Bebchuk’s “Case for Increasing Shareholder Power”: An Opposition

This post is by Theodore Mirvis of Wachtell, Lipton, Rosen & Katz. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.

Paul Rowe, William Savitt, and I have just released Bebchuk’s “Case for Increasing Shareholder Power”: An Opposition.  The Article argues that the sweeping changes in corporate law proposed in Lucian Bebchuk‘s The Case for Increasing Shareholder Power–in particular, vesting in shareholders the power to change the company’s charter and to authorize mergers–represent radical, risky changes in Delaware corporate law that would be both unwise and impractical.  In short, the case for Bebchukian revolution falls short.  The abstract describes the Article as follows:

This paper sets out the view that Lucian Bebchuk’s “case for increasing shareholder power” is exceedingly weak.  It demonstrates that Bebchuk’s proposed overthrow of core Delaware corporate law principles risks extraordinarily costly disruption without any assurance of corresponding benefit; that Bebchuk’s case is unsupported by any empirical data; that Bebchuk’s premise that corporate boards cannot be trusted to respect their fiduciary duty finds no resonance in the observed experience of boardroom practitioners (perhaps not surprisingly, as the proposal comes from the height of the ivory tower), and that its obsession with shareholder power is particularly suspect (if not downright dangerous) in light of the palpable practical problems of any shareholder-centric approach.

The full Article is available here.

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