.M. ’80 S.J.D. 84, HLS Senior Fellow and Tel-Aviv University Professor Alma Cohen, and Harvard Business School Professor Charles Wang. The trio received the award for their study, “Learning and the Disappearing Association between Governance and Returns,” which was published last month by the Journal of Financial Economics.
Eight Harvard Law School faculty members were recently ranked among the top 100 corporate governance scholars in the world, in all corporate areas, including management, law, economics, and finance. Included on the American Academy of Management’s list of 100 “high-impact scholars” were HLS Professors Lucian Bebchuk, John Coates, Reinier Kraakman, Mark Roe ’75, Steven Shavell and Cass Sunstein ’78. Former HLS Dean and current Visiting Professor Elena Kagan ’86 and HLS Lecturer on Law Leo Strine also were featured on the list.
On Feb. 15, Harvard Law School Professor Lucian Bebchuk testified before the U.S. Senate Committee on Banking, Housing and Urban Affairs Subcommittee on Financial Institutions and Consumer Protection at a hearing entitled “Pay for Performance: Incentive Compensation at Large Financial Institutions.”