Harvard Law Review - TOWARD A TRUE CORPORATE REPUBLIC: A TRADITIONALIST RESPONSE TO BEBCHUK'S SOLUTION FOR IMPROVING CORPORATE AMERICA by Vice Chancellor Leo E. Strine, Jr.

Harvard Law Review
Gannett House
1511 Massachusetts Ave
Cambridge, MA 02138

Editorial Office:
617-495-7889
617-496-5053 (fax)

Business Office:
617-495-4650
617-495-2748 (fax)

TOWARD A TRUE CORPORATE REPUBLIC: A TRADITIONALIST RESPONSE TO BEBCHUK'S SOLUTION FOR IMPROVING CORPORATE AMERICA
by Vice Chancellor Leo E. Strine, Jr. [ Full Text ]

119 Harv. L. Rev. 1759 (2006)

I am honored to have this chance to comment on Professor Lucian Bebchuk’s typically thoughtful article, The Case for Increasing Shareholder Power. In that article, Bebchuk sets out a reform proposal designed to meet some of the objections of skeptics who doubt the desirability of increasing shareholder power to influence corporate decisionmaking.
As a judge who decides corporate law cases, my essay responding to Professor Bebchuk is necessarily constrained. I will not enter the debate with my own vision of the appropriate role of stockholders in the governance of corporations. Instead, lest my essay be devoid of anything but platitudes, I present a critique of Bebchuk’s proposed reform from a particular viewpoint. That viewpoint should not be confused as representing my own. Instead, I adopt the perspective of what I will call an open-minded corporate law “traditionalist.” My description of this perspective attempts to describe fairly a school of thought about the American corporate governance system that not only has many adherents among investors, but also pervades the two major political parties whose members populate Congress and state legislatures. The substantial influence of the traditionalist perspective in our society means that in order to be successful, a proposal for the reform of corporate law such as Bebchuk’s must address traditionalist views.
This essay proceeds in four steps. Initially, I summarize Bebchuk’s policy proposal. Then, I describe in colloquial terms the perspective many traditionalist investors have about corporate governance. From there, I identify why Bebchuk’s policy proposal likely would not find favor with such investors. Finally, I set forth, for illustrative purposes, the type of proposal to increase stockholder clout that might serve as the basis for a responsible reform that would address the legitimate concerns of traditionalists. This proposal would periodically bolster the ability of stockholders to run a competing slate of directors against an incumbent board they believe is performing poorly. [ More ]

To view Harvard Law Review PDFs online you will need Adobe Acrobat Reader.
Download it here for free!