Go Dick! Smile.

Lawdragon‘s recent six-part profile on the corporate law curriculum at Harvard, Storming the Castle, has offered readers fascinating insights on a series of panel discussions sponsored by the Program on Corporate Governance and hosted here in Cambridge as part of Mergers, Acquisitions, and Split-Ups, a new course taught by Professor Robert Clark and Vice Chancellor Leo Strine.  (I introduced readers to the Lawdragon piece in earlier posts here and here.)

Part IV of the profile, however–entitled Go Dick! Smileis the showstopper.  That Part describes the panel on Spinoffs and Breakups: The Case of Time Warner, where opponents in the Carl Icahn/Time Warner proxy saga came before a packed room at Harvard Law to debrief the battle and its implications for the future of corporate governance.  Several of the major players in the proxy fight came to offer their perspective: Richard Parsons, CEO of Time Warner; Bruce Wasserstein, CEO of Lazard; Gene Sykes of Goldman Sachs; and Paul Cappuccio, Time Warner’s General Counsel.

All four offered candid and insightful reflections on Icahn’s attempt to influence corporate decisionmaking at Time Warner.  After acquiring about 3.5% of Time Warner’s stock, Icahn–who thought the shares badly undervalued–asked Parsons to spin off Time Warner’s massive cable division and undertake a $20 billion share buyback program to boost the stock price.  When Parsons–and other major shareholders–resisted, Icahn retained Lazard, who promptly prepared a 343-page report recommending that the Time Warner board split the company in four and proceed with Icahn’s proposed buyback.  Although Time Warner eventually agreed to buy back nearly $20 billion in shares, the company successfully resisted Icahn’s proposed asset sales.  (Whether that result was good for shareholders, of course, remains to be seen.)

All of the panelists, along with Professor Clark and Vice Chancellor Strine, seemed to agree that Icahn’s tactics revealed that Parsons did not as close a bead on the pulse of the investor community as he might have.  But the speakers also seemed to conclude that the Time Warner/Icahn story points to some of the limits of the influence even a well-heeled shareholder activist can exert on a major public company: as Gene Sykes, who advised Time Warner, indicated, Icahn was only able to push Parsons as far as fellow investors would allow.

Readers should absolutely check out the Lawdragon piece, available here, to see what lessons can be drawn from this rare and candid look inside a major proxy fight.  And if you’d like a firsthand look at the panelists and their debate, the Program on Corporate Governance has posted the video of the discussion here. (video no longer available)

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