Bebchuck's "Case for Increasing Shareholder Power": An Opposition
Responding to Lucian Arye Bebchuk, The Case for Increasing Shareholder Power, 118 Harv. L. Rev. 833 (2005)
The central argument of the Article is that the traditional, director-centered corporate form should be replaced in favor of a novel governance system of Bebchuk's own invention — a regime that nominally retains directorial primacy, but in fact eviscerates directorial discretion by vesting directly in shareholders the authority to change the company's charter and authorize mergers and other transformative corporate events. As Vice Chancellor Strine's "corporate law traditionalist" recognizes, the Bebchuk approach would undermine "the core element of the Delaware way: the empowerment of centralized management to make and pursue risky business decisions through diverse means."
This is a proposal for radical and risky change, offered notwithstanding — with no recognition of — the enormous historical success of the Delaware approach. The adage "if it ain't broke don't fix it" does not begin to capture the risk of Bebchuk's agenda. One would rather have to say something like "if it has performed superlatively over the course of generations, and the visible preferences of the market confirm its wisdom, and its continued proper functioning is central to the nation's economy, don't gratuitously disassemble it." In our view, the "case for increasing shareholder power" is exceedingly weak, and in this space we summarize several of our core objections.
118 Harv. L. Rev. F. 43 (2005) | DOWNLOAD PDF
