Vol. 20, No. 17 |
June 14, 2001 |
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Center for Corporate Governance holds first major seminar
The University of Delaware Center for Corporate Governance sponsored its first major symposium May 18-19, attracting leading lawyers, corporate officers and scholars from across the nation to consider the effects of a 1985 Delaware Supreme Court decision that has had a profound impact on the actions of corporate boards of directors. ?"The symposium exceeded even our highest expectations," Charles Elson, Edgar S. Woolard Jr. Chair in Corporate Governance, said. "The discussions, both formal and informal, amongst so professional, diverse and experienced a group made the event unique and exciting." The case of Smith vs. Van Gorkom–a shareholder suit brought against Trans Union Corp. CEO Jerome K. Van Gorkom and the board of directors over the sale of the company to the Marmon Group in 1981–is a staple in business classrooms, according to Elson, who directs UD's Center for Corporate Governance. In a split decision, the state justices ruled against Van Gorkom and members of the board, who essentially rubber-stamped the decision by the chief executive officer to sell Trans Union to Marmom. The majority opinion was written by Judge Henry R. Horsey, who attended the symposium as a panelist. The decision held that individual directors bear liability for their actions and the result of that finding was a major change in boardroom behavior, with directors increasingly turning to independent advisers and not simply relying on the recommendations of corporate management before making decisions. The symposium opened Friday evening, May 18, at the Wilmington Club with keynote addresses by E. Norman Veasey, current chief justice of the Delaware Supreme Court, and Bruce S. Chelberg, former Trans Union attorney and a defendant in the suit. It continued with a daylong session Saturday, May 19, at Arsht Hall on UD's Wilmington Campus, which was attended by more than 120 persons. Four panels discussed various issues associated with the 1985 decision. Veasey led a panel that looked at the legal results and implications of the decision, Delaware Court of Chancery Judge William B. Chandler III led a panel that considered the effect of the decision on board behavior, former Chancellor William T. Allen led a panel that critiqued the decision and discussed its consequences, and Elson led a panel that considered alternative approaches to the Van Gorkom model. UD President David P. Roselle welcomed guests to the opening dinner at the Wilmington Club, where he praised Elson who, he said, is "rapidly establishing himself as one of the nation's leading proponents for sound corporate governance and, through activities such as this symposium, is drawing the University and Delaware's distinguished legal community closer together." Veasey called Smith vs. Van Gorkom "a watershed case in Delaware jurisprudence," noting that it reached the state Supreme Court at the height of the turbulent takeover era and changed the ways boards behave. Chelberg, on the other hand, noted that the Supreme Court was deeply divided on the issue in handing down a 3-2 decision. He joked that given the distinguished audience on hand, it was hard not to argue for a review of the case. However, Horsey said that having re-read the case, he would have decided it the same way today. "I think we highlighted the importance of outside directors–directors who are really outside, who are really independent," he said. The symposium was held in cooperation with the American Bar Association Committee on Corporate Laws, the American Society of Corporate Secretaries, the National Association of Corporate Directors and the Northwestern University Law Review. Northwestern University Law School Dean David Van Zandt said that institution was honored to participate in the symposium, particularly given that the case had its origins in Chicago, where Trans Union and Marmom have corporate offices. Elson called the symposium "a great inaugural event for the center." –Neil Thomas Photo by Tom Nutter |
