Shareholder Rights: Harvard Law and CalPERS are Idiots
For years, there have been two very vocal voices in the debate over corporate governance: CalPERS and Harvard Law School. Unsurprisingly, both are idiots.
For years, CalPERS has argued that their focus on corporate governance improves returns. Bullshit. There is absolutely no evidence of that. Most of what we are now talking about as "corporate governance" is crap - the real issues have been solved, we are now just making up shit to give law school professors something to do. Which would bring me to the article below... but first... time to savor a little humble pie.
"Alfred Villalobos, a former member of the CalPERS board who hired himself out to several big investment firms, plainly on the expectation that he would use his connections to get them business. According to a lawsuit filed last year by the state attorney general's office, Villalobos made $47 million from 2005 to 2009 by getting CalPERS to invest $4.87 billion with his clients.
The AG's lawsuit and a just-released report on the Villalobos affair prepared for CalPERS by the Washington law firm Steptoe & Johnson paint a picture of corruption, moral corrosion and board-level inattention staggering in scale.
CalPERS directors and officials accepted gifts, cut secret deals and tried to subvert professional standards to serve Villalobos' clients. Some of the ugliest behavior is laid to Fred Buenrostro, a Villalobos crony who served as CalPERS chief executive from 2002 to 2008, during which period Villalobos allegedly paid for his travel, first-class accommodations and even part of his wedding. After leaving CalPERS, Buenrostro took a job with Villalobos."
Ahh... that's just fantastic. The amazing thing is that CalPERS is now somehow back claiming that they are improving the world by pushing to "improve" company's corporate governance standards... when some of the very same corrupt idiots are still in the organization.
But back to HLS, that den of arrogance and self-importance:
Harvard’s Shareholder Rights Project is Wrong
The Harvard Law School Shareholders Rights Project (SRP) recently issued joint press releases with five institutional investors, principally state and municipal pension funds, trumpeting SRP’s representation of and advice to these investors during the 2012 proxy season in submitting proposals to more than 80 S&P 500 companies with staggered boards, urging that their boards be declassified. The SRP’s “News Alert” issued concurrently reported that 42 of the companies targeted had agreed to include management proposals in their proxy statements to declassify their boards – which reportedly represented one-third of all S&P 500 companies with staggered boards. The SRP statement “commended” those companies for what it called “their responsiveness to shareholder concerns.”
This is wrong. According to the Harvard Law School online catalog, the SRP is “a newly established clinical program” that “will provide students with the opportunity to obtain hands-on experience with shareholder rights work by assisting public pension funds in improving governance arrangements at publicly traded firms.” Students receive law school credits for involvement in the SRP. The SRP’s instructors are two members of the Law School faculty, one of whom (Professor Lucian Bebchuk) has been outspoken in pressing one point of view in the larger corporate governance debate. The SRP’s “Template Board Declassification Proposal” cites two of Professor Bebchuk’s writings, among others, in making the claim that staggered boards “could be associated with lower firm valuation and/or worse corporate decision-making.”
There is no persuasive evidence that declassifying boards enhance stockholder value over the long-term, and it is our experience that the absence of a staggered board makes it significantly harder for a public company to fend off an inadequate, opportunistic takeover bid, and is harmful to companies that focus on long-term value creation. It is surprising that a major legal institution would countenance the formation of a clinical program to advance a narrow agenda that would exacerbate the short-term pressures under which American companies are forced to operate. This is, obviously, a far cry from clinical programs designed to provide educational opportunities while benefiting impoverished or underprivileged segments of society for which legal services are not readily available. Furthermore, the portrayal of such activity as furthering “good governance” is unworthy of the robust debate one would expect from a major legal institution and its affiliated programs. The SRP’s success in promoting board declassification is a testament to the enormous pressures from short-term oriented activists and governance advisors that march under the misguided banner that anything that encourages takeover activity is good and anything that facilitates long-term corporate planning and investment is bad.
Staggered boards have been part of the corporate landscape since the beginning of the modern corporation. They remain an important feature to allow American corporations to invest in the future and remain competitive in the global economy. The Harvard Law School SRP efforts to dismantle staggered boards is unwise and unwarranted, and – given its source – inappropriate. As Delaware Chancellor Leo Strine noted in a 2010 article : “stockholders who propose long-lasting corporate governance changes should have a substantial, long-term interest that gives them a motive to want the corporation to prosper.”
Martin Lipton
Theodore N. Mirvis
Daniel A. Neff
David A. Katz
For years, CalPERS has argued that their focus on corporate governance improves returns. Bullshit. There is absolutely no evidence of that. Most of what we are now talking about as "corporate governance" is crap - the real issues have been solved, we are now just making up shit to give law school professors something to do. Which would bring me to the article below... but first... time to savor a little humble pie.
"Alfred Villalobos, a former member of the CalPERS board who hired himself out to several big investment firms, plainly on the expectation that he would use his connections to get them business. According to a lawsuit filed last year by the state attorney general's office, Villalobos made $47 million from 2005 to 2009 by getting CalPERS to invest $4.87 billion with his clients.
The AG's lawsuit and a just-released report on the Villalobos affair prepared for CalPERS by the Washington law firm Steptoe & Johnson paint a picture of corruption, moral corrosion and board-level inattention staggering in scale.
CalPERS directors and officials accepted gifts, cut secret deals and tried to subvert professional standards to serve Villalobos' clients. Some of the ugliest behavior is laid to Fred Buenrostro, a Villalobos crony who served as CalPERS chief executive from 2002 to 2008, during which period Villalobos allegedly paid for his travel, first-class accommodations and even part of his wedding. After leaving CalPERS, Buenrostro took a job with Villalobos."
Ahh... that's just fantastic. The amazing thing is that CalPERS is now somehow back claiming that they are improving the world by pushing to "improve" company's corporate governance standards... when some of the very same corrupt idiots are still in the organization.
But back to HLS, that den of arrogance and self-importance:
Harvard’s Shareholder Rights Project is Wrong
The Harvard Law School Shareholders Rights Project (SRP) recently issued joint press releases with five institutional investors, principally state and municipal pension funds, trumpeting SRP’s representation of and advice to these investors during the 2012 proxy season in submitting proposals to more than 80 S&P 500 companies with staggered boards, urging that their boards be declassified. The SRP’s “News Alert” issued concurrently reported that 42 of the companies targeted had agreed to include management proposals in their proxy statements to declassify their boards – which reportedly represented one-third of all S&P 500 companies with staggered boards. The SRP statement “commended” those companies for what it called “their responsiveness to shareholder concerns.”
This is wrong. According to the Harvard Law School online catalog, the SRP is “a newly established clinical program” that “will provide students with the opportunity to obtain hands-on experience with shareholder rights work by assisting public pension funds in improving governance arrangements at publicly traded firms.” Students receive law school credits for involvement in the SRP. The SRP’s instructors are two members of the Law School faculty, one of whom (Professor Lucian Bebchuk) has been outspoken in pressing one point of view in the larger corporate governance debate. The SRP’s “Template Board Declassification Proposal” cites two of Professor Bebchuk’s writings, among others, in making the claim that staggered boards “could be associated with lower firm valuation and/or worse corporate decision-making.”
There is no persuasive evidence that declassifying boards enhance stockholder value over the long-term, and it is our experience that the absence of a staggered board makes it significantly harder for a public company to fend off an inadequate, opportunistic takeover bid, and is harmful to companies that focus on long-term value creation. It is surprising that a major legal institution would countenance the formation of a clinical program to advance a narrow agenda that would exacerbate the short-term pressures under which American companies are forced to operate. This is, obviously, a far cry from clinical programs designed to provide educational opportunities while benefiting impoverished or underprivileged segments of society for which legal services are not readily available. Furthermore, the portrayal of such activity as furthering “good governance” is unworthy of the robust debate one would expect from a major legal institution and its affiliated programs. The SRP’s success in promoting board declassification is a testament to the enormous pressures from short-term oriented activists and governance advisors that march under the misguided banner that anything that encourages takeover activity is good and anything that facilitates long-term corporate planning and investment is bad.
Staggered boards have been part of the corporate landscape since the beginning of the modern corporation. They remain an important feature to allow American corporations to invest in the future and remain competitive in the global economy. The Harvard Law School SRP efforts to dismantle staggered boards is unwise and unwarranted, and – given its source – inappropriate. As Delaware Chancellor Leo Strine noted in a 2010 article : “stockholders who propose long-lasting corporate governance changes should have a substantial, long-term interest that gives them a motive to want the corporation to prosper.”
Martin Lipton
Theodore N. Mirvis
Daniel A. Neff
David A. Katz
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