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2014

Is The Harvard Shareholder Rights Program Breaking The Law?, ValueWalk, December 18, 2014

The Harvard Shareholder Rights Program (HSRP) has spent the last few years pushing back against board staggering, where directors are given multi-year terms so that they don’t all go up for re-election at the same time (the Senate, for example, follows a similar system). The ‘Harvard Proposal,’ developed by the project, has been used in more than 100 campaigns against large US companies by shareholders trying to force boards to de-stagger, and the HSRP is credited with pushing the public debate steadily against staggered (or classified) boards. But according to Stanford professor of law and business Joseph Grundfest and SEC commissioner Daniel Gallagher, the ‘Harvard Proposal’ is illegal because it misleads shareholders.

Did Harvard Violate Federal Securities Law? SEC Commissioner Gallagher Thinks So, Business Law Prof Blog, December 13, 2014

In a new paper posted to SSRN, SEC Commissioner Daniel Gallagher and Professor Joseph Grundfest accuse the [Harvard Shareholder Rights Project] of making misleading statements regarding the benefits of declassified boards. They suggest that Harvard could be vulnerable to lawsuits by shareholders or the SEC under Rule 14a-9, which forbids false statements in proxy solicitations. The paper, with the provocative title “Did Harvard Violate Federal Securities Law?” is discussed in the Wall Street Journal.

SEC’s Gallagher says Harvard liable for proposals, CQ Roll Call, December 12, 2014

Daniel M. Gallagher, a Republican commissioner at the Securities and Exchange Commission, said the agency could bring enforcement action against Harvard University alleging that a law school project presented materially false or misleading data in shareholder proposals to declassify company boards. Harvard Law School’s Shareholder Rights Project, which works on behalf of shareholders seeking to improve corporate governance, has assisted shareholders in submitting almost 130 proposals to companies requesting that their board members face reelection annually. Those proposals were misleading, Gallagher said in a paper co-written with Stanford Law School professor Joseph Grundfest.

SEC Commissioner Warns Harvard of Vulnerability, Wall Street Journal, December 10, 2014

A top official at the Securities and Exchange Commission has taken the unusual step of saying Harvard University could be vulnerable to legal action from the agency or investors over a corporate governance project. In an academic paper, Daniel Gallagher, one of five SEC commissioners, criticized the Shareholder Rights Project at Harvard, which helps large investors like pension funds file shareholder ballot measures meant to help investors get more influence over corporate boards. … Lucian Bebchuk, director of the Harvard project, rejected any suggestion the project’s efforts violate securities laws, saying its work is “entirely consistent with SEC rules and not false or misleading in any way.”

Bonuses influence where bankers go but it’s not all about pay, The Conversation, December 1, 2014

Finally, it has been argued that large compensation packages for senior executives of companies may have more to do with the so-called agency problem than with either competition for managerial talent or failure in the market for managerial talent. Boards can find it difficult to negotiate compensation packages of executives without giving these executives a significant influence over their compensation packages. Such managerial power over their own pay obviously has direct implication for the level of the compensation and Bebchuk and Fried argue that managerial influence over their own pay can also de-couple their pay from firm performance.

Poison Pill Adoptions Head for Record Low, Agenda, November 24, 2014

Harvard University law professor Lucian Bebchuk, a longtime critic of using poison pills to block takeovers, particularly disapproves of pills used to block [shareholder] activists. “State law, including Delaware law, still provides boards with expansive and in my view excessive latitude to adopt both types of pill,” Bebchuk says in an e-mail response. “In my opinion, anti-activists pills are especially pernicious because an activist’s purchase of a significant stake falling far short of control tends to benefit rather than harm non-selling shareholders.”

Perspectives on Investor Activism, National Law Review, November 10, 2014

A forthcoming paper (by Lucian Bebchuk, Alon Brav, and Wei Jiang) examines the operating and stock price performance of firms that are targets of hedge fund activists. The authors document neutral to positive performance for the five years following activism, which they interpret as evidence against the claim that “myopic” activists push for short-term improvements that sacrifice value in the long run.

Did Bill Ackman just kill the poison pill?, Fortune, November 6, 2014

Lucian Bebchuk, a Harvard professor who has called laws that uphold poison pills provisions unconstitutional in the past, isn’t claiming a victory yet. He says the California judge’s ruling doesn’t change much. Activists always had the ability to vote out board members to get around poison pill agreements. “The poison pill remains highly relevant and [is still] the key defense tool that targets use to block offers,” says Bebchuk.

Voters are left in the dark on campaign spending by corporations, The Los Angeles Times, November 1, 2014

Shareholder interest in how much money their companies spend on politics, and where, is high. In recent years, according to a study by Lucian Bebchuk of Harvard and Robert L. Jackson Jr. of Columbia, disclosure of such spending has been the top subject of shareholder proposals at U.S. public companies.

Federalist Society 2014 National Lawyers Convention, The Washington Post, October 30, 2014

The Federalist Society’s 2014 National Lawyers Convention is happening Thursday, November 13 to Saturday, November 15, and it should be an excellent event. Speakers will include Justices Scalia and Alito, Senators Mike Lee and Orin Hatch, former Attorney General Michael Mukasey, former ACLU head Nadine Strossen, Carly Fiorina, and former BB&T Corp. head John Allison (now head of Cato). Academic panelists will include — among many others — Richard Epstein, Chai Feldblum, Gail Heriot, Lucian Bebchuk, Jonathan Turley, Neal Katyal, Randy Kennedy, our own Jonathan Adler and Nick Rosenkranz, and me [Eugene Volokh].

As Dark Money Floods U.S. Elections, Regulators Turn a Blind Eye, Newsweek, September 30, 2014

In addition, nearly a dozen senators and more than 40 members of the House have supported [the SEC rulemaking petition], according to one of the petition’s drafters, Lucian Bebchuk, a professor of law, economics and finance at Harvard. Bebchuk scoffs at those who say new rules to disclose corporate political spending will hurt confidentiality. “One could understand such an argument for letting individuals anonymously contribute their money,” he told Newsweek. “But such an argument loses its force when public companies make political contributions. In such a case, executives contribute not their own money but shareholders’ money, and there is little basis for allowing them to keep the contribution hidden from the shareholders whose money is spent.”

Time to put an end to the cult of shareholder value, Globe and Mail, September 26, 2014

Paul Polman, the CEO of Unilever, thinks American-style capitalism is broken, and he blames, in good part, the cult of shareholder value that has been all the rage since the 1980s. … He has railed against the theories of economists and biz-school gurus like Milton Friedman, Michael Jensen and Lucian Bebchuk, the high apostles of shareholder power and democracy.

Alibaba IPO bulls are missing some red flags, Wall Street Journal MarketWatch, September 20, 2014

Harvard University Professor Lucian Bebchuk, director of the Harvard Law School’s Program on Corporate Governance, noted that the governance issues “are concerns that go to the economic value of the shares at present. To the extent that public investors can be expected not to share a significant portion of the value will produce, that should be reflected in investors’ current valuation of the stock.”

Alibaba sets IPO share price, aims to raise $25 billion, but investors get warning, The Japan Times, September 19, 2014

Harvard law professor and governance specialist Lucian Bebchuk meanwhile warned that the structure, which allows inside minority shareholder control at Alibaba, is worrisome. “With an absolute lock on control and a limited fraction of the equity capital, the Alibaba insiders will have substantial incentives to divert value from Alibaba to other entities,” Bebchuk said in a New York Times blog this week.

Alibaba’s IPO, The Conglomerate, September 19, 2014

Investors apparently aren’t listening to Harvard Law’s Lucian Bebchuk, who earlier this week expressed governance worries about the firm, particularly its control by insiders. In Alibaba, control is going to be locked forever in the hands of a group of insiders known as the Alibaba Partnership. These are all managers in the Alibaba Group or related companies. The Partnership will have the exclusive right to nominate candidates for a majority of the board seats. Furthermore, if the Partnership fails to obtain shareholder approval for its candidates, it will be entitled “in its sole discretion and without the need for any additional shareholder approval” to appoint directors unilaterally, thus ensuring that its chosen directors always have a majority of board seats.

The Risks of Alibaba’s Wall Street Splash, The Diplomat, September 19, 2014

Writing in the New York Times, Harvard law School’s program director on corporate governance Lucian Bebchuk warns that despite the IPO, the corporate structure of Alibaba allows for control “to be locked forever in the hands of a group of insiders known as the Alibaba Partnership. These are all managers in the Alibaba Group or related companies. The Partnership will have the exclusive right to nominate candidates for a majority of the board seats,” despite only holding a small percentage of the company’s equity capital. This type of structure could allow the board to make deals that are beneficial to companies that these members have a substantial stake in, but that might be unfavorable to Alibaba.

Five things to know about Alibaba’s leadership, The Washington Post, September 18, 2014

Since insiders have so much control over the board, some governance experts wonder what that means for the board’s independence and efficacy. Harvard Law School’s Lucian Bebchuk, for example, detailed his concerns in a recent New York Times piece.

Everything You Need to Know About Alibaba and its Mega-IPO, Time, September 18, 2014

The Partnership structure was rejected by the Hong Kong Stock Exchange, which is how Alibaba ended up on Wall Street in the first place. Though members of the Partnership must have a “meaningful” equity stake in Alibaba, according to the company prospectus, it’s not spelled out how large the stake must be. As Harvard Law School professor Lucian Bebchuk points out, partners could choose to later pare down their stakes in Alibaba and attempt to influence the company in ways that are not beneficial to other shareholders (remember, Yahoo and Softbank have basically handed their votes to the Partnership).

Alibaba’s stock market listing a risky prospect as insiders hold all the cards, The Guardian, September 18, 2014

Lucian Bebchuk, a professor of law, economics and finance at Harvard Law School, put the problem this way in a sharp piece for the New York Times: “With an absolute lock on control and a limited fraction of the equity capital, the Alibaba insiders will have substantial incentives to divert value from Alibaba to other entities in which they own a substantial percentage of the equity. This can be done by placing future profitable opportunities in such entities, or making deals with such entities on terms that favour them at the expense of Alibaba.”

4 reasons to skip the Alibaba IPO frenzy, CBS MoneyWatch, September 18, 2014

As Harvard Law School professor Lucian Bebchuk noted in The New York Times, “insiders have a permanent lock on control of the company but hold only a small minority of the equity capital.” It means a small group has total control of Alibaba. “With an absolute lock on control and a limited fraction of the equity capital, the Alibaba insiders will have substantial incentives to divert value from Alibaba to other entities in which they own a substantial percentage of the equity,” Bebchuk wrote.

Levine on Wall Street: Calpers’s Exit and Alibaba’s Debut, Bloomberg View, September 17, 2014

Here is Lucian Bebchuk: “It is important for investors, however, to keep their eyes open to the serious governance risks accompanying an Alibaba investment.” He focuses on the fact that the people who run Alibaba hold only a relatively small chunk of the equity, and so are not aligned with shareholders; in particular Jack Ma is a bigger owner of Alipay than he is of Alibaba (itself the result of a transaction that left people a bit puzzled), and so the worry is that he will seek to benefit Alipay at the expense of Alibaba shareholders.

Can Alibaba Shares Climb Wall of Worry?, Barron’s, September 17, 2014

In a coluimn in the New York Times Tuesday, Lucian Bebchuk, a professor who heads Harvard Law School’s program on corporate governance, writes that investors need to “keep their eyes open to the serious risks accompanying an Alibaba investment.” For one, insiders have a permanent lock on control of the company but hold only a small minority of the equity capital,” Bebchuk writes. “Then, there are many ways to divert value to affiliated entities, but there are weak mechanisms to prevent this. Consequently, public investors should worry that, over time, a significant amount of the value created by Alibaba would not be shared with them.”

Op-Ed by Lucian Bebchuk: Alibaba’s Governance Leaves Investors at a Disadvantage, New York Times DealBook, September 16, 2014

Record Response Urges SEC To Require Disclosure Of Corporate Political Spending, MintPress News, September 11, 2014

“The overwhelming support from public comments the petition has attracted, and the strength of the arguments for transparency put forward in the petition, provide a strong case for SEC initiation of a rulemaking process,” Lucian Bebchuk, director of the corporate governance program at Harvard Law School and one of a group of academics who, in 2011, submitted the original petition on the issue, said at a press conference here last week. “Furthermore, opponents of the petition have failed in their comments to provide any good basis for avoiding such a process.”

Corporate Money In Politics: 1 Million Comments Flood SEC Over Political Spending Proposal,International Business Times, September 9, 2014

“The court’s First Amendment analysis has long given the SEC considerable deference in the development of rules that provide investors with information necessary to facilitate the functioning of securities markets,” wrote Lucian A. Bebchuk of Harvard University and Robert J. Jackson Jr. of Columbia Universtiy. They noted the Supreme Court’s Citizens United decision reaffirmed the right of the government to mandate disclosure of political spending.

Have Economists Been Captured by Business Interests?, Harvard Business Review, September 8, 2014

Economists with appointments at business schools are more likely to give a thumbs up to executive pay than those without — and this even after controlling for “the Bebchuk effect” caused by the extreme productivity of executive pay critic Lucian Bebchuk, who teaches law, economics, and finance at Harvard Law School.

One Million Comments Urge the SEC to Stop Secret Corporate Political Spending, Truthout, September 8, 2014

“The overwhelming support from public comments the petition has attracted, and the strength of the arguments for transparency put forward in the petition, provide a strong case for SEC initiation of a rulemaking process,” said Lucian Bebchuk, professor and director of the program on Corporate Governance at Harvard Law School and co-chair of the committee that filed the petition. “Furthermore, opponents of the petition have failed in their comments to provide any good basis for avoiding such a process.”

One Million Americans Want Corporations to Reveal Political Spending, Moyers & Company, September 8, 2014

A coalition of academics, good-government advocacy groups and shareholder activists announced last week that one million Americans have written the Securities and Exchange Commission (SEC) asking for a rule to make corporations reveal how they spend money for political purposes. … In a blog post, [Robert] Jackson and fellow petitioner Lucian Bebchuk noted that the issue had attracted far more comments than any other the SEC had ever considered. Asked why, Bebchuk, a widely cited professor of law, economics and finance at Harvard, said, “The case for transparency in this area is clear and compelling to a broad spectrum of people, including individuals who would otherwise not consider expressing a view on SEC matters. The current freedom of public companies to spend money on politics without telling their investors is clearly unacceptable to a large number of people who care enough about it to write to the SEC.”

Study Says Activist Investors Good For Long Term, ValueWalk, August 21, 2014

Harvard University’s Lucian Bebchuk, Duke University’s Alon Brav and Columbia University’s Wei Jiang examined activist targets from 1994 to 2007, monitoring the stock price of activist target stocks against a benchmark index three years before and five years after the target intervention month. In almost all cases, the activist intervention improved long term stock performance.

Do Hedge Funds Create Sustainable Company Growth?, IEDP Blog, August 18, 2014

Three researchers, Lucian Bebchuk of Harvard Law School, Alon Brav of Duke Fuqua School of Business, and Wei Jiang of Columbia Business School […] discovered that despite much hype to the contrary the long-term effect of hedge funds and ‘activists shareholders’ is largely positive. They tested the conventional wisdom that interventions by activist shareholders, and in particular activist hedge funds, have an adverse effect on the long-term interests of companies and their shareholders and found it was not supported by the data.

Activist investors impeding energy development, Kitchener-Waterloo Record, August 7, 2014

Many shareholders have the view that activist investors are a panacea to unlock hidden value. In fact, a recent paper by Lucian Bebchuk, Alon Brav and Wei Jiang showed that stocks rose nearly six per cent after activist investors got involved and that the gains were not temporary.

Should you follow an activist into a stock?, Fortune, July 24, 2014

Evidence shows that buying stocks after change-oriented campaigns are instigated can yield superior returns for several years. … S&P Capital IQ examined 874 companies between 2003 and 2013 and found that those targeted by activists outperformed the Russell 3000 by 6.3 percentage points in the 23 days before and after the initial filing an activist made with the Securities and Exchange Commission. (About half of that rise occurred before the filing.) Lucian Bebchuk, a Harvard Law School professor who also heads the university’s Program on Corporate Governance, found similar initial gains in a study of some 2,000 activist campaigns between 1994 and 2007.

Through the looking glass: CEO pay in China’s listed companies, Vox, June 24, 2014

Ever since Bebchuk and Fried (2004) argued CEOs are able to exploit their managerial power to extract rents, economists in the West have worried about CEOs’ ability to ‘skim’ profits from firms, particularly when there are weak corporate governance structures in place.

Cash allowances for CEOs? They’re not kids, USA Today, May 24, 2014

Governance experts say allowances, some in lieu of other perks, some on top of other corporate freebies, are unwarranted. “There’s little economic logic for public companies to reward top executives with perks,” says Lucian Bebchuk, director of Harvard Law School’s Program on Corporate Governance.

What Thomas Piketty Gets Wrong About Capitalism, Reason.com, May 23, 2014

For [Thomas] Piketty, the only plausible explanation for skyrocketing executive pay is self-dealing: managers are taking advantage of weak corporate governance to benefit themselves at the expense of shareholders. This is certainly a popular view, and it has its scholarly defenders—most notably, Lucian Bebchuk and Jesse Fried at Harvard Law School.

Clash Over Darden Board Will Be Measure of Activist Clout, Wall Street Journal, May 22, 2014

Harvard Law Prof. Lucian Bebchuk, who has led the campaign for annual elections, arguing it improved accountability in many companies, said he doesn’t expect many fights for full control, as institutional shareholders “have displayed considerable reluctance to awarding a majority of board seats to a dissident group.”

Bruner Book Club: The Relationship between the Corporation, Employees, and Social Welfare,PrawfsBlawg, May 13, 2014

Lucian Bebchuk, for example, is perhaps the scholar most associated with shareholder primacy, but he has been excoriated by business groups for being a tool of not only activist shareholders but also public-employee pension funds.

Is This Warren Buffet or Thomas Piketty?, Huffington Post, May 1, 2014

Most scholars claiming that high pay for CEO is rent seeking or appropriation from stockholders explain that the problem is that most big public corporations in the US have a dispersed ownership: The board members have a principal agent problem – they are “captured” by management and have no real incentive to negotiate the compensation at arm’s length. Shareholders, they explain don’t have a real voice in the board. Professor Lucian Bebchuk from Harvard together with Professor Jessie Fried from Harvard Law School articulated those ideas 10 years ago in a series of papers and book “Pay without performance”.

How to Outsmart Activist Investors, Harvard Business Review, May, 2014

[Shareholder activists] buy stocks they view as undervalued and pressure management to do things they believe will raise the value, such as giving more cash back to shareholders or shedding divisions that they think are driving down the stock price. […] Multiple studies have shown that activism succeeds in raising share prices, at least temporarily. A major recent study by Lucian Bebchuk, Alon Brav, and Wei Jiang of activist investments from 1994 through 2007 also found five-year improvements in the operating performance of targeted companies.

CNBC’s David Faber Speaks with Carl Icahn, Chairman Icahn Enterprises [Transcript], CNBC, April 23, 2014

“You know, there’s a guy Lucian Bebchuk that has done a study showing how well companies do, for years and years after you have activism.”

Carl Icahn defends Ackman, slams Lipton, CNBC, April 23, 2014

Icahn added that contrary to [Martin] Lipton’s claims, he has invested “billions” in his companies and helps many of them for the long term. He also cited recent research by Harvard Law School professor Lucian Bebchuk that shows the long-term benefits to companies of activist investor involvement.

Activists Wept for There Were No More Worlds to Conquer, Wall Street Journal, April 22, 2014

The exotic came into view on Monday, when Valeant Pharmaceuticals International Inc. announced a pre-emptive alliance with activist William Ackman to coax Allergan Inc. into a $40 billion-plus merger. […] The stock market applauded the approach, pushing up both Valeant and Allergan shares. Similarly, a highly-cited and controversial 2013 study by Harvard Law School’s Lucian Bebchuk of 2,000 activist situations found that operating performance at affected companies actually improved over time.

Why Give Hedge Fund Raiders 10 Days to Disclose?, Bloomberg View, April 22, 2014

Outside investors must disclose their stakes publicly within 10 days after reaching the 5 percent mark […] This is a subject that Harvard Law School professor Lucian Bebchuk and famed corporate lawyer Marty Lipton have been arguing about for years in various open forums. […] Bebchuk has argued that the disclosure rules for large stockholders don’t need to be changed. In his view, outside blockholders can be a useful check on entrenched, inefficient management and shouldn’t be discouraged from acquiring stakes.

Time to rein in grossly overpaid CEOs, Al Jazeera America, April 21, 2014

The question is how much does the CEO contribute compared with the next person in line for the job? Given the experience of large corporations in other countries, there is every reason to believe that there are lots of next people who could do the job as well or better and for much less. (Anyone who believes that CEO pay actually reflects the CEO’s value to the company should read Lucien Bebchuk’s outstanding book, Pay Without Performance.)

Now It’s Strine Taking Aim at Bebchuk Over Governance, American Lawyer, March 25, 2014

Delaware Supreme Court Chief Justice Leo Strine has challenged Harvard Law School professor Lucian Bebchuk to rethink his focus on unfettered shareholder democracy. […] According to Strine’s essay, the crux of his disagreement with Bebchuk is the unequal treatment that boards get compared to shareholders, not all of whom necessarily have long-term value at heart themselves.

Activists crash dealmaker party, Breakingviews, March 25, 2014

Uppity investors publicly targeted 237 companies last year, an 8 percent increase from 2012, according to Activist Insight. And while Lipton, of the New York firm Wachtell, Lipton, Rosen & Katz, and Harvard shareholder-rights advocate Lucian Bebchuk still publicly butt heads over whether such investors seek long-term value or just a quick buck, the tone is decidedly less combative behind the scenes.

Strine: Stop shareholder activism from hurting American investors, Reuters, March 25, 2014

Strine also says that because Bebchuk and his allies have succeeded in persuading corporations to get rid of staggered board seats – an outcome the chief justice isn’t happy about – institutional investors ought to “get smart and learn to love the (poison) pill.”

Dealpolitik: Are Poison Pill Takeover Defenses Unconstitutional?, Wall Street Journal, March 25, 2014

Two prominent corporate law professors are arguing in a paper soon to be published in the Columbia Law Review that the ubiquitous poison pill used by target companies to defend against hostile takeovers is vulnerable to being challenged as unconstitutional. […] In reaching the conclusion that courts may someday reject poison pills as unconstitutional, Professors Lucian Bebchuk of Harvard and Robert Jackson of Columbia look back at two U.S. Supreme Court cases decided in the 1980s, in the relatively early days of takeovers.

Bebchuk Fires Back at Lipton in Williams Act Debate, American Lawyer, March 18, 2014

A contentious debate over the validity of the so-called poison pill defense against unsolicited corporate takeover continued to simmer Monday, after Harvard Law School professor Lucian Bebchuk parried Wachtell Lipton Rosen & Katz founding partner Martin Lipton’s scathing response to a recent paper coauthored by Bebchuk that suggests the 45-year-old federal law known as the Williams Act is the best weapon for defeating such a takeover defense.

Academic highlight: Rethinking securities class actions, SCOTUSblog, March 7, 2014

[Economists] have long debated the efficient capital markets thesis, which may be why the Court is now taking a second look at Basic. Academic experts in securities law are weighing in as well in the hopes of shaping the Supreme Court’s view of these issues. In their article Rethinking Basic — cited in both both sides’ briefs — Lucian Bebchuk and Allen Ferrell argue that Justices should avoid addressing the thorny question whether markets are perfectly efficient, and instead focus on whether there has been actual fraudulent distortion of market price — a determination they argue can be made through the use of “event studies.”

Law Profs Bebchuk, Johnson Float Poison Pill Preemption Tactic, American Lawyer, March 5, 2014

Two legal academics say it is time for a close examination of a 45-year-old federal statute that they believe could be employed to preempt state laws that allow so-called poison pill defenses against unwanted corporate takeovers. In a paper entitled, “Toward a Constitutional Review of the Poison Pill,” Harvard Law School professor Lucian Bebchuk, who directs the school’s corporate governance program, and Robert Jackson Jr., an associate professor of law at Columbia Law School, write that the potential of the law in question, the Williams Act, to trump poison pills has been largely ignored since its passage in 1968.

Anything you can do, Icahn do better, The Economist, February 15, 2014

[Critics] argue that activists encourage firms to do things that boost their share price in the short run but harm their long-term performance. This critique has plenty of adherents, in academia, business and government. Yet empirical proof that activists exacerbate short-termism is strangely elusive. Indeed, such evidence as there is suggests the opposite.“The Long-Term Effects of Hedge-Fund Activism”, a recent paper by Lucian Bebchuk of Harvard Law School and others, examined the roughly 2,000 interventions at companies by activist funds from 1994 to 2007. Over the five years following an intervention both the share price and the operating performance of the target company improved, on average. The operating performance got stronger towards the end of the five-year period, not weaker.

Even Among the Richest of the Rich, Fortunes Diverge, New York Times, February 10, 2014

By just about any measure, earnings for executives are near their highs, achieved during the stock-market bubble that occurred around the millennium. Not all of that increased compensation for managers is because of improving performance, either. The growth of earnings for executives has outpaced growth in the stock market or in corporate earnings, by a wide margin. So why are executives making so much? Researchers point to a few causes. Executives seem to have managed to co-opt passive corporate boards to extract fatter and fatter compensation packages, for one. “Boards have not been operating at arm’s length from the executives whose pay they set,” Lucian A. Bebchuk and Jesse M. Fried of Harvard Law School contend in an exhaustive study of the phenomenon. “The constraints imposed by market forces and shareholders’ power to intervene are not tight enough to prevent such deviations.”

Better way to elect directors, Pensions & Investments, February 3, 2014

If proxy voting is the principal way shareholders influence corporate governance and the direction of corporations, the rules of the Securities and Exchange Commission fall short in enabling shareholders in contested elections to select the combination of nominees they believe will best foster long-term value creation. … Lucian A. Bebchuk, professor of law, economics and finance at Harvard Law School, calls the shareholder franchise a myth, in part because of constraints on shareholders’ voting choices.

Overhaul of Israel’s Economy Offers Lessons for United States, New York Times, January 7, 2014

In October 2010, the Israeli government formed a committee of 10 government regulators known as the concentration committee to examine the issue of the tycoons’ control of the Israeli economy. The committee was advised by Lucian A. Bebchuk, a Harvard Law professor and occasional contributor to DealBook, who strongly advocated breaking up the more significant pyramids. […] The lobbyists’ attempts to influence legislators got so bad that at one point in a Knesset committee meeting, the lobbyists were asked to identify themselves and leave the room. It even got personal, with one lawyer for the tycoons claiming in an interview with an Israeli paper that Mr. Bebchuk had “hypnotized the committee.”