The Public and Private Faces of Derivative Lawsuits

Derivative suits, long the principal vehicle for discussions about representative litigation in corporate and securities law, now share the stage with younger cousins - securities fraud class actions and state law fiduciary duty class actions. At the same time alternative governance vehicles - independent directors, auditors and other reforms that have followed in the wake of Enron - potentially diminish the relative place of litigation such as derivative suits. This article presents data from all derivative suits filed in Delaware over a two-year period. We find a relatively small number, certainly as compared to fiduciary class action and securities fraud class actions. Unlike these other representative suits, derivative suits are used for both public and close corporations. They arise usually in a duty of loyalty context. Contrary to earlier studies, we do not find evidence that these cases are strike suits yielding little benefit. Instead, roughly 30% of the derivative suits provide relief to the corporation or the shareholders, while the others are usually dismissed quickly with little apparent litigation activity. In cases producing a recovery to shareholders, those amounts typically exceed the amount of attorneys\u27 fees awarded by a significant margin. They do demonstrate some indicia of litigation agency costs (for example suits being filed quickly, multiple suits per controversy, and repeat plaintiffs\u27 law firms), but each of these is much less pronounced for derivative suits than for other forms of representative litigations. Overall, the claim that derivative suits are strike suits is much weaker than in earlier periods. The Delaware judiciary, which hears most public company corporate litigation in America, has effectively monitored these cases. There is room to open the door for larger shareholders to utilize these suits to police corporate misconduct. Institutional shareholders, while not willing to take on as large a role in governance as many have suggested in terms of naming directors and the like, may be willing to take a larger role in derivative litigation. Thus we see potential for derivative litigation to play a more important role in the future. We therefore suggest that suits brought by a one percent or larger shareholder should be excused from the demand requirement currently applied in derivative suits

The New Look of Shareholder Litigation: Acquisition-Oriented Class Actions

Now, however, a new form of shareholder litigation has emerged that is distinct from derivative or securities fraud claims: class action lawsuits filed under state law challenging director conduct in mergers and acquisitions. The empirical data reported in this article show that these acquisition-oriented suits are now the dominant form of corporate litigation and outnumber derivative suits by a wide margin. Are these acquisition-oriented class actions just another deadbeat in the corporate governance debate? Should policymakers take action to cut back on the development of this new form of shareholder litigation? In this paper, we argue that, just as with derivative suits and securities fraud class actions, good policy must balance the positive managerial agency cost reducing effects of these acquisition-oriented shareholder suits against their litigation agency costs. To frame our analysis of acquisition-oriented class actions, we begin with a look back at the history of this debate over representative litigation in corporate and securities law. For six decades, there have been efforts to limit shareholder derivative suits. These suits, in which one shareholder sues in the name of and on behalf of the corporation, are. usually brought to enforce various fiduciary duties that officers and directors owe corporations and their shareholders. They thus can be contrasted to normal corporate litigation in which directors determine what actions to take for the corporation. Derivative suits were once said to have promise as a means to limit managerial agency costs

Shareholder Voting in an Age of Intermediary Capitalism

Shareholder voting is a key part of contemporary American corporate governance. As numerous contemporary battles between corporate management and shareholders illustrate, voting has never been more important. Yet, traditional theory about shareholder voting, rooted in concepts of residual ownership and a principal/agent relationship, does not reflect recent fundamental changes as to who shareholders are and their incentives to vote (or not vote). In the first section of the article, we address this deficiency directly by developing a new theory of corporate voting that offers three strong and complementary reasons for shareholder voting. In the middle section, we apply our theory to a world where most shares are held by institutional investment intermediaries (and mostly within retirement plans). We show that intermediaries’ business plans give them little reason to vote those shares and even create conflicts of interest that may distort their votes. Yet several key developments have countered that reality and opened the way for voting’s new prominence. First, government regulations now require many institutions to vote their stock in the best interests of their beneficiaries. Second, subsequent market innovations led to the birth of third party voting advisors, including Institutional Shareholder Services (ISS), which help address the costs of voting and the collective action problems inherent in coordinated institutional shareholder action. Third, building on these developments, hedge funds have aggressively intervened in corporate governance at firms seen as undervalued, regularly using the ballot box to pressure targeted firms to create shareholder value, thereby giving institutional shareholders a good reason to care about voting. But there is more to the corporate franchise than hedge fund inspired voting. Say on Pay proposals, Rule 14a-8 corporate governance proposals, and majority vote requirements for the election of directors, are all important, recurrent topics involving shareholder votes. We must also explain why these lower value votes should be held. In our concluding section, we apply our theory to examine when shareholder voting is justified. We examine hedge fund activism as an example of high value voting situation and Say on Pay votes as an illustration of lower value cases where there are still good reasons to have shareholder votes

Mortality From Postoperative Myocardial Infarction in Nonthoracic Surgical Patients at a Community Hospital

In a 20-month prospective study, 35 patients with postoperative myocardial infarction were identified. All patients referred to cardiologists by nonthoracic surgeons were evaluated for evidence of postoperative myocardial infarction as defined by symptoms, electrocardiographic changes, and cardiac enzyme elevation. Ten of the 35 patients (29%) subsequently died, seven (20%) from the myocardial infarction. Twenty-five of the 35 patients (71%) had preexisting coronary artery disease. Reported experience with patient mortality following postoperative myocardial infarction varies from 28% to 69%. Our patient mortality rate at 29%, though still substantial, is lower than many current reports. Despite close perioperative surveillance of patients with coronary artery disease, the morbidity and mortality remains unacceptably high. Physicians should routinely evaluate the surgical patient thoroughly for cardiac risk

Is U.S. CEO Compensation Inefficient Pay Without Performance?

In Pay Without Performance, Professors Lucian Bebchuk and Jesse Fried develop and summarize the leading critiques of current executive compensation practices in the United States. This book, and their highly influential earlier article, Managerial Power and Rent Extraction in the Design of Executive Compensation, with David Walker offer a negative, if mainstream, assessment of the state of U.S. executive compensation: U.S. executive compensation practices are failing in a widespread manner, and much systemic reform is needed. The purpose of our Review is to summarize the book and to offer some counterarguments to try to balance what is becoming an increasingly one-sided debate. The book\u27s thesis is that executive compensation practices in the U.S. benefit corporate executives at the expense of shareholders through implicit and explicit corruption of the pay-setting process. It argues that CEO employment contracts are bad for shareholders (not optimal ) because they are the product of managerial power. Managerial power arises, the authors claim, because boards of directors at public companies are beholden to the firm\u27s top executives, largely due to management\u27s control over the director nomination process. Weak compensation committees thus do little to protect the firm in its pay negotiations with the CEO, leading to levels of executive pay that are both inappropriately high and have inappropriately low levels of incentives. The only constraint on this process is outrage, either among the firm\u27s shareholders or the general public. This outrage constraint, however, only polices extreme cases of executive overcompensation

Kalb-Ramond excitations in a thick-brane scenario with dilaton

We compute the full spectrum and eigenstates of the Kalb-Ramond field in a warped non-compact Randall-Sundrum -type five-dimensional spacetime in which the ordinary four-dimensional braneworld is represented by a sine-Gordon soliton. This 3-brane solution is fully consistent with both the warped gravitational field and bulk dilaton configurations. In such a background we embed a bulk antisymmetric tensor field and obtain, after reduction, an infinite tower of normalizable Kaluza-Klein massive components along with a zero-mode. The low lying mass eigenstates of the Kalb-Ramond field may be related to the axion pseudoscalar. This yields phenomenological implications on the space of parameters, particularly on the dilaton coupling constant. Both analytical and numerical results are given.Comment: 10 pages, 13 figures, and 2 tables. Final version to appear in The European Physical Journal

Atherosclerosis in Indigenous Tsimane: A Contemporary Perspective

The Horus and other research teams have found that atherosclerosis is not uncommon in ancient people through the study of their mummified remains (Murphy et al., 2003; Allam et al., 2009, 2011; Thompson et al., 2013, 2014). However, some have postulated that traditional hunter-gatherers are in some ways healthier than modern people and that they had very little atherosclerotic disease (O’Keefe et al., 2010). The aim of this study was to evaluate the burden of atherosclerosis in a population alive today but living a traditional lifestyle similar to that experienced by past populations. This led to the Tsimane Health and Life History Project Team (THLHP) (Gurven et al., 2017) and the Horus Study Team combining efforts to evaluate the prevalence and extent of coronary atherosclerosis in the Tsimane of Bolivia (Kaplan et al., 2017)