Weinberg Center panelists discuss issues of critical importance to corporate boards and investors.

Weinberg Center symposium

UD event focuses on governance issues critical to boards and investors

TEXT SIZE

12:26 p.m., April 22, 2016--This year’s recent corporate governance symposium brought to the University of Delaware campus many of the top experts in the corporate governance field.

Titled “Governance Issues of Critical Importance to Boards and Investors in 2016,” symposium attendees were welcomed by a variety of University of Delaware leaders including Nancy Targett, acting president of UD; Charles Elson, director of the John L. Weinberg Center for Corporate Governance and the conference sponsor, and Ann Mulé, the Weinberg Center’s associate director. 

Campus Stories

From graduates, faculty

As it neared time for the processional to open the University of Delaware Commencement ceremonies, graduating students and faculty members shared their feelings about what the event means to them.

Doctoral hooding

It was a day of triumph, cheers and collective relief as more than 160 students from 21 nations participated in the University of Delaware's Doctoral Hooding Convocation held Friday morning on The Green.

Also welcoming the attendees was Myron T. Steele, the former chief justice of the Delaware Supreme Court and chair of the Weinberg Center’s Advisory Board.

Mulé noted that the sold-out event presents “the opportunity to bring together an outstanding panel of governance practitioners and to showcase academic research work which focuses on governance issues deemed important by the center.”

Mulé has said on numerous occasions that one of the strengths of the Weinberg Center is that it brings together all stakeholders – academics, practitioners, thought leaders and students – at events like this one, where thoughtful discussions occur and network opportunities abound. 

The symposium began with a panel discussion featuring experts serving as public company directors, investors, proxy advisory firm principals and other representatives from the corporate and investor community, and the Delaware judiciary. 

The panel, moderated by Elson, began with individuals sharing their thoughts on which issues will matter most to boards and investors in 2016.

The panelists included:

  • Les Brun, chairman and CEO of Sarr Group LLC; chairman of the boards of Broadridge Financial Solutions Inc. and CDK Global Inc.; audit committee chair, Merck and Co. Inc.; director, Hewlett Packard Enterprise Co. and NXT Capital Inc.
  • Margaret (Peggy) M. Foran, chief governance officer, senior vice president and corporate secretary, Prudential Financial Inc.; director, Occidental Petroleum Corp.
  • Michael Garland, assistant comptroller for corporate governance and responsible investment, Bureau of Asset Management, Office of the New York City Comptroller.
  • J. Travis Laster, vice chancellor, Delaware Court of Chancery.
  • Robert M. McCormick, chief policy officer, Glass Lewis and Co.
  • Patrick S. McGurn, special counsel and head of strategic research and analysis, Institutional Shareholder Services (ISS).
  • Allie Rutherford, principal, CamberView Partners LLC.
  • Thomas E. Sandell, chairman and CEO, Sandell Asset Management Corp.
  • Anne Sheehan, director of corporate governance, California State Teachers’ Retirement System (CalSTRS).

The panel discussion began with Elson posing this question to the panelists: “What’s bugging you?” 

The first panelist to answer outlined his four major concerns: proxy access, hedge fund activism, board accountability and board responsiveness and refreshment. 

Regarding hedge fund activism, he noted that “settlement fever” has broken out, and cited several examples of what he sees as a trend based on several recent settlements and a number of major contests upcoming.

The next panelist touched on several topics she and her colleagues are paying attention to, including proxy access, board composition (particularly in the area of board diversity) and sustainability, both as a risk management issue as well as an environmental and social issue.

Other panelists were concerned about the misalignment between performance and compensation, commenting that there are more conversations now about pay for performance, and asking, “What does a compensation committee do when there is misalignment?” 

One of the panelists presented a question to the panel: “There has been a shift from a management-centric system to a shareholder-centric system. Where should the balance lay?” A lively discussion ensued.

It is fair to say that there was a great deal of disagreement among panel members on a number of issues including investor engagement, activism, settlements, proxy access and others. However, after a healthy discussion about these and other issues of concern raised by the panel, one panelist observed that the level of consensus around what is important from the panelists’ perspectives was remarkable. 

He noted that board accountability is where they are going – tenure, refreshment, diversity and proxy access. 

Following the panel discussion was a paper presentation by noted Harvard law professor Lucian Bebchuk. 

Bebchuk, the William J. Friedman and Alicia Townsend Friedman Professor of Law, Economics and Finance at Harvard University and the director of the Program on Corporate Governance at Harvard Law School, focused on the concept of the “enhanced-independent director” who would be accountable to public investors as a way to protect public investors from controlling shareholder’s opportunism.

Introducing Bebchuk, Elson explained that the Harvard professor’s “work on corporate governance is legendary.” 

The critically acclaimed author’s research is cited throughout the world. He led SSRN citation rankings for law professors at the end of 2015 and for the previous eight years in terms of the total number of citations to his work. [Note: SSRN is a multi-disciplinary online repository of scholarly research and related materials.]

Elson quipped, “So, let’s just say that when Lucian talks, the world listens.”

Bebchuk’s presentation, “Making Independent Directors Work," was based on a paper he co-authored with Assaf Hamdani, who is also a professor of law at Harvard. 

The paper’s focus was that, “To ensure that independent directors can be relied upon to monitor controlling shareholders, [it is argued], some independent directors should be accountable to public investors. This can be achieved by empowering the investors to determine or at least influence these directors’ election or retention…Enhancing the independence of some directors would substantially improve the protection of public investors without undermining the ability of the controller to set the firm's strategy.”

Afternoon session

The afternoon session included the presentation and discussion of three papers. The first paper, "Shareholder Power and Corporate Innovation: Evidence from Hedge Fund Activism,” was presented by co-author Alon Brav from Duke University. The paper examined how hedge fund activism reshapes corporate innovation. 

The discussant for this session was Sabastian V. Niles from New York City law firm Wachtell, Lipton, Rosen and Katz. This paper was received the John L. Weinberg Center best paper award at the symposium

“Who Controls Corporate Charters? Shareholder Activism and Corporate Charter Amendments” was presented by Geeyoung Min from the Millstein Center for Global Markets and Corporate Ownership at Columbia Law School. This article challenges conventional prior scholarship that has characterized corporate charters as relatively static documents that tend to serve the interests of managers over those of shareholders. 

The discussant for this session was Myron T. Steele Potter, Anderson and Corroon LLP and former chief justice of the Delaware Supreme Court.

Andrew F. Tuch from the Washington University School of Law delivered the last symposium presentation. Titled “Banker Loyalty in Mergers and Acquisitions,” the piece is a forthcoming article in the Texas Law Review. It develops a theoretical account of investment banks as fiduciaries of bank’s merger and acquisition (M&A) clients, showing why they should act loyally toward their clients unless informed client consent is obtained. 

The discussant for this paper was Laster, vice chancellor of the Delaware Court of Chancery.

Article by Deborah Blanchard

Photos by Kathy F. Atkinson and Lane McLaughlin

News Media Contact

University of Delaware
Communications and Public Affairs
302-831-NEWS
publicaffairs@udel.edu

UDaily is produced by
Communications and Public Affairs

The Academy Building
105 East Main Street
University of Delaware
Newark, DE 19716 | USA
Phone: (302) 831-2792
email: publicaffairs@udel.edu
www.udel.edu/cpa