2011

• Op-Ed by Mark Roe: Reforming Repo Rules, Project Syndicate, December 2011
• A Former Treasury Adviser On How To Really Fix Wall Street, New Republic, Decemeber 17, 2011
  An opinion piece by HLS Visiting Assistant Professor Morgan Ricks: Any serious program for Wall Street reform should start with two words: “term out.” “Terming out” is a financial term of art, but its meaning is easily grasped. It simply means funding your business with long-term financing instead of short-term IOUs. To a far greater extent than is commonly understood, our financial sector funds its operations with extremely short-term borrowings. These IOUs must be paid back in a day, a week, or a month. By contrast, termed-out financial firms shun borrowings that come due in less than a year. A terming-out requirement would be costly for Wall Street, but the reward would be a safer and more resilient financial system. That’s a trade we should be willing to make.
• Focus on Donations Grows, Inside Investor Relations, Decemeber 16, 2011
  When the US Supreme Court ruled in 2010 that corporate political contributions are protected by free speech, the five-four split-decision signaled deep divisions. […] Writing in the Harvard Law Reviewlast year, Robert Jackson of Columbia Law School and Lucian Bebchuk of Harvard Law School, the two prime movers behind the petition, pointed out that while the Supreme Court made clear the free speech rights of corporations, the question of ‘who should have the power to decide whether a corporation will engage in political speech’ remains unanswered.
• Progress Energy Warned Itself not to Self Manage Crystal River Nuclear Plant Project, St. Petersburg Times, Decemeber 11, 2011
  Progress Energy’s disastrous do-it-yourself upgrade to the Crystal River nuclear plant was such a risky idea that the company’s own internal report warned against it. […] Mark J. Roe, a Harvard law professor specializing in corporate governance, said not only does Progress’ decision to ignore its own report raise questions about its case before the state Public Service Commission, but it could subject the company to lawsuits from customers or investors.
• Pet Food Lawsuit Won’t Neuter Wall Street, The Street, Decemeber 2, 2011
  A settlement involving Barclays Capital (BCS) and Del Monte Foods’ over its pet food business sale is being described by lawyers as leading to “sweeping change” in investment banking, but longtime industry watchers think it will be much harder to teach old Wall Street dogs new tricks. […] About the settlement, John Coates of Harvard Law School asks, ‘is it temporary attention, or will it change practices over a long period of time?” Since the Delaware court ruling hinged on Barclays’ disclosure and not its actual investment banking practice, Coates believes in the former.
• 10 Things We Didn’t Learn From [the] Enron Scandal, ABC News, Decemeber 1, 2011
  #9: Still building fragile financial structures: “We could have taken a deep look at the special purpose vehicles, derivatives, repos, and the rest of the ‘new’ finance that was core to Enron’s business model, in order to see what needed to be done better,” Mark Roe, professor at Harvard Law School, said. “The outright fraud of the type that was the core of Enron’s ultimate collapse — bogus transactions that generated accounting entries but not real profits – was contained after Enron (even if other frauds, like Madoff’s arose).”
• Friends of alum endow new fellowship, Harvard Gazette, November 29, 2011
  Friends of Henry Hubschman, HLS ’72, M.P.P. ’73, have set up a fellowship in his memory at Harvard Kennedy School (HKS) and Harvard Law School (HLS). Established shortly after Hubschman’s death in February 2011, the fellowship has received more than $550,000 in contributions and is now permanently endowed. It will provide financial assistance to students pursuing dual HLS/HKS degrees beginning in academic year 2012–13. […] “This fellowship is a perfect tribute to Henry,” said longtime friend Ben W. Heineman Jr., who is a distinguished senior fellow at HLS’s Program on the Legal Profession and a senior fellow at HKS’s Belfer Center for Science and International Affairs. “He had a brilliant professional career at the intersection of law, policy, politics, and business, and was always grateful for the skills and perspectives he developed as a joint-degree student almost 40 years ago.”
• Citigroup May Need to Pay More to Keep SEC Deal, Lawyers Say, Bloomberg Businessweek, November 23, 2011
  Citigroup Inc., whose $285 million settlement with U.S. regulators over a collapsed collateralized debt obligation was faulted by a federal judge as too lenient, may have to pay more money to avoid admitting it did anything wrong, said lawyers following the case. … “Here an agency of the U.S. is saying, in effect, ‘although we claim that these defendants have done terrible things, they refuse to admit it and we do not propose to prove it, but will simply resort to gagging their right to deny it,’” he wrote in a decision approving the settlement. […] Rakoff, who in 2009 rejected a $33 million deal between the SEC and Bank of America Corp., has said his role is to determine whether the Citigroup settlement is “fair, adequate and reasonable” and in the public interest. He’s limited to approving or disapproving the settlement and can’t rewrite it to impose terms the parties don’t want, said James Kwak, a professor at the University of Connecticut School of Law in Hartford. […] Kwak, a fellow at the Harvard Law School corporate governance program, said he thinks Rakoff will approve the Citigroup settlement or a rewritten version of it without any admission of liability.
• Delaware Chancery Court Hears Cheers and Critiques at Columbia, Corporate Counsel, November 21, 2011
  It’s not every day that law professors get to tell the members of the country’s premier business court—the Delaware Court of Chancery—what their academic research reveals about the bench’s decision-making. […] According to the academic literature, close to three-fifths of U.S. public companies incorporate in Delaware, providing the court with a large case flow upon which their expertise is based. In fact, said Harvard Law professor Mark Roe, U.S. corporate law is essentially made in two places: Washington, D.C.—with a mix of public policymakers, consumers, employees, unions, managers, and investors influencing the feds—and Delaware, where a smaller circle of parties (managers, boards, and investors) influences the chancery. Roe also remarked that Delaware’s own influence on Washington action is “underplayed” in the understanding of U.S. corporate law.
• Why Are Fannie & Freddie CEOs Paid So Much?, Forbes, November 16, 2011
  One could look at the Fannie/Freddie salaries as a one-off single decision on excessive pay. That would be a mistake. In fact, the salaries reflect a pervasive phenomenon of “pay without performance” at the CEO level, and in particularly in the financial sector, as documented in the insightful book by Lucian Bebchuk and Jesse Fried, Pay without Performance: The Unfulfilled Promise of Executive Compensation.
• America’s New Robber Barons, New York Review of Books, November 16, 2011
  One reason for the discrepancy between the US and other countries is that boards of directors in the US are especially willing to give their CEOs and other high level executives big raises and generous stock options. Lucian Bebchuk of Harvard has done a lot of research on this so-called “governance” issue. Meantime, as Bebchuk’s work shows, shareholder influence over executive compensation is far too weak. And there is also the issue of culture itself.
• Chancery Court Praised at NYC Meeting, Delaware Online, November 14, 2011
  At Friday’s conference, law professors and litigators all talked about the “genius” of the Delaware Chancery Court system and its influence not only on corporate America and corporate governance but on Washington and federal regulation. […] But not all the presentations on Chancery Court were positive. Professor Mark Roe of Harvard Law School talked about how some new federal regulations have been passed that appear to intrude on areas previously dominated by Chancery Court. But he also said a shift in rulings from the Delaware Chancery Court, like those that give more access to shareholders, has appeared to calm federal policymakers and their constituents. “Delaware’s position affects Washington,” he said, and vice versa.
• Has Level 3’s Executive Compensation Served Shareholder Interests?, Seeking Alpha, November 10, 2011
  Does executive compensation put executive interests over shareholder interest? This topic has received a lot of attention over the years due to spectacular failures and the economic environment. Recently I was perusing the web and came across an advertisement for a book titled “Pay without Performance” by Lucian Bebchuk and Jesse Fried. Part of the description is as follows: […]
• At Olympus, Western Questions for Old-School Ways, The New York Times, October 26, 2011
  [W]hen [Olympus’] English president, Michael C. Woodford, confronted the Japanese chairman, Tsuyoshi Kikukawa, last summer over $1 billion in murky payouts and questionable acquisitions Olympus had made during Mr. Kikukawa’s tenure, their worlds clashed. And so began a boardroom battle that has now cost both men their jobs, wiped out over half the company’s stock-market value. […] But the Olympus scandal is unusual because it follows an era of aggressive government crackdown on bribery and suspicious business deals, said J. Mark Ramseyer, a professor of Japanese legal studies at Harvard Law School. “The activity seems to have gone down quite a bit,” Mr. Ramseyer said.
• Op-Ed by Mark Roe: Clearinghouse Over-Confidence, Project Syndicate, October 2011
• High CEO Salaries Can Mean Lower Profits,The Australian, October 17, 2011
  Profitability tends to suffer when chief executives get paid significantly more than their senior executive cohort, new research shows. […] The US research Mr Jordan worked with, by economists Lucian Bebchuk, Martijn Cremers and Urs Payer, produced five conclusions about companies with a high chief executive pay slice.
• Volcker Rule To Restrict Banks’ Proprietary Trading Contains Loopholes, Experts Say, Huffington Post, October 11, 2011
  Federal regulators released on Tuesday a draft of the long-anticipated Volcker rule, a regulation that will limit large banks’ bets with their own money. […] Some experts said that […] the Volcker rule includes enough loopholes to allow banks to continue a certain amount of proprietary trading under a different name. “Unless they’re actually embedded in banks, they may have a great deal of trouble determining whether permissible or banned activities are going on,” said Andrew Tuch, a law professor at the University of Sydney and [an S.J.D. candidate] at Harvard Law School. Tuch said that the Dodd-Frank Act’s provisions for the Volcker rule unsuccessfully tried to accomplish two aims at once: promoting financial stability and reducing conflicts of interest. The Volcker rule’s effectiveness now will depend on banks’ own internal compliance, he said.
• US Banks Defer 60% of Executive Bonuses, Financial Times, October 5, 2011
  The largest US banks are deferring more than 60 per cent of senior bank executives’ bonuses, according to a survey by the Federal Reserve. […] Regulators argue this ensures employees keep their company’s overall performance in mind when taking risks but pay expert Lucian Bebchuk of Harvard Law School reckons that stock grants simply incentivise bankers and traders to take bigger risks. The more risk taken, the greater the potential the bank’s share price – and the value of the banker’s bonus – will rise, he says.
• A Growing Consensus on What to Do About Citizens United, Huffington Post, September 25, 2011
  But election wonks are not the only ones worried about the impact of corporate dollars in American elections. Corporate law experts have also voiced their objections. Corporate law professors including Bebchuk and Coates at Harvard, Jackson and Gilson at Columbia and Klausner at Stanford have expressed concern that the Supreme Court has fundamentally misunderstood how corporate democracy works.
• Governance Leaders Recognized, Corporate Secretary, September 16, 2011
  The International Corporate Governance Network (ICGN) has honored Colette Neuville, Lucian Bebchuk and Dr. Stephen Davis with awards for their outstanding contributions to corporate governance. […] The second ICGN award was presented to Professor Lucian Bebchuk of Harvard Law School, who has conducted extensive research on executive compensation and provided other extensive work in the field, including what the ICGN described as ‘unprejudiced analysis’. Bebchuk’s widely acclaimed book, co-authored by Jesse Fried and entitled Pay without performance: the unfulfilled promise of executive compensation, was published in 2004.
• One Thing Can Stop Corporations From Buying the 2012 Election: Transparency, Atlantic, September 13, 2011
  Op-ed by James Kwak, Program on Corporate Governance Fellow: As the 2012 campaign season draws near, one of the major questions is what impact corporate spending will have on the balance of power in Washington and around the country. […] Last month, an all-star committee of corporate law professors petitioned the Securities and Exchange Commission to write rules requiring corporate disclosure of political activities.
• Picking Apart the ‘Ponzi Scheme’: Is Rick Perry Right?, ABC News, September 9, 2011
  Social Security “is a Ponzi scheme,” presidential candidate Rick Perry said during Wednesday’s Republican debate. “It is a monstrous lie. It is a Ponzi scheme to tell our kids that are 25 or 30 years old today, ‘You’ve paid into a program that’s going to be there.’ Anybody that’s for the status quo with Social Security today is involved with a monstrous lie to our kids, and that’s not right.” But to be a true Ponzi scheme the federal government would have to convince people to voluntarily pay […] “The critical thing that makes a Ponzi scheme despicable to me is the fraud, and Perry’s exaggerating a little bit if he’s implying that there is fraud,” said Harvard Law professor Mark Roe.
• Fulfilling the Promise of ‘Citizens United,’ Washington Post , September 6, 2011
  An opinion piece by HLS Professor John C. Coates and Public Citizen’s Taylor Lincoln: The Supreme Court’s January 2010 Citizens United decision to permit corporations to spend unlimited sums to influence federal elections was premised on a pair of yet-unfulfilled promises: Corporations would disclose their expenditures, and shareholders would be able to police such spending. The best chance to fulfill those promises may now rest with the Securities and Exchange Commission. The SEC could require disclosure of political spending by public companies and facilitate action by shareholders to sign off on such spending.
• The U.S. Legal System: Good At Some Things, Wretched At Others, Forbes, September 6, 2011
  One thing President Obama won’t talk about in his jobs speech Thursday is the deadening effect of litigation on the U.S. economy. And maybe he’s right to ignore it. […] It’s the unique aspects of U.S. law — specifically, class actions and mass torts — that give the entire system a bad name. That’s the conclusion of Harvard Law School’s J. Mark Ramseyer and Eric Rasmusen of Indiana University in a paper I recently stumbled across. The paper, “Are Americans More Litigious?” is filled with the statistics tort-reformers love to trundle out.
• From Blood Transfusions to Poison Pills, Deal Magazine, September 2, 2011
  Interview with William B. Chandler III, former Chancellor Delaware’s Court of Chancery: I got the views of all of my colleagues on the court on both the pill question, which was Airgas II, and on the bylaw question, which was Airgas I. They were very helpful to me in writing it and getting it out in a timely way. If the question is, “Would I have written this as long or in the same way?” probably not, because back when I wrote Unitrin in the mid-1990s, there hadn’t been as much ink spilled by academics. You saw a lot of academic references in the opinion, and that probably resulted in a slightly different approach to how to write it, because I was writing it for the parties but also acknowledging the views of various academics on this question from professor [Lucian] Bebchuk to others.
• SEC Proposal Would Disclose Political Donations by Public Companies, Washington Post, August 31, 2011
  A group of 10 law professors filed a formal petition asking the [Securities and Exchange Commission] to require corporations to list political contributions in annual proxy statements sent to shareholders. The professors cite a growing interest among shareholders for disclosure of political contributions. “Many shareholders recognize that the interests of executives and directors with respect to political spending might differ from those of shareholders,” said Lucian Bebchuk, a Harvard Law School professor who co-chaired the group of professors seeking the new rule. “Such shareholders are naturally concerned when, as is commonly the case, their company provides them with no information about its political spending.”
• More Board Elections Mean Easier Targets for Icahn, MarketWatch, August 23, 2011
  As recently as 2000, almost two-thirds of America’s biggest companies maintained a controversial policy that discourages hostile takeovers and limit the kinds of investor insurgencies Icahn and others have conducted at dozens of U.S corporations. […] The policy – known as a staggered or classified board – typically means than every year only a third of the corporation’s directors come up for election.[…] Harvard Law School Professor Lucian Bebchuk, a leader in efforts to declassify boards, cites a study he conducted that found classified boards are associated with lower firm valuation.
• Will Funny Money Elect The Next President?, United Press International, August 21, 2011
  Is the American political process drowning in corporate money, dammed-up funds in long confinement finally set loose by a U.S. Supreme Court decision so controversial even its supporters defend it with a wink and a smirk? […] Concern over the source of independent money led 10 corporate law law professors, including Harvard Law School’s Lucian Bebchuk and Columbia Law School’s Robert Jackson, to petition the Securities and Exchange Commission, The Wall Street Journal reported Aug. 5.
• Courts Should Curb Executive Pay, National Law Journal, August 15, 2011
  Well-respected scholars of corporate law have also pointed out that CEO remuneration is not geared to rewarding the performance of those top officers. In their book Pay Without Performance, professors Lucian Bebchuk and Jesse Fried of Harvard Law School attacked what they call the “official view” that directors fix executive pay in arm’s-length negotiations with corporate leaders to provide them incentives to increase shareholder wealth. In reality, those top executives set their own pay through captured boards that they control.
• Op-Ed by Mark Roe: America’s First Debt Crisis, Project Syndicate, August 2011
• Law Professors Ask SEC to Require Disclosure of Campaign Donations, Wall Stret Journal, August 5, 2011
  A group of 10 corporate law professors asked the Securities and Exchange Commission to require corporations to disclose to shareholders most political spending. […] The law professors, led by Lucian Bebchuk, of Harvard Law School, and Robert Jackson, of Columbia Law School, argue that while the Supreme Court declared unconstitutional any restrictions on corporate speech during elections, the high court’s ruling in the case, Citizens United v. Federal Election Commission, assumed shareholders would be able to monitor the use of corporate resources on political activities.
• SEC Urged To Make Companies List Political Spending, Reuters, August 5, 2011
  A group of securities law experts are pushing for federal regulations forcing companies to reveal how much they spend on political activities. The 10 professors have formally petitioned the U.S. Securities and Exchange Commission to quickly write rules requiring regular disclosures to shareholders. […] The group of academics includes Lucian Bebchuk from Harvard Law School; John Coffee from Columbia Law School; James Cox from Duke Law School; Robert Jackson, Jr. from Columbia Law School; and Donald Langevoort from Georgetown Law School.
• SEC Urged To Require Disclosure of Corporate Political Spending, Dow Jones Newswires, August 5, 2011
  A group of 10 law professors is asking the Securities and Exchange Commission to draft rules requiring public companies to disclose the political contributions they make, a followup to a recent Supreme Court decision prohibiting the government from banning corporate spending in political campaigns. […] The petition is led by Lucian Bebchuk, of Harvard Law School, and Robert Jackson, of Columbia Law School.
• Are Dual-Class Shares Bad For Investors?, SmartMoney, August 1, 2011
  The News Corp. phone hacking scandal has drawn attention to a class issue on Wall Street. Most traded companies have only one type of common stock. A small number of firms, including several media giants, issue two: one class for anyone who wishes to buy a stake and another with super voting rights that allows a privileged few to hoard operational control. Is that dual system bad for returns? […] Media firms, including the New York Times Company and the Washington Post Company, also use dual-class structures to protect their editorial vision from potentially hostile shareholders, says Guhan Subramanian, a professor at Harvard Business School and Harvard Law School who teaches corporate governance.
• Op-Ed by James Kwak: What Do You Mean, ‘Government Is Too Big’?, Atlantic, July 18, 2011
• Icahn’s Power Stems from His People, Boston Globe, July 5, 2011
  Investor Carl Icahn is dispatching his Harvard team to a new corporate confrontation at yet another medical company. […] Most recently, Icahn has challenged the management at drugmaker Forest Laboratories Inc., the company that paid $1.2 billion for Newton’s Clinical Data Inc. in February. He acquired 6.9 percent of the company’s shares and proposed four candidates for a nine-member board. Among them: Richard Mulligan and Lucian Bebchuk.
• 10 Things CEOs Won’t Tell You, SmartMoney, July 5, 2011
  It’s shocking to discover the average CEO of an S&P 500 company made $11.4 million in total compensation in 2010. That’s enough to pay the salaries of more than 250 firefighters, according to the AFL-CIO. But for investors, there’s more to executive compensation than pure sticker shock. Over the years, a series of academic studies have tied higher CEO pay to lower returns for shareholders. […] How much the CEO makes compared to the other executives in the C-suite also matters: Companies where the CEO grabs a bigger piece of the total compensation pie awarded to the top five executives tend to have a lower value and generate lower stock returns as the CEO’s share of the pay pie increases, according to a 2009 study by Harvard Law School professor Lucian Bebchuk and colleagues at the Yale School of Management and INSEAD.
• When Companies Do the Right Thing, Motley Fool, July 1, 2011
  Good corporate governance isn’t just the right thing to establish; it may also encourage better shareholder returns. The Harvard Law School Forum on Corporate Governance and Financial Regulation recently published empirical evidence supporting the purely financial reasons in favor of declassifying boards. According to studies the forum cited in its blog post, classified boards can be correlated with lower valuation, worse performance, and value-destroying acquisitions.
• Op-Ed by Mark Roe: How Capitalist is America?, Project Syndicate, June 2011
• Why they’re winning on CEO pay, Washington Post, June 24, 2011
  We’ve been having this argument about executive pay for 30 years, and we’re still pretty much where we began: Executives think the market has affirmed that they are worth every penny of what they get, and the rest of us think they’re grossly overpaid. By my lights, the best academic work on this subject has been done by two law school professors, Lucian Bebchuk and Jesse Fried at Harvard, who unlike most finance professors understand that the market for executive compensation is essentially rigged. Their studies have found that the top five executives capture about 10 percent of the net profits of large public companies, up from about 5 percent in the early 1990s, which means that it has a material effect on shareholders. […] Put more simply, the firms with high CEO pay turn out not to be the best performers.
• Bonus Cuts, Pay Raises, Then Layoffs, New York Times DealBook, June 20, 2011
  It’s hardly surprising that Wall Street is bracing for layoffs. The European debt crisis is rocking the markets. New regulations are crimping bank profit centers. And smaller bonuses are sending other compensation costs soaring. […] Lucian A. Bebchuk, the director of the Program on Corporate Governance at Harvard Law School, said he was not convinced that raising salaries was the problem at all. “Look, it makes things less flexible, but not in a bad way,” he said. To Mr. Bebchuk, the larger problem is that overall compensation has not come down. “I’m surprised it hasn’t come down more.”
• U.S. Lawmakers Press Regulators on Bank Capital, Derivatives, Bloomberg, June 16, 2011
  U.S. financial regulators sought to reassure lawmakers that they can achieve global coordination and maintain industry competitiveness as they implement the biggest rewrite of Wall Street oversight since the Great Depression. […] The [House Financial Services Committee] heard testimony from a second panel including … Harvard Law School professor Hal Scott […]
• CalPERS, CalSTRS told to back political disclosure, Pensions & Investments, June 3, 2011
  CalPERS and CalSTRS would have to support proxy proposals calling for disclosure of political spending by corporations under a request by Bill Lockyer, California state treasurer and a trustee of both retirement systems. […] His letters cites two academic studies that he said show a negative link between a company’s political spending and its shareholder value. One is by John C. Coates IV, professor of law and economics at Harvard Law School; the other by Rajesh K. Aggarwal, professor in financial markets and institutions, Carlson School of Management, University of Minnesota, and two other academics.
• Do We Really Need 2 Shareholders Suits Challenging Warner Deal?, Thomson Reuters, May 20, 2011
  […] That’s probably not going to sit very well with the judges of Delaware Chancery Court, who have lately been on the warpath about M&A shareholder suits being litigated in multiple jurisdictions. You’ve heard about Vice-Chancellor Travis Laster’s fit of pique in the Nighthawk case, but he’s not the only one. As (plaintiffs lawyer!) Mark Lebovitch of Bernstein Litowitz Berger & Grossmann wrote this week in a comprehensive post on multiforum deal litigation at the Harvard Law School Forum on Corporate Governance blog, “The current system is prone to manipulation and gamesmanship [and] the judiciary is becoming more sensitive to some of these issues.”
• Companies Rewarded for All-Cash Deals, Wall Street Journal, May 17, 2011
  U.S. corporations are learning that it’s impossible to hide $1 trillion in cash on their balance sheets. Both investors and bankers alike are clamoring to get their hands on it. Today, Jim Woolery, North American co-head of M&A at J.P. Morgan, makes his pitch for why companies are well served using some of that cash to make acquisitions. His argument: right now, markets are rewarding those that do. (Woolery’s research can be found here at the Harvard Law School Forum on Corporate Governance and Financial Regulation blog.)
• APS Elects Four from Harvard, Harvard Gazette, May 17, 2011
  The American Philosophical Society, the oldest learned society in the United States, recently elected four new members from Harvard into this year’s class of scholars. The society, founded in 1743 by Benjamin Franklin for the purpose of “promoting useful knowledge,” honors and engages distinguished scientists, humanists, social scientists, and leaders in civic and cultural affairs […] This year’s elected members from Harvard follow: Ben Heineman, senior fellow, Belfer Center for Science and International Affairs; distinguished senior fellow, Harvard Law School.
• The Raj Insider Dealing Sideshow, Reuters, May 12, 2011
  And in fact the times of worst excess in compensation are exactly the same times when shares are rising to unsustainable peaks, as in 2000 and 2007, as boards and executives play a cozy game of writing and cashing in share options. Now theoretically shareholders can oust boards and thereby impose pay discipline on executives, but the reality is that there are massive impediments to them doing so. Lucian A. Bebchuk, a Harvard Law School professor, went so far as to describe the idea of the power of the shareholder franchise as a “myth,” though given the way investors are treated like children perhaps the better term would be fable.
• The Case Against Favored Treatment Of Derivatives, The Deal, May 10, 2011
  Perhaps the best widely available review of resolution authority issues comes in University of Pennsylvania law professor and bankruptcy expert David Skeel’s “The New Financial Deal: Understanding the Dodd-Frank Act and its (Unintended) Consequences,” which was published earlier this year […] Now Skeel gets some academic support. Harvard Law School’s Mark Roe has a new paper in the Stanford Law Review, “The Derivatives Market’s Payment Priorities as Financial Crash Accelerator,” that tackles the same subject and makes roughly the same recommendations. Roe focuses on the failures of AIG, Bear Stearns Cos. and Lehman Brothers and argues that this “favored treatment” of derivatives and repurchase agreements, which gives them super-priority status in a bankruptcy situation, sapped “the failed firms’ counterparties’ incentives to account well for counterparty risk – the risk that their financial trading partner would fail.”
• Declassification: Florida Strikes Back at Entrenched Corporate Boards, BNET, May 10, 2011
  While other shareholder activists have taken on CEO pay not tied to performance and the responsible (or irresponsible) directors who approve it, Florida’s state pension fund has quietly made unprecedented progress in making all directors accountable to shareholders on an annual basis. The Florida State Board of Administration (FSBA), the $158.9 fund administered by the state for pensions and other purposes, has announced that seven major companies have agreed to eliminate their classified boards. Instead of electing directors to staggered three-year terms so that only a third of them are put to a vote each year, the companies have agreed to switch to annual election of the entire board. Working with the American Corporate Governance Institute (ACGI), headed by Harvard Law School professor Lucian Bebchuk, FSBA has withdrawn shareholder proposals in exchange for a promise to switch to annual election […]
• 7 CEOs Who’ve Made Over $200 Million Since 2006, Business Insider, May 7, 2011
  Overall, the financial crisis may have had a positive effect on CEO compensation. “Short-term incentive has been de-accentuated over the last year or two, and long-term incentive has been restored,” says James Reda, managing director of the executive compensation firm James F. Reda & Associates. When CEOs are incentivized over the long-term, they tend to make decisions that are good for the enduring strength of their company rather than ones that boost stock prices – and compensation — in the short term, according to a 2010 paper by Harvard Law Professor and corporate governance expert Lucian A. Bebchuk.
• Quiet Proxy Season Means Fewer Fights in the Boardroom, New York Times DealBook, May 3, 2011
  Proxy season is a bust. Shareholder activism intended to spur change in the boardroom is down significantly so far this year. At the same time, activism by hedge funds to oppose takeover transactions is rising. […] And the corporate governance activist Lucian A. Bebchuk at Harvard Law School and his American Corporate Governance Institute have continued to push for boards to hold annual elections of directors instead of electing directors in one-third tranches each year, making them harder to unseat.
• Revered Chandler Leaving Chancery Court, The News Journal, April 25, 2011
  In a significant development for the state’s lucrative incorporation business, the chief judge of the Delaware Court of Chancery will leave the bench in June. […] Mark Roe, a corporate law professor at Harvard Law School, said given the court’s contribution to the state coffers, it may be necessary to increase their compensation. One of the court’s great strengths is its continuity of judges. “It’s not a good trend if too many judges leave too quickly because they find better financial opportunities off the bench,” Roe said. “That would risk having stable, high-quality judges.”
• Capital Market Regulation Needs an Overhaul, Wall Street Journal, April 20, 2011
  An opinion piece by HLS Professor Hal Scott: Securities and Exchange Commission Chair Mary Schapiro recently informed the House Committee on Oversight and Government Reform that the SEC is reviewing ideas to reduce the regulatory burdens on small-business capital formation. This should translate into a review of how we regulate offerings in private and public markets. Both need major fixes.
• Op-Ed by Mark Roe: Fukushima and Derivatives Meltdowns, Project Syndicate, April 2011
• ‘Eroded’ Takeover Law Favors Directors, Delaware’s Chief Business Judge Says, Westlaw Journal, April 18, 2011
  Delaware case law balancing the conflicting interests of directors and shareholders in corporate takeovers has been “eroded,” tilting the merger and buyout playing field in favor of management, the state business court’s chief judge said at a legal conference Monday. […] Chandler presided over a recent high-profile case involving a takeover battle between Airgas Inc. and Air Products & Chemicals. […] Famed Harvard law professor Lucian Bebchuk predicted that at least one of the takeover defenses that Airgas relied on, the “staggered board” provision, will fade away as shareholders refuse to approve them for the charters of new companies.
• More Directors Face Yearly Votes, Wall Street Journal, April 18, 2011
  This proxy season, an unusually high proportion of companies have accepted activists’ demands that all board members stand for annual elections by shareholders, replacing staggered terms for directors that typically last three years. […] The Florida State Board of Administration and the Nathan Cummings Foundation, advised by Harvard law professor Lucian Bebchuk, recently dropped half of 28 resolutions seeking yearly elections after 14 of the big companies they targeted agreed—ahead of a vote—to support the change at 2011 or 2012 annual meetings. […] Board declassification “could be expected to benefit shareholders by improving firm value and performance,” Mr. Bebchuk says.
• Are CFOs Smarter Than CEOs — or Do They Just Invest That Way?, BNET, April 14, 2011
  Lucian A. Bebchuk, J. Martijn Cremers, and Urs Peyer have created a new measure they have dubbed the CEO Pay Slice to assess the relative importance of the CEO within the hierarchy of a firm, with a paper examining the proportion of the total pay for the top five executives at a firm that goes to the CEO as a component of performance. My firm, GovernanceMetrics International, considers it a red flag if the ratio of the CEO’s pay to the median pay of other named executive officers is 3x or more.
• Peltz Pushes Greater Latitude in Proxy Voting, MarketWatch, April 4, 2011
  Shareholder activist Nelson Peltz on Monday applauded a provision in the Dodd-Frank financial-reform law, held up by a lawsuit from a top business lobby, intended to give stockholders a greater say in corporate board elections. […] “He wants and it seems a reasonable idea that once he satisfies all the disclosure requirements, there would be some card that has all the candidates, dissident and management candidates, and people can make their choices from the options there,” said Harvard Law School Professor Lucian Bebchuk.
• At Forum for Deal Makers, M.&A. Meets the Law, New York Times DealBook, March 29, 2011
  The 23rd annual Tulane Corporate Law Institute, an annual gathering of deal makers in New Orleans, begins on Thursday […] A number of roiling issues are at the top of the deal-making agenda. […] The proper balance of takeover defenses will be a topic at Tulane. The Delaware Chancery Court recently allowed Airgas the use of a poison pill to defeat a hostile bid by Air Products. […] But the decision is spurring shareholder activists to seek work-arounds. Lucian A. Bebchuk, a Harvard Law professor and a leading advocate for shareholders, has written that shareholders need to increase their lobbying efforts to force corporations to drop staggered boards because of Airgas.
• Is Ford CEO Alan Mulally Overpaid?, CBS MoneyWatch, March 23, 2011
  United Auto Workers President Bob King is not happy with the $54.5 million compensation package Ford Motors CEO Alan Mulally is receiving for his performance at the company. […] But theory does not always translate into practice, and high CEO pay may cause performance to get worse rather than better. A recent paper by Lucian Bebchuk, Martijn Cremers and Urs Peyer found that the pay slice of CEOs has been increasing over time, and CEOs receive a larger fraction of the total pay of the top four executives than they did in the past.
• The Conference Board Issues Poison Pill Recommendations, Conference Board, March 18, 2011
  The recent Delaware Court of Chancery Air Products v. Airgas decision and the spate of poison pill adoptions in recent months lends credence to the theory that the anti-takeover shareholder rights plans are alive and well. […] However, in a Feb. 24 Wall Street Journal Op-Ed piece (An Antidote for the Corporate Poison Pill) the well-known Harvard Law School professor and director of its corporate governance program, Lucian Bebchuk, warns that while the Delaware court decision upholds the validity of certain poison pills, pressure by shareholders could “substantially limit their toxicity.”
• Compensation for Corporate Directors Rises Sharply, USA Today, March 4 2011
  Compensation for corporate directors is rising sharply, a USA TODAY analysis of 2011 proxy filings finds. Behind the gains: higher cash retainers, fees and rising values of stock and stock option grants. […] Harvard University governance expert Lucian Bebchuk says paying for savvy board members is worthwhile for shareholders. But excessive pay has drawbacks.
• Inequality and Political Power, New York Times Economix, March 3, 2011
  Inteview with Jacob Hacker and Paul Pierson – Hacker: As Lucian Bebchuk of Harvard and others have documented, many features of American corporate pay practices seem designed to maximize C.E.O. leverage and minimize oversight— something the corporate scandals of the early 2000s cast in stark light.
• Op-Ed by Mark Roe: The Economic Future of Egypt’s Revolution, Project Syndicate, February 2011
• ‘Go Shop’ Can Be a Fig Leaf for a Deal to Hide Behind, New York Times DealBook, February 28, 2011
  The “go shop” on Wall Street is quickly becoming a “no shop.” […] as the recent sale of J. Crew and other management-led buyouts show, the go-shop process looks more like window dressing — a way to subvert a true auction and enrich management. … in most cases, the structure of the deals may be spooking potential bidders. Incumbent managers, said Guhan Subramanian, a Harvard professor who studied the effectiveness of a go-shop period, have “a significant advantage over other potential buyers.”
• How to End the Housing Mess, Boston Globe, February 25, 2011
  There are solutions that could restore a normal housing market […] Howell Jackson of Harvard Law School wants government to use its power of eminent domain to turn securitized loans back into whole mortgages. The reduced market value of the security would translate into a subsidy for the new mortgage. [This] approach would enable millions of distressed homeowners to keep their homes, and thus arrest the decline in real estate values.
• Lehman Bankruptcy Seen Undeterred by Laws Curbing Compensation, Bloomberg, February 23, 2011
  The Financial Crisis Inquiry Commission said last month that Wall Street pay practices pushed traders and managers to disregard risk. New rules must include longer restrictions on selling shares and require higher levels of stock ownership among top traders and managers in order to be effective in promoting risk awareness, said compensation experts including Harvard Law School professor Lucian Bebchuk.
• Op-Ed by Lucian Bebchuk: An Antidote for the Corporate Poison Pill, Wall Street Journal, February 2011
• A Pill of a Swan Song, TheDeal Magazine, February 18, 2011
  Chancellor William B. Chandler III’s Feb. 15 opinion finding for Airgas Inc. in a case where Air Products and Chemicals Inc. sought to force Airgas to redeem its poison pill is one of the most remarkable decisions from a Delaware court in many years. […] As he came to the end of the opinion, Chandler nodded to the two great antagonists in the debate over the poison pill, Lucian Bebchuk of Harvard Law School and Martin Lipton, the lawyer most closely identified with the pill, whose firm, Wachtell, Lipton, Rosen & Katz, represented Airgas.
• Buzz Tracker, New York Times DealBook, February 2, 2011
  Staggered Boards and Valuations: A new research paper from Lucian Bebchuk, Alma Cohen and Charles Wang finds that while the Delaware courts “appear to disagree, the markets believe that staggered boards are value reducing.”
• Harvard Professor Warns of Cutting Regulators’ Budgets, Wall Street Journal, January 26, 2011
  House Republicans have appeared to harden their stance in recent days against giving funding increases to regulators that were authorized in the Dodd-Frank financial-overhaul law. In particular, they’ve discussed blocking hefty budget increases for the Securities and Exchange Commission and the Commodity Futures Trading Commission. But squeezing regulators’ budgets could create serious problems for the financial system, warned Hal Scott, a Harvard Law School professor who testified before the House Financial Services Committee Wednesday.
• Investors Want a Right to Know About CEO Health, Wall Street Journal, January 24, 2011
  Apple Inc.’s limited disclosure about its ailing chief executive is stirring debate about whether corporate boards should be forced to tell investors more about ill leaders and CEO succession plans. […] “Unless there are SEC standards for disclosures about CEO health, the recalcitrant boards won’t discuss what the diagnosis or the illness is,” contends Ben Heineman […] [ a senior fellow of the Program on the Legal Profession at Harvard Law School and senior fellow of the Belfer Center for Science and International Affairs at the Kennedy School of Government].
• Air Products Ruling Will Set Takeover Benchmark, Financial Times, January 23, 2011
  Defining moments in corporate law are pretty infrequent. […] But this week promises one […] as a Delaware court assesses the latest legal battle in the year-long hostile takeover attempt by Air Products of its industrial gases rival Airgas. […] “Delaware wants to continue to be the pre-eminent jurisdiction on corporate law issues,” says Prof Guhan Subramanian, a corporate governance expert at Harvard Law School. “If it strays too far in the balance between boards and shareholders, there is potential for the federal government to step in and take over certain aspects of corporate law.”
• Oxford’s New B-School Dean Readies a Game Plan, Businessweek, January 12, 2011
  A Q&A with incoming University of Oxford Said Business School Dean Peter Tufano: Q. How do you envision shaping the curriculum at Said? Any plans to add new classes or programs? A. I personally won’t be creating new classes, but I firmly believe innovation and pedagogy can be incredibly powerful, not only for students but faculty. At Harvard, I co-teach a class with Howell Jackson, of Harvard Law School, on consumer finance. We look at consumer finance businesses and how the consumer financial sector is regulated, as well as the psychological and social side. The students who leave that class are well-armed with not just one perspective, but multiple perspectives of the consumer, businesses, and regulators.