2010

• Bankers Arouse Public Anger. But Will They Change?, Christian Science Monitor, December 30, 2010
  How did these bankers fare? The top five executives at Bear Stearns and Lehman made roughly $250 million apiece in sales of stock and bonuses in the 2000 to 2008 period, notes Harvard economist Lucian Bebchuk. There was no “claw back” provisions for these earnings. Even in 2009, the executives’ bottom lines were “positive and substantial,” he writes.
• Making Fear and Greed Pay in Investing, New Zealand Herald, December 29, 2010
  […] Fear and greed, together with the desire to follow the herd, are the primary emotions underpinning investment decisions and business strategy, as countless academic studies have shown. […] The misalignment of interests and assessment of risk is also a fault highlighted by Harvard University professors Lucian Bebchuk and Holger Spamann in their analysis of the financial crisis.
• Banks Best Basel as Regulators Dilute or Delay Capital Rules, BusinessWeek, December 22, 2010
  More than 500 representatives from 27 nations, including top regulators and central bankers, met dozens of times this year to hammer out 440 pages of new rules to govern the world’s banks. […] “Nobody’s been able to fix too-big-to-fail around the world because nobody knows how to do it,” said Hal Scott, a Harvard Law School professor who also is director of the Committee on Capital Markets Regulation, a nonpartisan group of academics and business executives. “Even figuring out how to resolve giant banks nationally is tough. How can you do it internationally? That was the biggest lesson of the crisis, systemic risk, but that’s still unresolved.”
• Market Group Challenges ‘Flawed’ Dodd-Frank Rulemaking Process, Bloomberg, December 16, 2010
  U.S. regulators implementing the Dodd-Frank Act are following a “seriously flawed” process that may damage the financial system and hinder economic recovery […] R. Glenn Hubbard, John Thornton and Hal Scott said in a letter to lawmakers dated yesterday. “The current rulemaking process is sacrificing quality and fairness for apparent speed, risking lengthy court challenges and poor rules that will damage our financial system and hinder economic recovery,” the three men said in the letter addressed to leading members of the Senate Banking and House Financial Services committees. […] The letter from Hubbard, Thornton and Scott — leaders of the Committee on Capital Markets Regulation, a nonpartisan research group — raises concerns similar to those expressed by Republicans who will take control of the House of Representatives next month. […] Scott, who teaches at Harvard Law School, is director.
• Op-Ed by Lucian Bebchuk: Pricing Corporate Governance, Project Syndicate, November 2010
• Wall Street Shrinks From Credit Default Swaps Before Rules Hit, Bloomberg, November 29, 2010
  Trading in credit-default swaps, Wall Street’s fastest-growing business before the credit crisis, has tumbled 40 to 60 percent from three years ago as banks prepare for new regulation of derivatives. […] “This was a major profit center for a lot of banks,” said Hal Scott, a Harvard Law School professor who also is director of the Committee on Capital Market Regulation, a nonpartisan group of academics and business executives that in May 2009 called for measures to reduce the risks derivatives pose. “It’s part of a bigger picture of reduced financial activity due to uncertainty and regulatory reform.”
• Deal for J. Crew Allows It to Go Shopping, New York Times DealBook, November 23, 2010
  J. Crew is on sale for the holidays. The retailer’s agreement to sell itself includes a go-shop provision, which allows it to solicit other bidders even though its $3 billion deal with two private equity firms has been announced. In other words, J. Crew can go shopping for a higher bid. […] The go-shop is somewhat suspect among market participants. It is viewed as primarily cosmetic. It provides cover for the fact that the chosen buyer has a head start but does not do much more. But in one study of private equity go-shops, Guhan Subramanian, a Harvard business professor, found that despite the conventional wisdom, go-shops were generally effective and did indeed result in subsequent bids.
• Staggered Boards and Company Value, New York Times DealBook, November 12, 2010
  A background issue in the battle between Airgas and Air Products and Chemicals is the effectiveness of staggered boards and what academic research has to bear on the issue. […] This back and forth on this issue in the debate over Airgas and Air Products also raises another chance to review these studies. Lucian A. Bebchuk, Alma Cohen and Charles Wang, professors at Harvard, have seized this opportunity. In a study released on Wednesday, the professors examine how a Delaware Chancery Court decision in the Airgas dispute affected corporate value.
• Activists pressure U.S. companies on political money, Reuters, November 5, 2010
  Two social activist investment groups said this week they have begun pressuring major U.S. companies, including Pfizer Inc and PepsiCo Inc to review contributions to trade groups such as the Chamber of Commerce. […] The activists’ proposals ask each of the four companies to review political spending and contributions, with an eye on their own corporate rules against political spending. Shareholders are likely to introduce more such measures as similar legislation stalls in Washington, said Lucian Bebchuk, a Harvard University law school professor who studies corporate governance.
• Hershey Trust bought neighboring land for well above market value, Philadelphia Inquirer, October 25, 2010
  The Milton S. Hershey School, whose mission for 100 years has been educating impoverished children, is also the owner of Pumpkin World USA, a roadside attraction north of Hershey where you can buy vegetables, country crafts, and gourds galore. […] In 2006, the Hershey Trust paid a total of $8.6 million in school money for Pumpkin World – a sum more than nine times greater than the property’s fair-market value, according to the Dauphin County tax office. […] “Paying eight to nine times the assessed value requires an extraordinary explanation,” said Robert Sitkoff, a Harvard law professor and national expert on trusts.
• Death of a democracy, MarketWatch, October 19, 2010
  […] In case you missed it, recent Supreme Court rulings mean that corporations can now effectively spend freely on political campaigns, including during elections. Loopholes in the tax code, particularly pertaining to 501(c)4 nonprofits, mean they can do so secretly through anonymous front groups. […] Shareholders will have no say. “Political-speech decisions can be made without input from shareholders, a role for independent directors or detailed disclosure,” law professors Lucian Bebchuk of Harvard and Robert Jackson of Columbia will report in a forthcoming paper on the issue. As Bebchuk told me: “Companies certainly are not required, and do not disclose, contributions to intermediaries that engage in political spending.”
• Trial to Amplify the Citi-EMI Discord, New York Times, October 13, 2010
  […] On Monday, Mr. Hands and Mr. Wormsley will face off in a federal courtroom in Manhattan. Barring an 11th-hour settlement, a six-person jury will decide the outcome of a lawsuit brought by Mr. Hands’s private equity firm against Citigroup over its role in EMI’s sale. Mr. Hands accuses his once-trusted adviser of deceiving him during the auction process. … “Bringing a lawsuit is a common strategy to employ in order to gain leverage in a negotiation,” said Guhan Subramanian, a professor of law and business at Harvard whose recent book “Negotiauctions” (W. Norton & Company) examines complex deal-making situations. “Even though Citigroup believes this is a frivolous lawsuit, it’s risky to expose itself to the uncertainties surrounding the wild card of a jury trial.”
• SEC will examine faulty pay data, Boston Globe, October 11, 2010
  US securities regulators say they plan to look into dozens of cases in which publicly traded Massachusetts companies misstated how much their top executives earned over the past few years. […] “The company does not believe any further action was warranted,” said James Levine, its chief financial officer. “The compensation components reported in the table were all correct — the errors were in select totals.” But a Harvard Law School professor, Lucian Bebchuk, said “there is a good chance” the SEC will order companies to correct significant errors, including Verenium’s.
• Pa. attorney general probes millions in land deals by Hershey School’s trust, Philadelphia Inquirer, October 8, 2010
  The expenditure of $17 million on a golf course and clubhouse by the trustees of the Hershey School – just one of a number of land deals costing tens of millions of dollars made in the last six years – has resulted in an investigation by the Pennsylvania Office of the Attorney General. […] Robert Sitkoff, a trust law professor at Harvard Law School who has written about the Hershey Trust, said the golf course deal was possible because of the immense wealth of the charity compared with its modest philanthropic program. The trust fund that operates the school is worth $7 billion to $8 billion, while the school enrolls about 1,800 students. “If the school and the program were pushing up against the trust’s capacity, it would be hard to see the trustees doing things like this. Because the school is so small, and the trust corpus so large, there is a temptation to skim,” Sitkoff said.
• Non-Bank Companies Poised for Fed Scrutiny on Systemic Risk, Bloomberg, October 7, 2010
  It has the makings of a Wall Street parlor game: Guess which firms will be designated for Federal Reserve oversight because they could pose a risk to U.S. financial stability. A council of regulators, which met for the first time Oct. 1, will review non-bank financial companies for possible inclusion under the Fed’s regulatory umbrella, taking into account everything from size and debt to hidden liabilities, Bloomberg Businessweek reports in its Oct. 11 issue. […] “There’s going to be a lot of controversy once they start doing this, and the decisions will be very difficult to defend,” says Hal S. Scott, a Harvard Law School professor. “When the first one is designated,” he says, “everyone’s going to ask why them and not us, or why us and not them.”
• Corporate political activities and governance, The Deal, October 4, 2010
  Last week, Harvard Law professor John Coates IV posted a paper on the Harvard Corporate Governance and Financial Regulation blog that attempts to pin down the cost to shareholders of corporate political activity. The provocation for the study is the Citizens United case, in which the Supreme Court, as Coates writes, “relaxed the ability of corporations to spend money on elections.” In doing so, the court, he writes, “rejected a shareholder-protection rationale for restrictions on spending, in part on the ground that shareholders are generally capable of defending their own interests through ‘corporate democracy.’ “
• In reporting pay, firms can err big, Boston Globe, October 4, 2010
  In its annual report on executive pay last spring, Verenium Corp. of Cambridge told shareholders its top lawyer had earned less than $629,000 in 2008. In fact, he earned nearly twice that amount. […] These are among the dozens of mistakes publicly traded companies in Massachusetts made in reporting executive compensation to shareholders and federal regulators over the past few years, according to a Globe review of documents filed with the Securities and Exchange Commission. […] Lucian Bebchuk, a Harvard Law School professor who has studied executive compensation, said he was troubled by the error rate, saying it raised serious concerns.
• U.S. Chamber Unveils Study Highlighting Consequences of Proposed ‘Bank Tax’, The Financial, September 29, 2010
  The U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness released a study on September 28 conducted by Hal S. Scott, Nomura professor of international financial systems, Harvard Law School that highlights the unintended consequences the proposed “bank tax” would have on access to credit, job creation, and the overall economy. The study, “Financial Crisis Responsibility Fee: Issues for Policymakers,” concludes that imposing the tax now – more than three years in advance of the legislative deadline – could lead to a $1 trillion decline in lending, reducing access to credit for job creators and consumers at a time when the economy is still struggling to recover.
• Op-Ed by Lucian Bebchuk: Politics and Corporate Money, Project Syndicate, September 2010
• Influential Voices in U.S. Board Rooms, Business Ethics, September 21, 2010
  Regulators and rulemakers led the list of 100 most influential people affecting corporate governance in America’s board rooms in 2010, according to the National Association of Corporate Directors. […] Based on the selections, Harvard University claimed bragging rights. According to the Harvard Law School Forum on Corporate Governance and Financial Regulation blog, the Directorship 100 list includes twenty-seven individuals who are Harvard Law School faculty or fellows, guest Contributors to the blog, and/or Harvard Law School alumni – suggesting, the blog says, that Harvard and its governance program play “a central role in the corporate governance landscape.”
• Calling on Corporate Law to Defend Democracy, Boston Review, September 15, 2010
  While Lessig is rightly concerned about institutional corruption, Congress is not the only institution at risk. Corporations themselves may be corrupted by political spending. As Harvard Law professor Lucian Bebchuk has noted, corporate meddling in politics is potentially bad for capitalism because managers may seek to water down corporate-governance rules to the detriment of investors. Moreover, given that shareholders likely will hold a range of political convictions, corporate managers’ spending inclinations may not match up with shareholders’ preferences.
• Rusal Hopes to Regain Norilsk Board Seats, Wall Street Journal, September 10, 2010
  Russian aluminum giant United Co. Rusal is pursuing its efforts to extend its influence over the world’s largest nickel producer, OAO Norilsk Nickel, which it partially owns. […] Rusal is also courting minority investors, and has launched a website called “SaveNorNickel” that lays out its views on the miner. Rusal is trying to marshal support ahead of special meeting of Norilsk shareholders scheduled to take place next month, after Rusal lost one of its four board seats at Norilsk’s annual meeting in June. One person it has approached to run for the Norilsk board is Lucian Bebchuk, who heads the program on corporate governance at Harvard Law School. Mr. Bebchuk said he has agreed to run for the Norilsk board.
• Analysis: Crowded Oracle management bench could mean friction, Reuters, September 8, 2010
  Two’s company, but three could be a crowd at the top of Oracle Corp. Larry Ellison, co-founder of the world’s No. 3 software maker, risks friction with his top lieutenant and perhaps eventually himself by bringing on board his old friend and former Hewlett-Packard Co Chief Executive Mark Hurd, experts warn. “They’re building in a structure of potential conflict,” said Ben Heineman, a Harvard law professor and former general counsel for General Electric Co. “That doesn’t mean it won’t work out, but you have to ask the question.”
• The Directorship 100, Directorship Magazine, September 1, 2010
  A consummate proponent of shareholder activism, and a sometimes participant, Harvard’s Lucian A. Bebchuk is among the most influential academics on the corporate governance scene In addition to being professor of management practice at Harvard Business School and former CEO of device maker Medtronic, William W. George currently serves as a director of Exxon Mobil and Goldman Sachs, and is a frequent critic of those who shirk their executive duties. Earlier this year, he took Toyota CEO Akio Toyoda to task for not accepting responsibility for problems at the automaker. Ben W. Heineman Jr. is a distinguished senior fellow at Harvard Law School and senior fellow of the Belfer Center for Science and International Affairs at the Kennedy School of Government.
• Dodd-Frank’s ‘say on pay’ could impact executive pay, MarketWatch, August 26, 2010
  One of the lesser-known elements of the sweeping Dodd-Frank Act aimed primarily at reforming the nation’s banks is directing the Securities and Exchange Commission to write rules that could temper the compensation of executives across multiple industries. […] Harvard Law School Professor Lucian Bebchuk contends that shareholders understand that compensation packages should differ based on unique expectations at each firm. However, he argued that there are some compensation arrangements that investors can agree are undesirable and should be removed from all U.S. corporations. A golden parachute pay-package for a CEO that is retained as a top executive by an acquiring firm, is a good example of the kind of compensation provisions that could be removed, he said.
• Wall Street reform gives regulators power over executive pay, Washington Post, August 19, 2010
  That largely overlooked provision of the law gives federal agencies expanded powers to write regulations dictating pay at financial firms. How they choose to use these powers could have a major impact on whether banks pursue excessive risks. “The financial crisis made patently clear that the direct regulation of the choices that banks make is bound to be imperfect because regulators are often following behind,” said Lucian A. Bebchuk, a Harvard Law School professor who has advised the Obama administration on executive compensation issues. “It’s valuable for regulators to have an extra tool to influence the private incentives that will shape executives’ decision-making.”
• Message to Potash Corp: Poison pills taste bad, Globe and Mail, August 18, 2010
  It’s commonly known as a poison pill provision, a sometimes-controversial tactic used to stall a takeover bid or put the kibosh on it altogether. If it seems at odds with the concept of free markets and shareholder interests, it often is. […] According to Lucian Bebchuk, professor of law, economics and finance at Harvard Law School, a problem arises however when they are used as more than a stalling tactic. “From the perspective of shareholders and good corporate governance, it is undesirable to allow the use of poison pills to just say ‘no’ indefinitely to an offer,” he said in an e-mail.
• Why Corporate Governance Matters to Everyone, Huffington Post, August 17, 2010
  In recent years, corporate governance scholars such as Lucian Bebchuck of Harvard Law School, Nell Minow of The Corporate Library and James McRitchie of CorpGov, activist investors such as CalPers, CalSTERS, Carl Icahn, Andrew Shapiro and Bill Ackman and, to some extent, the Delaware courts, have sought to change this situation by facilitating better process and more inclusive boards of directors. […]
• Shareholders Wise Up, Corporate Board Member, August 9, 2010
  Investing in companies that are well governed no longer guarantees the superior returns it once did, according to a study by three university professors. Harvard Law School’s Lucian A. Bebchuk, Tel Aviv University’s Alma Cohen, and Stanford’s Charles C. Y. Wang divided companies into two groups, ones with good governance and ones with bad, and compared their performance from 2000 to 2008. They found that investors gained little advantage by favoring well-governed companies versus putting their money into ill-governed ones.
• Why Do Lawyers Acquiesce in their Clients’ Misconduct?, The Situationist, August 8, 2010
  But [Oliver] Budde’s calculations were supported by a Yale Journal of Regulation article entitled, “The Wages of Failure: Executive Compensation at Bear Stearns and Lehman, 2000-2008” (Bebchuk et al.).
• Why the SEC’s Proxy-Access Plan Won’t Help Tame Wall Street, BNET, August 5, 2010
  [T]he SEC is set to make it easier for shareholders to nominate corporate directors! […] Citing data from CalPERS, California’s giant state pension fund, governance expert Lucian Bebchuk of Harvard recently noted that the 10 largest pension funds hold less than 2.5 percent of Bank of America, Exxon Mobile, IBM and Microsoft. Even if these giant investors were to join forces, in fact, they’d still fall short of the three percent ownership requirement.
• Geithner’s Hollow ‘Speed’ Pledge to Business, Wall Street Journal, August 5, 2010
  An op-ed by HLS Professor Hal Scott and Glenn Hubbard: Businesses must know the rules of the game before risking their capital. And so, in his speech at New York University’s Stern School of Business on Aug. 2, Treasury Secretary Tim Geithner assured his audience that the massive regulatory reforms of the new Dodd-Frank legislation would be implemented quickly to remove the drag of uncertainty on the economy. “First we have an obligation of speed,” he said, and asked to be held accountable if his pledge was not honored.
• Say What? Pay What? Real World Approaches to Executive Compensation Reform, Corporate Counsel, August 5, 2010
  In their new paper, “Paying for Long-Term Performance” (University of Pennsylvania Law Review, v. 158 No. 7, at 1915), professors Lucian Bebchuk and Jesse Fried offer some concrete suggestions for ways to tie executive compensation to a company’s long-term performance. Bebchuk and Fried argue that equity incentives can be designed to prevent the gaming of equity grants both at the front end, when they are granted, and at the back end, when they are exercised.
• In devising punishments, SEC faced with competing interests, Washington Post, August 3, 2010
  What’s $75 million? For Citigroup, it’s a week of profits, less than 0.1 percent of its market value, a rounding error on a balance sheet worth more than $2 trillion. And for the Securities and Exchange Commission, it’s a fair price to pay for the bank to settle allegations that it misled its shareholders about nearly $40 billion in subprime mortgage investments it held in 2007, the year before the bank began its slide into the abyss. […] “The punishment of a corporate entity like Citigroup serves a limited purpose,” said Mark J. Roe, a professor at Harvard Law School. “There’s a lot of smoke and drama around it, but it ends up shifting money from one group of shareholders to another.”
• Oracle’s Ellison: Pay King, Wall Street Journal, July 27, 2010
  Larry Ellison, founder and chief executive of software maker Oracle Corp., topped the list of best-paid executives of public companies during the past decade, receiving $1.84 billion in compensation, according to a Wall Street Journal analysis of CEO pay […] The disparity between those CEOs’ fortunes and those of their shareholders is “pretty depressing,” and “suggests there’s a fair amount of pay without performance,” said Jesse Fried, a law professor at Harvard University and co-author of a 2004 book, “Pay Without Performance: The Unfulfilled Promise of Executive Compensation.”
• Op-Ed by Lucian Bebchuk: How to Pay a Banker, Project Syndicate, July 2010
• Ken Feinberg’s Lame Report on Wall Street Pay Shows We’re Back to Square One, BNET, July 23, 2010
  Common shareholders in banks tend to be equally thrill-seeking, studies show, and for similar reasons. The more risk a company takes, the more money they can make. That’s why say-on-pay doesn’t work in banking. Because when both bankers and investors benefit the more risk a company takes, giving shareholders a voice over how those bankers should be compensated merely reinforces the firm’s taste for action. As Harvard’s Lucian Bebchuk, a leading corporate governance expert, has written: […]
• Pay CEOs in debt, Business Spectator, July 17, 2010
  This emphasis has been likely been driven by the long-standing belief that, empirically, executives don’t hold debt. […] Indeed, recent empirical studies (eg, Bebchuk and Jackson 2005, Sundaram and Yermack 2007, and Gerakos 2007) found that CEOs do in fact hold substantial amounts of debt in their own firm (known as “inside debt”), in the form of defined benefit pensions and deferred compensation.
• Heading Off The Next Credit Crisis, Forbes, July 12, 2010
  […] This sort of self-fulfilling credit crunch is the focus of Wharton research that explores alternative ways to prevent inefficient credit tightening from causing further damage to an already wounded economy. In a paper titled, “Self-Fulfilling Credit Market Freezes,” Wharton finance professor Itay Goldstein and Lucian A. Bebchuk of Harvard Law School examine different approaches to halt an overreaching credit crunch.
• What happened to all that anger over CEO pay?, Christian Science Monitor , July 12, 2010
  With last month’s sweeping financial reform bill, Congress has finally moved to tame runaway executive pay. Sort of. […] CEO pay inflation certainly enriches a few. It also has meaningfully shifted corporate earnings away from employees and shareholders, according to Harvard Prof. Lucian Bebchuk.
• Playing paymaster, Mint, July 5, 2010
  […] The old regulatory principle of letting managers’ incentives align with those of shareholders needn’t hold true here. That’s because, for commercial banks that are important for the financial system, shareholders’ incentives are already skewed. Harvard Law School’s Lucian Bebchuk has argued that shareholders know the government will bear the downside risk: They could well be goading managers to take on more risk.
• Should executives be paid with debt? No!, Fortune, July 2, 2010
  As investigators comb through the wreckage of the financial meltdown, one fact remains clear and startling: Credit default swaps and collateralized debt obligations, as well as debt and equity from large financial firms were useless as indicators of fiscal health. One of the biggest revelations has been the utter failure of markets to capture the relevant information required to set accurate prices on securities […] But is tying pay to debt, even as a partial solution, really the answer? Harvard Law School professor Lucian Bebchuk has argued in a series ofpapers prepared for the Investor Research Responsibility Center Institute that it is.
• Op-Ed by Lucian Bebchuk: Don’t Gut Proxy Access, New York Times DealBook, June 2010
• Harvard’s Bebchuk Urges More Shareholder Control of Executive Pay, Investment Advisor, June 17, 2010
  Standard pay arrangements reward executives for short-term gains and generate incentives for them to take excessive risks and trade off long-term stock performance, says an in-depth Harvard study on how to tie compensation to shareholder value. “The standard narrative assumed that the executives of [Bear Stearns and Lehman Brothers] saw their own wealth wiped out together with the firms when the firms melted down,” said one of the study’s authors, Lucian Bebchuk, a Harvard Law School professor and director of the school’s program on corporate governance, in a Tuesday, June 15, webinar about the study’s findings.
• Wall Street Pay Should Be Tied to Bonds, Harvard’s Bebchuk Says, Bloomberg, June 16, 2010
  Bonuses for Wall Street’s top executives should be tied to a basket of the firm’s securities, including bonds and stocks, to align managers with all stakeholders and discourage excess leverage and risk, Harvard Law School Professor Lucian Bebchuk said.
• Wall St. Urged to Tie Bonuses to Debt of Banks, New York Times DealBook, June 15, 2010
  Lucian A. Bebchuk, a professor of law, economics and finance at Harvard, contends that bonuses for Wall Street’s top executives should be linked to the value of a firm’s bonds as well as stock to align the interests of managers with those of everyone who holds a stake in the firm, Bloomberg News reports.
• States Want Your Trust, Wall Street Journal, June 14, 2010
  If you’re considering establishing a trust, it may pay to shop out of state […] Between 1985 and 2003, some $100 billion—about 10% of reported trust assets held by federally regulated financial institutions—moved to states that allowed long-term trusts and didn’t tax trusts created by nonresidents, according to a study by Robert Sitkoff, a professor at Harvard Law School, and Max Schanzenbach, a professor at Northwestern University School of Law, published in the Yale Law Journal.
• Rich, failed bankers show pay-reform shortcomings, Baltimore Sun, June 6, 2010
  There is a seductive myth that the economic destruction of recent years had nothing to do with the limitless pay dangled like a 10,000-pound jelly doughnut before American CEOs. […] The top five executives at Bear Stearns pulled $1.4 billion out of the company from 2000 through 2008, calculates Harvard’s Lucian Bebchuk with two colleagues in a paper being published in the Yale Journal on Regulation. The top five bosses at Lehman Brothers pocketed $1 billion over the same period.
• Op-Ed by Lucian Bebchuk: Rating the Raters, Project Syndicate, May 2010
• Buenos Aires Loves NYC Judge Rescuing Argentines From Default, Business Week, May 24, 2010
  U.S. District Judge Thomas Griesa can walk down the streets of New York unrecognized, even after handling Chrysler LLC’s bankruptcy and a trademark lawsuit last year by film director Woody Allen […] “If there is a very high participation rate, obviously litigation will decrease,” said Hal Scott, who heads Harvard Law School’s international finance systems program and has written about Argentina’s default. “The question is going to be: who’s left?”
• Practice meets theory: Academia, The Deal Magazine, May 14, 2010
  The Harvard Law School Program on Corporate Governance brings together leading thinkers on all sides of the shareholder rights divide. Its 2009 roundtable on proxy access attracted Delaware Court of Chancery Vice Chancellor Leo E. Strine Jr.; senior Securities and Exchange Commission adviser Kayla Gillan; Dean Shahinian, senior counsel for the Senate Committee on Banking, Housing and Urban Affairs; and AFL-CIO associate general counsel Damon Silvers, among others. […]
• An op-ed by Professor Mark Roe: Derivatives Clearinghouses Are No Magic Bullet, Wall Street Journal, May 6, 2010
• Fuld Understated Pay More Than $200 Million, Lehman’s Budde Says, Bloomberg, April 29, 2010
  Before Lloyd Blankfein of Goldman Sachs Group Inc. took his place, Richard S. Fuld Jr.’s angry face was the universal symbol of Wall Street greed. […] In “The Wages of Failure: Executive Compensation at Bear Stearns and Lehman, 2000-2008,” Harvard Law professor Lucian Bebchuk; Alma Cohen, a visiting professor from Tel Aviv University; and Holger Spamann, a Harvard Law lecturer, calculate that Fuld earned $522.7 million from 2000 to 2007, only slightly less than Budde’s tally.
• The rewards of virtue, The Economist, April 26, 2010
  Once again, corporate-governance reform is back on the legislative agenda, not least in the United States. […] Critics of reform were never convinced. A new study co-written by Lucian Bebchuk, a Harvard professor who is also an activist for corporate-governance reform, gives rise to further doubts—at least at first glance. “Learning and the Disappearing Association Between Governance and Returns,” by Mr Bebchuk, Alma Cohen and Charles Wang, repeats the study by Mr Gompers and his colleagues for 2000-08. It finds that, in contrast with the 1990s, neither the 24-factor index nor the six-factor one would have helped investors beat the market.
• Goldman Sachs: The fraud that isn’t, Calgary Herald, April 21, 2010
  The U.S. Securities and Exchange Commission’s unfathomable and illogical Goldman Sachs case appears to be heading off in two directions […] The Times reported that Harvard Law professor Allen Farrell said the SEC suit was based on a strange definition of material information. “We normally think of material information as specific to the mortgages, not somebody’s prediction about the future course of macro-economic events.”
• Professors Discuss Goldman Suit, Harvard Crimson, April 21, 2010
  The Securities and Exchange Commission’s recent suit against Goldman Sachs raises new questions about securities regulation from both legal and ethical standpoints, according to professors from Harvard Law School and Harvard Business School […] According to Law School Professor Jesse M. Fried ’86, the question at the heart of the case is whether or not hedge fund manager John Paulson’s involvement in structuring the portfolio in 2006 was “material”—that is, significant to a buyer’s decision to purchase the securities […] Law School Professor Allen Ferrell noted that Paulson’s actions likely did not constitute wrongdoing, since the hedge fund was independently speculating on future market movements—which is not fraudulent behavior on its own […] According to Law School Professor Howell E. Jackson, the SEC has a plausible case and Goldman will not be confident enough to go to trial. Ferrell, Jackson, and Fried said they believe that Goldman will settle.
• A Difficult Path in Goldman Case, New York Times, April 19, 2010
  In accusing Goldman Sachs of defrauding investors, regulators are not only taking aim at a company with deep pockets and a will to fight — they are also pursuing an unusual claim that could be difficult to prove in court, legal experts said. […] Allen Ferrell, a law professor at Harvard, said the suit rested on an unusual definition of material information.
• Lawmakers Dodge Key Issues in Reg Reform, Financial Planning, April 12, 2010
  Though touted as a way to avert the next financial crisis, the massive regulatory reform bill awaiting a Senate vote ignores key contributing factors, including an inefficient and outdated regulatory structure, a broken housing finance market and weak underwriting standards that spurred a wave of unaffordable mortgages […] Hal Scott, the director of the Program on International Financial Systems at Harvard Law School, agreed. “It doesn’t address GSE reform, which arguably is the most costly part of the entire bailout process,” he said. “If you look at the money we’ve actually spent on the bailout … the GSEs are costing us billions. There is no solution to that. That fact is the biggest gap in the reform.”
• Toyota e-mails reveal debate over Toyota recall, Christian Science Monitor, April 8, 2010
  E-mails exchanged between Toyota company executives, published Wednesday, suggest a heated debate within the company about when to release information about the company’s now notorious mechanical problems with an accelerator assembly […] At GE, “we started to do training [with employees] to write accurately and not in an inflammatory way,” says Ben Heineman, now a senior fellow at Harvard University’s schools of law and government in Cambridge, Mass. That means encouraging employees to stick to facts in e-mails, rather than trying to draw conclusions.
• HLS Boasts Top Gov. Leaders, Harvard Crimson, April 5, 2010
  Thirty-four of the 100 most influential figures in corporate governance are affiliated with Harvard Law School, according to a review by Directorship Magazine. […] The majority of Harvard’s affiliates on the list are part of the Law School’s Forum on Corporate Governance.
• Learning from Ken Feinberg, Reuters Blog, March 25, 2010
  When Pay Czar Kenneth Feinberg first slashed executive compensation at U.S. firms that benefited most from a government bailout the cry was that this would hurt these weakened firms when they could least afford it, as the best and brightest would leave for better money elsewhere, where the free market still ruled. […] Lucian Bebchuk of Harvard Law School has argued that relations between top executives and boards are not truly arm’s length. There are simply too many ways for management to reward boards for overpaying them.
• Secondary Sources: Paid to Fail, Libertarians, Inflation Targeting, Wall Street Journal Blog, March 24, 2010
  A roundup of economic news from around the Web. “Paid to Fail”: Writing for Project Syndicate Lucian Bebchuk, Alma Cohen and Holger Spamann say that Bear Stearns and Lehman executives made out pretty well. “After Bear Stearns and Lehman Brothers melted down, ushering in a worldwide crisis, media reports largely assumed that the wealth of these firms’ executives was wiped out, together with that of the firms they navigated into disaster.
• The Big Wall Street Pay Days That Ken Feinberg Missed, Wall Street Journal Blog, March 23, 2010
  As the pay czar reviews bonuses paid out to Wall Street firms that received Troubled Asset Relief Program funding, it is worth remembering the big pay days that preceded the federal bailout and some might say helped create the need for one. We are talking about stock sales by Bear Stearns and Lehman Brothers Holding executives. A trio of Harvard researchers, including Lucian Bebchuk, recently calculated that the top five executives at Bear and Lehman cashed out $1.1 billion and $850 million, respectively, from 2000 to 2008.
• Goldman executives benefit from fund investments, Financial Times, March 21, 2010
  Goldman Sachs’ executives took home millions of dollars last year from investments in funds run by the bank, after the furore over pay forced Wall Street banks to rein in awards to their top staff. […] Some experts say that amounts to a monetary benefit. Lucian Bebchuk, a professor at Harvard, said: “Given the size of the distributions to the top executives, it seems that they likely have rather large amounts invested in those funds and that saving the costs of management fees and overrides can be substantial.”
• Obama, Lehman and ‘The Dragon Tattoo’, The New York Times, March 20, 2010
  Far from being held liable for the chicanery and recklessness that would destroy their company and threaten their country’s economy, these executives benefited big time. In a study late last year, three Harvard Law School researchers examined public documents to assess whether one “standard narrative” of the crash was true — that “the meltdown of Bear Stearns and Lehman Brothers largely wiped out the wealth of their top executives.” It turned out to be a fairy tale.
• Op-Ed by Lucian Bebchuk, Alma Cohen and Holger Spamann: Paid to Fail, Project Syndicate, March 2010
• Does finance reform bill go far enough?, NPR’s Marketplace, March 15, 2010
  Harvard law and finance professor Hal Scott talks with Kai Ryssdal about the changes proposed in Sen. Dodd’s financial-industry reform bill.
• Semiannual Bonuses Gain Traction, The Wall Street Journal, March 15, 2010
  More bosses are getting two bites at their bonus apples…The trend also troubles Lucian Bebchuk, co-author of the book “Pay Without Performance.” The economic crisis proved “it’s important to link pay to long-term results,” says Mr. Bebchuk, a Harvard law professor and head of its corporate-governance program. “Semiannual bonuses move companies in exactly the opposite direction from which they should be heading with their pay practices.”
• U.S. takeover defenses come tumbling down, Financial Times, March 11, 2010
  US companies are finding themselves increasingly exposed to unwanted takeover attention after a dismantling of companies’ poison pills prompted by pressure from corporate governance activists […] Guhan Subramanian, professor of business law at Harvard Law School, however says: “Once a threat has been identified, the court does seem to be giving target boards a blank cheque to do anything they want. But the question remains, what kind of threat is sufficient to trigger that response?”
• Can They Stop the Great Recession?, New York Review of Books, March 10, 2010
  No one could argue, after reading Gasparino’s book, that compensation practices and regulatory neglect did not drive bad decisions. Cayne, Fuld, Prince, and O’Neal barely understood the mortgage securities market at all—nor did they try. But they each made a fortune despite their ignorance.
• Study Finds, for First Time, Data Boards Bundle Items for Votes, Securities Regulation & Law Report, March 8, 2010
  In a new study, two professors from Harvard Law School and the University of Southern California Gould School of Law are reporting that, for the first time, they have found empirical evidence that corporate management, to obtain outcomes it wants, bundles charter amendments that might be unfavorable to shareholders with measures that enjoy shareholder support. The study, authored by Harvard’s Lucian Bebchuk and USC’s Ehud Kamar, reviewed the bundling of corporate mergers with a move to a staggered board structure. It used hand-collected data relating to governance changes in 393 public mergers occurring in companies of similar size from 1995 to 2007.
• An Irish Mirror, The New York Times, March 7, 2010
  Everyone has a theory about the financial crisis. These theories range from the absurd to the plausible — from claims that liberal Democrats somehow forced banks to lend to the undeserving poor (even though Republicans controlled Congress) to the belief that exotic financial instruments fostered confusion and fraud. But what do we really know? […] Third, key players had an incentive to take big risks, because it was heads they win, tails someone else loses. […] There was a lot of this in the United States, too: as Harvard’s Lucian Bebchuk and others have pointed out, top executives at failed U.S. financial companies received billions in “performance related” pay before their firms went belly-up.
• Equity Firms Cheer Return of ‘Staple’; Critics Don’t, The Wall Street Journal, March 5, 2010
  It is the surest sign yet that corporate credit markets are roaring anew: The “staple” is back […] “While there’s a clear conflict of interest,” said Guhan Subramanian, a professor of law and business at Harvard University who studies corporate acquisitions, “that conflict has to be weighed against the benefits of creating a more robust auction.”
• Doubts grow about inclusion of Volcker rule in Senate bill, Risk Magazine, March 4, 2010
  The White House sent legislative language outlining its contentious ‘Volcker rule’ to Congress on Wednesday, which is designed to prevent bank holding companies from engaging in proprietary trading. However, doubts remain about the need for such a rule, with increasing numbers of participants speculating it will be scrapped […] That opinion may not be shared by senators, however. Hal Scott, Nomura professor and director of the programme on international financial systems at Harvard Law School in Massachusetts, says he detected a distinct lack of enthusiasm among committee members when he testified before the Banking Committee on February 4.
• Congress Is Wasting a Good Crisis, The Wall Street Journal, March 3, 2010
  Has anyone in Congress actually explained to taxpayers how much they could be on the hook for if the banking system were to crater again? […] What should Congress have done instead? First, instead of enshrining a system for backstopping liabilities like market debt, legislation should have put defined limits on it—and forced firms that use a lot of it to hold more capital. Second, the advantageous treatment derivatives counterparties enjoy under bankruptcy law should have been reversed. These perks undermine market discipline and can actually increase systemic instability when a firm fails, says Harvard University law professor Mark Roe.
• These CEOs Are Bleeding Your Investments, The Motley Fool, February 27, 2010
  New research on compensation suggests that highly paid CEOs are taking money out of your pocket. Finance professor Raghavendra Rau of Purdue University and two co-researchers examined the relationship between executive pay and stock returns for around 1,500 businesses per year over the 12-year period ending in 2006. […] This trend seems to be confirmed by another study on compensation by Lucian Bebchuk at Harvard Law School. Bebchuk examined CEO pay at more than 2,000 companies. He concluded that the higher the chief exec’s proportion of pay, the less the company was likely to earn in the future.
• Regulatory group warns global co-ordination slipping, Financial Times, February 26, 2010
  A group of 15 private sector regulatory experts from 11 countries on Friday said they had formed a new advisory body on global regulatory issues, warning that there had been signs in recent months that countries were going their own way on how to reform the global financial system […] The new group, known as the Council on Global Financial Regulation, will be co-chaired by Michel Prada, former president of the Autorité des Marchés Financiers, the French markets regulator, and Hal Scott, director of the Program on International Financial Systems at Harvard Law School.
• Will the Citizens United Ruling Prove Harmful to Capitalism?, Wall Street Journal Law Blog, February 26, 2010
  We’ve read lots — trust us, lots — on the pros and cons of the Citizens’ United case. Frankly, at this point, the debate is getting a little shopworn. […] But Harvard law professor and corporate governance expert Lucian Bebchuk, the author of Pay Without Performance, which took a critical look at current executive compensation practices, weighed in on Thursday with a thoughtful piece about why fewer limits on corporate campaign expenditures is a bad thing.
• Some CEOs Are Selling Their Companies Short, BusinessWeek, February 25, 2010
  Some companies, including Procter & Gamble and Kellogg, ban executive hedging, but they are a minority. Lucian Bebchuk, head of the Program on Corporate Governance at Harvard Law School, predicts growing problems with hedges as companies make executives hold on longer to shares as a way of prodding them to work for long-term gains. A manager might have to keep a stock award for three years after it vests, for example. If he can hedge his shares and essentially cash out of them before the holding period ends, he eludes that restriction. That’s why Bebchuk sees an all-out ban as the only solution. “Allowing executives the freedom to hedge,” he says, “defeats the purpose of equity compensation.”
• Op-Ed by Lucian Bebchuk: Corporate Political Speech is Bad for Shareholders, Project Syndicate, February 2010
• Despite outrage, AIG bonus fiasco could happen again, Reuters, February 19, 2010
  To many Americans, it’s a matter of common sense: traders who failed so spectacularly at their jobs that they nearly brought down the global economy should be fired, not rewarded with handsome bonuses. […] “Many financial firms have already announced they will be using clawbacks going forward, but unfortunately they have not given outsiders the ability to assess whether the clawbacks are effective or merely cosmetic,” said Lucian Bebchuk, a professor at Harvard Law School and a leading expert on the subject of compensation. “The devil is in the details.”
• A different class, The Economist, February 18, 2010
  The spectacular collapse of so many big financial firms during the crisis of 2008 has provided new evidence for the belief that stockmarket capitalism is dangerously short-termist. After all, shareholders in publicly traded financial institutions cheered them on as they boosted their short-term profits and share prices by taking risky bets with enormous amounts of borrowed money. […] Although no American firms have dual classes of shareholders, they do sometimes resort to another device designed to resist pressure to pursue short-term goals: “staggered boards”, in which only a minority of directors face re-election each year. According to Lucian Bebchuk of Harvard Law School, who has studied their impact, they are strongly associated with lower long-term returns.
• Obama’s ‘Volcker Rule’ May Not Survive Congressional Skepticism, Business Week, February 5, 2010
  President Barack Obama’s “Volcker Rule” to ban proprietary trading at U.S. banks may not survive in Congress, hampered by criticism that the administration waited too long and offered too few details […] Drawing a line between bank and customer trading won’t be easy, said Hal Scott, a professor at Harvard Law School who specializes in international financial systems. A narrow definition probably won’t reduce risk, Scott said, while a broad one could “seriously impair the basic function of modern banks as market-makers” in government and non-government securities and as packagers of consumer debt into bonds.
• Bankers question definition of ‘prop trading’ at Senate Volcker rule hearing, Risk Magazine, February 5, 2010
  Senior bankers and academics have questioned the feasibility of new rules to prohibit US bank holding companies from engaging in proprietary trading, pointing to the difficulty of defining the activity and the limited impact such a ban could have as a systemic risk mitigant […] “If the limits on proprietary trading only apply where banks take positions unrelated to serving customers they will have little impact. For example, with respect to Wells Fargo and Bank of America, such activity represents around 1% of revenues. While proprietary trading has been estimated to be 10% of the revenues of Goldman Sachs, that firm could easily avoid these requirements by divesting itself of its banking operations as deposit-taking constitutes only 5.19% of its liabilities,” said Hal Scott, professor of international financial systems at Harvard Law School.
• Dodd Denounces Pace of Banking Overhaul, New York Times, February 4, 2010
  Executives at Goldman Sachs and JPMorgan Chase expressed misgivings on Thursday about the Obama administration’s new proposals to restrict the size and risk-taking of the country’s largest financial institutions […] Two scholars who appeared before the committee also clashed in their views. Hal S. Scott, professor of international finance systems at Harvard Law School, said the Volcker proposals were too broad and that the banking reforms required international coordination.
• Even Better Volcker Rules, New York Times, February 4, 2010
  This morning the Senate Banking Committee again takes up the issue of the “Volcker rule.” […] Today’s hearing is actually the second of a pair. The financial industry is represented by heavyweights, including Gerry Corrigan of Goldman Sachs; and John Reed, former chief executive of Citibank. The panel also includes Hal Scott of Harvard Law School; Barry Zubrow, chief risk officer of JP Morgan Chase; and Simon Johnson.
• Will Sharpened Clawback Provisions at J.P. Morgan Chase, Bank of America Corp., and Morgan Stanley Quiet Populist Rage?, American Banking News, January 28, 2010
  The big banks continue to respond to the growing outrage focused on their compensation practices. The Wall Street Journal reports that many banks including J.P. Morgan Chase (JPM), Bank of America Corp. (BAC), and Morgan Stanley (MS) have announced enhanced provisions that will allow them to seize bonus compensation for employees whose bets or other actions do not pan out, and expose the company to excessive risk. […] “Firms have not been providing outsiders with the information that is necessary to assess whether the clawbacks are meaningful and effective or merely cosmetic,” remarks Lucian Bebchuk, a Harvard University law professor who runs the college’s corporate-governance program.
• Op-Ed by Lucian Bebchuk, Martijn Cremers and Urs Peyer: The CEO Pay Slice, Project Syndicate, January 2010
• Can Financial Firms Get Executives to Give Back Pay?, Time, January 27, 2010
  In the past few months, a number of financial firms have instituted or beefed up rules that would allow them to force employees to return year-end bonuses. So-called clawbacks would be triggered by subsequently discovered misconduct and some firms say they may even apply in cases where employees made trades that looked profitable at first, but go sour. […] On Friday, Wall Street pay was again in the spotlight in Washington. The House Committee on Financial Services held a hearing on executive compensation. Harvard professor Lucian Bebchuk, who recently consulted pay czar Kenneth Feinberg in setting compensation limits at bailed-out firms, said Congress should regulate and “place limits” on Wall Street pay.
• Wall Street Toughens Rules on Clawbacks, Wall Street Journal, January 27, 2010
  Banks and securities firms are toughening rules that give them power to seize pay from employees whose bets or other actions blow up later. But they still mightn’t be tough enough. […] “Firms have not been providing outsiders with the information that is necessary to assess whether the clawbacks are meaningful and effective or merely cosmetic,” says Lucian Bebchuk, a Harvard University law professor who runs the college’s corporate-governance program.
• Ailing Banks Favor Salaries Over Shareholders, New York Times, January 26, 2010
  Finding the winners on Wall Street is usually as simple as looking at pay. Rarely are bankers who lose money paid as generously as those who make it. But this year is unusual. A handful of big banks that are struggling in the postbailout world are, by some measures, the industry’s most magnanimous employers. Roughly 90 cents out of every dollar that these banks earned in 2009 — and sometimes more — is going toward employee salaries, bonuses and benefits, according to company filings. […] “It’s heads I win, and tails they don’t lose too badly,” said Jesse M. Fried, a professor at Harvard Law School and co-author of “Pay Without Performance.”
• A failure of public financial sector governance, Financial Times Online, January 26, 2010
  As the Financial Crisis Inquiry Commission begins looking at the causes of the recent financial crisis, we need to consider that crisis is a failure of governance. Lucian Bebchuk from Harvard Law School has written extensively on the failure of private sector governance: boards that failed to make informed judgments or control the risks incurred by their institutions, self-serving management that lost control over reckless risk taking and compensation systems that invited speculation by traders. Although Sheila Bair, chair of the Federal Deposit Insurance Corporation (FDIC), has openly expressed her discontent with the governance of the banks and the FDIC is considering tying premiums to compensation, we are likely to witness the largest bonus season the industry has ever seen.
• Op-Ed by Mark Roe: More corporate lobbying is bad business, Financial Times, January 25, 2010
• Protect Consumers First and Reduce Loan Principals; We Owe it to the People who Stay,Huffington Post, January 25, 2010
  It was music to my ears listening to President Obama talk tough to the financial sector. My organization, the National Community Reinvestment Coalition, publicly commended him for his remarks…We have proposed that the Treasury Department acquire mortgage loans at a discount through the powers granted to the Administration under TARP or through the power of eminent domain. This would allow for the permanent and sustainable modification of loans, including principal reductions, which could then be packaged and resold to the market. Professor Howell Jackson of Harvard Law School has demonstrated how the government could use eminent domain in this instance.
• Stock backdating investigations changed Silicon Valley, Mercury News, January 24, 2010
  Hoping to spare her client from prison, an attorney for former Brocade executive Stephanie Jensen stood before a federal judge this month and argued that the furor over stock-option backdating was a “so-called scandal” that never amounted to much. […] That doesn’t mean no harm was done, argues Harvard law professor Jesse Fried, another expert on corporate governance. He said the practice artificially inflated company earnings and stock values, in many cases “enabling executives to reap larger cash bonuses and sell their stock at a higher price.”
• Economists: More must be done on executive pay, Boston Globe, January 22, 2010
  Top US economists warned at a House Financial Services Committee hearing today that more must be done to reign in pay practices which led to the 2008 financial collapse. The witnesses called by US Representative Barney Frank—Nobel Laureate Joseph Stiglitz, Harvard Law School professor Lucian Bebchuk and The Corporate Library co-founder Nell Minow—testified that shareholders should have more power over executive pay and better rules were needed to limit the incentives tied to compensation that lead to excessive risk taking.
• US lawmakers seek to give investors more say on pay, Reuters, January 22, 2010
  The hearing comes as the White House ratchets up its attacks on Wall Street banks with a proposal to rein in their risky activities and a plan to force the firms to pay up to $117 billion to reimburse taxpayers for the bailout. […] Lucian Bebchuk, a Harvard Law School professor, told the House panel that giving shareholders say on pay was only part of the reform of shareholder rights that is necessary.
• Frank taking aim at Wall Street bonuses, Boston Globe, January 22, 2010
  As bonus season arrives on Wall Street, heralded by yesterday’s announcement that Goldman Sachs set aside $16.2 billion for total compensation, Representative Barney Frank is opening a new review by the House Financial Services Committee of ways to impose limits on executive pay. […] No banking executives will testify at Frank’s hearing today, but a witness list includes Nobel laureate Joseph Stiglitz; Harvard professor Lucian Bebchuk; and Nell Minow, cofounder of the Corporate Library, a major compensation and financial services research firm.
• The real world, The Deal Magazine, January 22, 2010
  Guhan Subramanian is one of the most prominent — and ambitious — legal academics of his generation. The 39-year-old is the only person who’s ever held tenured positions at Harvard’s law and business schools, and on the side he advises companies on M&A and corporate governance. After authoring numerous academic papers and a corporate law textbook with former Delaware Chancellor William Allen and Harvard Law’s Reinier Kraakman, Subramanian is set to publish “Negotiauctions: New Dealmaking Strategies for a Competitive Marketplace” next month with W. W. Norton & Co.
• Strong Year for Goldman, as It Trims Bonus Pool, New York Times, January 21, 2010
  No one was crowing about their big paychecks at Goldman Sachs headquarters in New York on Thursday. Despite a record 2009, the bank announced that it had set aside only $16.2 billion to reward its employees. […] Goldman’s move undermined banks’ claims that they could never cut bonuses because they would lose talent, said Lucian A. Bebchuk, a professor of finance at Harvard and an adviser to the United States Treasury on compensation. “This announcement suggests that firms have flexibility in setting pay levels,” he said.
• Hershey May Lose Market Share as Cadbury Slips Away, Business Week, January 20, 2010
  Hershey Co.’s third failed effort to merge with Cadbury Plc in eight years may leave the U.S. chocolate maker and the charitable trust that controls it grappling to retain investors and market share […] The legacy of 2002 has been a drag on Hershey, said Harvard Law School professor Robert Sitkoff, who co-wrote a paper for the Columbia Law Review in 2008 saying that the trust’s controlling stake has impeded shareholder value. “They succeeded in keeping Hershey Co. independent and under the control of the Hershey Trust, but look at what’s been lost,” Sitkoff said in an interview yesterday. “The industry is passing them by.”
• Analysts: Kraft bid puts Cadbury out of Hershey’s league, Philadelphia Inquirer, January 19, 2010
  The Hershey Co. would have to borrow heavily and look to its controlling shareholder, the Hershey Trust, for more than $1 billion to help bankroll a bid for Cadbury P.L.C., according to published reports and experts […] “In the real world, people would get fired for this,” said Robert Sitkoff, a Harvard University law professor and trust expert who has extensively studied the Hershey Trust. “What they should be doing is selling the company.”
• FDIC reveals plans to crack down on executive pay, Risk Magazine, January 13, 2010
  The US Federal Deposit Insurance Corporation (FDIC) is seeking to increase levies on banks with short-term compensation policies, under proposed rules released for comment yesterday. The FDIC cites a recent study by Harvard researchers Lucian Bebchuk, Alma Cohen and Holger Spamann into pay at the failed banks Lehman Brothers and Bear Stearns, which found that senior executives at both banks received a total of $2.4 billion via unrecoverable bonus payments and stock sales in the eight years leading up to the banks’ collapse in 2008.
• The Board That Couldn’t Think Straight, The Conference Board Review, January 13, 2010
  Most of the condemnation heaped upon Merrill Lynch, Bear Stearns, Bank of America, Citigroup, Lehman Brothers, and Countrywide has fallen not on the non-executive board members but upon the CEOs. The tallest trees take the lightning hits. Perhaps their directors have escaped ignominy because they are perceived as feckless, the human analog to “parsley on fish—decorative but useless,” in the words of U.S. Steel chairman Irving Olds some six decades ago. […] Only when tacitly accepted bad behavior becomes sufficiently serious to violate what Harvard’s Lucian Bebchuk calls the “outrage constraint” do outside authorities step in and attempt to “reform” boards with measures such as SarbOx.
• Goldman Tries to Put a Halo on Bonuses, Time, January 13, 2010
  Goldman Sachs is doing its best to prove that what’s good for them is good for the rest of us. But image consultants and corporate-compensation experts say the Wall Street firm’s recent moves won’t quell the growing anger against the world’s most profitable bank. […] Lastly, according to Harvard law professor Allen Ferrell, who has studied corporate giving, where Goldman employees donate may matter as much as how much they end up contributing to charity.
• Fresh round of Wall Street bonuses rekindles scrutiny, Washington Post, January 12, 2010
  As resurgent Wall Street banks prepare to hand out billions of dollars in bonuses – their first since returning federal bailout funds – the payments are drawing intense scrutiny from regulators and politicians. […] “All indications are that levels continue to be quite high,” said Lucian Bebchuk, a Harvard law professor who has advised the Obama administration on executive compensation. “Thus far, the evidence is not encouraging, with neither levels or structures being reformed to the extent that is necessary for addressing the problems of the crisis.”
• U.S. Bankers Are Fed Up With British Regulations, New York Times, January 10, 2010
  A tough new requirement by Britain’s securities regulator that top banking executives and earners must defer 60 percent of their total compensation for a three-year period is pushing some American banks with extensive London operations to say that they just won’t take it anymore. […] “The U.K. may be ahead, but it is not the only one going in this direction,” said Lucian A. Bebchuk, a professor of finance at Harvard and an adviser to the United States Treasury on compensation. “This is a consensus view all over the world.”
• Delaware on defense, The Deal Magazine, January 8, 2010
  Delaware’s corporate law has a target on its back again. Since the late 1970s, shareholder activists and their allies in the academy have complained that the state’s law favors management and boards at the expense of shareholders and have lobbied Congress and the Securities and Exchange Commission to adopt rules more favorable to shareholders. […] “I don’t want to speak for Delaware,” says Vice Chancellor Leo E. Strine Jr., one of the five judges on the state’s Court of Chancery, “but I think the concern is that there is an awful lot of economic growth and jobs related to the ability of U.S. businesses to shape structures that work for them” under the state’s corporate law, which gives companies broad leeway to craft an appropriate governance regime.
• Did Pay at Bear, Lehman Cause Collapses?, SmartMoney, January 8, 2010
  Top bosses at Bear Stearns and Lehman Brothers lost bundles on company stock when those firms collapsed. Just punishment for excessive risk-taking, you might say. But was it? A new post-mortem report suggests not. A trio of Harvard Law School professors have tallied the cash these management teams collected for their performance during the boom years that preceded — caused, really – the bust. The numbers make failure look lucrative.
• Bank Bailout Overseer, an HLS Professor, Named Bostonian of the Year, Harvard Crimson, January 5, 2010
  The Boston Globe has named Harvard Law School Professor Elizabeth Warren its 2009 Bostonian of the Year for bringing “a sense of sanity to the economic crisis” as the official overseer of the U.S. bank bailout program. […] “As head of the TARP oversight panel, Elizabeth Warren has been an extremely effective and influential monitor of one of the consequential economic programs in history, and in this role she has successfully and effectively put a spotlight on issues of great significance,” said Law School Professor Lucian A. Bebchuk, who has written prolifically about TARP and executive pay, in an e-mailed statement from abroad.