Did corporate governance "Fail" during the 2008 stock market meltdown? The case of the S&P 500

Business Lawyer

Volumn 65, Issue 1, 2009, Pages 1-65

  Cheffins, Brian R ^a  

^a UNIVERSITY OF CAMBRIDGE   (United Kingdom)

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EID: 76849086573     PISSN: 00076899     EISSN: None     Source Type: Journal    
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References (371)

1. Ben W Heineman, Boards Fail-Again, Bus. WK. ONLINE, Sept. 26, 2008, http://www.businesseek.com/managing/content/ sep2008/ca20080925-789001.htm.
2. Anne Simpson, America's Governance Revolution Must Not Be Ducked, FIN. TIMES, May 26, 2009, at 9.
3. Grant Kirkpatrick, The Corporate Governance Lessons from the Financial Crisis, FIN. MARKET TRENDS, July 2009, at 2, available at http://www.oecd.Org/dataoecd/32/l/42229620.pdf. The report was published under the auspices of the OECD Steering Group on Corporate Governance.
4. Shareholder Bill of Rights Act, S. 1074, 111th Cong. 2(1) (2009), available at http://www.corpfinblog.corn/uploads/nlill-text-shareholders- bill-of-rights-act-of-2009(2).pdf.
5. Barry B. Burr, Shareholders See Victory in Obama Administration, PENSIONS & INVESTMENTS, NOV. 10, 2008, at 1.
6. See Thomas Frank, Financial Journalists Fail Upward, WALL ST. J., Mar. 18, 2009, at A13.
7. STANDARD & POORS, MONTHLY REPORT: WORLD BY NUMBERS 4 (Dec. 2008), available at http://www2.standardandpoors.com/spf/pdf/index/123108-WorldbyNumbers-Report.pdf (indicating stock prices in the United Kingdom fell 50.9 percent as compared with 38.7 percent in the United States).
8. Company Balance-Sheets: The Sensible Giants, ECONOMIST, May 2,2009, at 79.
9. See, e.g., Joe Nocera, Ceithner's Plan on Pay Falls Short, N.Y. TIMES, June 13, 2009, at Bl.
10. See, e.g., MARY O'SULLIVAN, CONTESTS FOR CORPORATE CONTROL: CORPORATE GOVERNANCE AND ECONOMIC PERFORMANCE IN THE UNITED STATES AND GERMANY 105-07 (2000);
11. Jeffrey N. Gordon, The Rise of Independent Directors in the United States, 1950-2005: OJ Shareholder Value and Stock Market Prices, 59 STAN. L REV. 1465 (2007).
12. Sanjai Bhaghat, Brian Bolton & Roberta Romano, The Promise and Peril of Corporate Governance Indices, 108 COLUM. L. REV. 1803,1809 (2008).
13. See O'SUUIVAN, supra note 10, at 105-07;
14. Ira M. Millstein, The Evolution of Corporate Governance in the United States-Briefly Told, in CORPORATE GOVERNANCE: CRITICAL PERSPECTIVES ON BUSINESS AND MANAGEMENT 263,271 (Thomas Clarke ed., 2005).
15. See, e.g., A.A. BERLE, JR., THE 20TH CENTURY CAPITALIST REVOLUTION (1954).
16. See Bengt Holmstrom & Steven N. Kaplan, Corporate Governance and Merger Activity in the United States: Making Sense of the 1980s and 1990s, 15 J. ECON. PERSP. 121, 129 (2001);
17. Joel Seligman, A Sheep in Wolfs Clothing: The American Law Institute Principles of Corporate Governance Project, 55 GEO. WASH. L. REV. 325,330-32 (1987).
18. J.A. LIVINGSTON, THE AMERICAN STOCKHOLDER 81 (1958).
19. See Millstein, supra note 12, at 271;
20. Henry Hansmann & Reinier Kraakman, The End of History for Corporate Law, 89 GEO. L.J. 439,444 (2001).
21. See Holmstrom & Kaplan, supra note 14, at 123.
22. See Frank Dobbin & Dirk Zom, Corporate Malfeasance and the Myth of Shareholder Value, 17 POL. POWER & SOC. THEORY 179,183 (2005).
23. See id.; Cynthia A. Montgomery, Corporate Diversification, J ECON. PERSP., Summer 1994, at 163, 166.
24. Dobbin & Zorn, supra note 18, at 183.
25. See Gordon, supra note 10, at 1515;ROBERT SOBEL, THE RISE AND FALL OF THE CONGLOMERATE KINGS 171,175-76(1984).
26. See SOBEL, supra note 21, at 186-87.
27. See Gordon, supra note 10, at 1516.
28. See Seligman, supra note 14, at 335-36;
29. Frederick Andrews, Management-Changing Americas Executive Climate, N.Y. TIMES, June 3,1977, at Dl (discussing bribes and kickbacks by Lockheed).
30. See Seligman, supra note 14, at 338.
31. See Thomas B. Hubbard, Company Boards Don't Need Uncle Sam, N.Y. TIMES, June 24, 1979, at F14.
32. See Seligman, supra note 14, at 338.
33. Ann Crittenden, World's Companies Changed by Moves for Accountability, N.Y. TIMES, Jan. 4,1978, at D7 (discussing a report by Business International Corporation).
34. Thomas C. Hayes, Board "Outsiders" Win Favor, N.Y. TIMES, Mar. 31,1980, at D1.
35. See Gordon, supra note 10, at 1481,1523-26;
36. see also Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985) (takeovers);
37. Moran v. Household Int'l, Inc., 500 A.2d 1346 (Del. 1985) (same);
38. Zapata Corp. v. Maldonado, 430 A.2d 779 (Del. 1981) (derivative litigation).
39. Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66, 13211, 107 Stat. 312, 469-71 (codified as amended at I.R.C. 162(m) (West Supp. 2009)).
40. See Millstein, supra note 12, at 278.
41. See Gordon, supra note 10, at 1531-33.
42. Dobbin & Zom, supra note 18, at 188;
43. see Holmstrom & Kaplan, supra note 14, at 134.
44. See Dobbin & Zom, supra note 18, at 188;ROBERT A.G. MONKS &NELL MINOW, CORPORATE GOVERNANCE 107 (1995).
45. See CAROLYN KAY BRANCATO, I NSTITUTIONAL INVESTORS AND CORPORATE GOVERNANCE: BEST PRACTICES FOR INCREASING CORPORATE VALUE 81 (1997).
46. O'SULUVAN, supra note 10, at 156. The figures do not add up to 100 percent due to foreign ownership, which was 2.0 percent in 1965 and 5.9 percent in 1985. Id.
47. See BRANCATO, supra note 36, at 84.
48. See OS'ULUVAN, supra note 10, at 161;
49. BRUCE WASSERSTEIN, BIG DEAL: 2000 AND BEYOND 167-69 (2000).
50. See Gerald E Davis, Agents Without Principles? The Spread of the Poison Pill Through the Intercorporate Network, 36 ADMIN. Sa.Q. 583, 586-87 (1991).
51. See BRANCATO, supra note 36, at 84
52. O'SULLIVAN, supra note 10, at 176;
53. Holmstrom & Kaplan, supra note 14, at 132.
54. See BRANCATO, supra note 36, at 84-85.
55. See Dobbin & Zom, supra note 18, at 189;
56. John C. Coffee, Jr., A Theory oj Corporate Scandals: Why the United States and Europe Differ, in CORPORATE GOVERNANCE POST-ENRON: COMPARATIVE AND INTERNATIONAL PERSPECTIVES 3, 11-12 (JosephJ. Norton, Jonathan Rickford & Jan Kleineman eds., 2006).
57. See Holmstrom & Kaplan, supra note 14, at 133; see alsoJOHN C. COFFEE, JR., GATEKEEPERS: THE PROFESSIONS AND CORPORATE GOVERNANCE62 (2006).
58. Holmstrom & Kaplan, supra note 14, at 140.
59. See, e.g., Hansmann & Kraakman, supra note 16, at 444.
60. Holmstrom & Kaplan, supra note 14, at 141.
61. Bengt Holmstrom & Steven N. Kaplan, The State of U.S. Corporate Governance: What's Right and What's Wrong?, in CORPORATE GOVERNANCE AT THE CROSSROADS: A BOOK OF READINGS 71, 71 (Donald H. Chew & StuartL. Gillan eds., 2005).
62. As of early January 2000 the DJIA was 11,722 and in early September 2002 it was 7528. In March 2000 the S&P 500 peaked at 1527.5 and fell to 800.6 in September 2002. These numbers are derived from historical charts available on web sites for the NYSE and NASDAQ on Yahoo! Finance, http://finance.yahoo.com/ (last visited Sept. 9, 2009).
63. On the pre- and post-scandal market capitalization of these companies, see ZABIHOLLAH REZAEE, CORPORATE GOVERNANCE POST-SARBANES-OXLEY 28-29 (2007).
64. See, e.g., Simon Deakin & Suzanne Konzelmann, Corporate Governance After Enron: An Age of Enlightenment?, in AFTER ENRON: IMPROVING CORPORATE LAW AND MODERNISING SECURITIES REGULATION IN EUROPE AND THE US 155,156-58 (John Armour & Joseph A. McCahery eds., 2006).
65. See, e.g., Holmstrom & Kaplan, supra note 48, at 71, 82-83; ROY C. SMITH & INGO WALTER, GOVERNING THE MODERN CORPORATION: CAPITAL MARKETS, CORPORATE CONTROL, AND ECONOMIC PERFORMANCE 21-22 (2006).
66. Pub.L. No. 107-204, 116 Stat. 745 (2002) (codified in scattered sections of 11, 15, 18, 28 & 28 U.S.C.).
67. SMITH & WALTER, supra note 52, at 245.
68. For a succinct summary of the changes SOX introduced, seeREZAEE, supra note 50, at 37-38.
69. Id. at 36, 247;
70. SMITH & WALTER, supra note 52, at 245.
71. REZAEE, supra note 50, at 36.
72. See Gordon, supra note 10, at 1491.
73. See Troy A. Paredes, Enron: The Board, Corporate Governance, and Some Thoughts on the Role of Congress, in ENRON: CORPORATE FIASCOS AND THEIR IMPLICATIONS 495, 515-16 (Nancy B. Rapoport & Bala G. Dharaneds., 2004).
74. See REZAEE, supra note 50, at 37-38.
75. COFFEE, supra note 440, at 62-64. 70 62.
76. See id. at 15.
77. See Gordon, supra note 10, at 1536;
78. Ronald J. Gilson, Catalyzing Corporate Governance: The Evolution of the United States System in the 1980s and 1990s, 24 COMPANY & SEC. L.J. 143, 156-57 (2006).
79. JONATHAN R. MACEY, CORPORATE GOVERNANCE: PROMISES KEPT, PROMISES BROKEN 118 (2008).
80. See FRANK H. EASTERBROOK & DANIEL R. FISCHEL, THE ECONOMIC STRUCTURE OF CORPORATE LAW 172-73 (1991).
81. See Holmstrom & Kaplan, supra note 140, at 124;
82. Brian Cheffins & John Armour, The Eclipse of Private Equity, 33 DEL. J. CORP. L. 1,18-19 (2008).
83. See MACEY, supra note 640, at 122-26;
84. Holmstrom & Kaplan, supra note 140, at 126-29;
85. O'Sullivan, supra note 10, at 167.
86. See Cheffins & Armour, supra note 66, at 21.
87. Holmstrom & Kaplan, supra note 140, at 132.
88. Id. at 132-36.
89. Cheffins & Armour, supra note 66, at 11, 23.
90. See id. at 22-24.
91. Id. at 3.
92. For an overview of the points raised here, see BRIAN R. CHEFFINS, CORPORATE OWNERSHIP AND CONTROL: BRITISH BUSINESS TRANSFORMED 397-98,403 (2008).
93. Cheffins & Armour, supra note 66, at 12.
94. See William W Bratton, Private Equity's Three Lessons for Agency Theory, 3 BROOK. J. CORP., FIN. & COM. L. 1,9-10 (2008).
95. Irwin Stelzer, Don't Qose Gate on Private Equity "Barbarians," SUNDAY TIMES, May 13, 2007, at 4.
96. See also Paul Rogers, Tom Holland & Dan Haas, Private Equity Disciplines for the Corporation,). PRIVATE EQUITY, Winter 2002, at 6,8.
97. For a discussion of the notion of "offensive" shareholder activism, see CHEFFINS, supra note 74, at 392-93.
98. See BRANCATO, supra note 36, at 82,85.
99. See Iman Anabtawi & Lynn Stout, Fiduciary Duties for Activist Shareholders, 60 STAN. L. REV. 1255, 1277-78 (2008);
100. see generally Stephen J. Choi & Jill E. Fisch, On Beyond CalPERS: Survey Evidence on the Developing Role of Public Pension Funds in Corporate Governance, 61V AND. L. REV. 315, 317-18, 326-34, 347-51 (2008);
101. Marcel Kahan & Edward B. Rock, Hedge Funds in Corporate Governance and Corporate Control, 155 U. PA. L. REV. 1021,1028,1043-45 (2007).
102. See Anabtawi & Stout, supra note 80, at 1278.
103. John Armour & Brian R. Cheffins, The Rise and Fall (?) of Shareholder Activism by Hedge Funds 21-22 (ECGI Law Working Paper No. 136, 2009) available at http://papers.ssrn.eom/so/3/papers. cfm?abstract-id=1489336.
104. See MACEY, supra note 64, at 245; Anabtawi &r Stout, supra note 80, at 1279.
105. See Armour & Cheffins, supra note 82, at 9-10.
106. See Securities Exchange Act of 1934 13(d), 15 U.S.C. 78m(d) (2006) (providing the statutory foundation for this requirement).
107. See Alon Brav, Wei Jiang, Frank Partnoy & Randall Thomas, Hedge Fund Activism, Corporate Governance, and Firm Performance, 63 J. FIN. 1729,1752 (2008).
108. See Armour & Cheffins, supra note 82, at 27-28; Susan Chandler, Hedge Funds Put the Pressure On, CHI. TRIB., Jan. 27, 2006, at CI.
109. Examples of companies targeted included Circuit City, General Motors, H.J. Heinz, McDonalds, and Time Warner.
110. See William W Bratton, Hedge Funds and Governance Targets, 95 GEO. L.J. 1375, 1429-32 (2007);
111. MATTEO TONELLO, CONFERENCE BD., HEDGE FUND ACTIVISM: FINDINGS AND RECOMMENDATIONS FOR CORPORATIONS AND INVESTORS 14 (2008), available at hup:// papers.ssrn.com/sol3/pape rs.cfm?abstract-id=l 107027.
112. Kahan & Rock, supra note 80, at 1024.
113. Charles Duhigg, Gad/lies Get Respect, and Not Just at Home Depot, N.Y. TIMES, Jan. 5, 2007, at CI.
114. Dennis K. Berman, The Game: Activist Holders Sit Pretty; Boards' Clout Wanes, Bringing Big Changes; Martin Upton Fumes, WALL ST. J. (EUR.), July 9, 2008, at 19.
115. See Anabtawi & Stout, supra note 80, at 1290-91.
116. Brav, Jiang, Partnoy & Thomas, supra note 86, at 1733.
117. See generally David Haarmeyer, The Revolution in Active Investing: Creating Wealth and Better Governance, 18 J. APPLIED CORP. FIN. 25 (2007).
118. MACEY, supra note 640, at 241.
119. Id. at 250.
120. REZAEE, supra note 50, at 36.
121. See Dean Calbreath, Market Proves Resilient, S.D.UNION- TRIB., Jan. 2, 2008, at CI.
122. During the week of May 19th, the DJIA high was 13,717 and the S& P 500 high was 1440.2.
123. See Matt Krantz, Markets' Fall Was Worst in Seven Decades,USA TODAY, Jan. 2, 2009, at Bl. The index officially reported by S& P for 1926 to 1956 contained only ninety stocks. The modem version of the S& P 500 index, with 500 stocks, was launched in 1957.
124. See Jack W. Wilson & Charles P Jones, An Analysis of the S& P 500 Index and Cowles's Extensions: Price Indexes and Stock Returns, 1870-1999, 75 J. Bus. 505, 507-08, 512, 514 (2002).
125. Krantz, supra note 98.
126. Shareholder Value, FIN. TIMES, Feb. 4, 2009, at 14.
127. Heineman, supra note 1.
128. See, e.g., Bernard Black, Does Corporate Governance Matter? A Crude Test Using Russian Data, 149 U. PA. L. REV. 2131, 2133-34 (2001) (summarizing the U.S. evidence);
129. Colin Melvin & Hans- Christoph Hirt, Corporate Governance and Performance: The Missing links, in THE BUSINESS CASE FOR CORPORATE GOVERNANCE 201, 201-04 (Ken Rushton ed., 2008) (arguing that studies, on balance, indicate better corporate governance is correlated with better corporate performance but acknowledging the evidence is conflicting and saying the direction of causation is unclear).
130. See Thomas J. Donohue, Pres. & CEO, U.S. Chamber of Commerce, Remarks at Three Sector Summit-Hitachi Foundation Board Dinner (July 14, 2003), available at http://www.uschamber.com/ press/speeches/2003/030714tjd- hitachi.htm ("There are more than 17,000 publicly traded companies in the U.S.").
131. See STANDARD & POORS, S& P 500 (2009), available at http://www2.standardandpoors.com/spf/ pdf/index/SP-500- Factsheet.pdf Oast visited Sept. 9, 2009) [hereinafter S& P 500].
132. CHARLES H. FEINSTEIN & MARK THOMAS, MAKING HISTORY COUNT: A PRIMER IN QUANTITATIVE METHODS FOR HISTORIANS 10-11 (2002).
133. See S& P 500, supra note 104.
134. Id.
135. Id.
136. Id. The market capitalization threshold was increased from $3 billion to $4 billion in 2008.
137. See Press Release, Standard & Poors, Standard & Poors Announces Update to the U.S. Market Cap Guidelines and Changes to U.S. Indices (Sept. 25, 2008), http://www2.standardandpoors.com/spf/ pdf/index/Fastballdancer.pdf.
138. See S& P 500, supra note 104.
139. See C. Michael Carty & Herbert D. Blank, The Fortune 500 vs. The S&P 500, FIN. ADVISOR, Jan. 2003, Error! Hyperlink reference not valid. id=73.
140. S& P 500, supra note 104.
141. Press Release, Standard & Poors, Standard & Poors Announces Changes to U.S. Indices (Sept. 9, 2008), http://www2.standardandpoors.com/spf/ pdfAndex/lychnobitic374.pdf;
142. Press Release, Standard & Poor's, Standard & Poors Announces Changes to U.S. Indices (Nov. 11, 2008), http://www2. standardandpoors.com/spf/ pdf/index/worzboson.pdf.
143. GARY L. GASTINEAU, THE EXCHANGE-T RADED FUNDS MANUAL 148 (2002).
144. See id. See also Press Release, LAC, New IAC Poised to Get Cheaper After Break-up (Aug. 19, 2008), http://iac.mediaroom.com/index.php?s=53& item=232 (discussing the share price impact of IAC/lnterActive Corp.s exit from the S& P 500) (hereinafter IAC Press Release).
145. See infra Part IVB.
146. On asset values, see Am. Int'l Group, Inc., Annual Report (Form 10-K), at 6-8, 36 (Mar. 2, 2009); Citigroup, Inc., Annual Report (Form 10-K), at 2,4 (Feb. 28, 2009).
147. See Stevenson Jacobs & Tom Krusher, What if Washington Bailed Out of Bailouts?, Bus. WK. ONLINE, Mar. 25, 2009, http://www.businessweek.corn/investor/content/mar2009/pi20090320-839114.Htm? chan=investing-investing+index+page-top+stories (explaining why, among companies afflicted by the crisis, Citigroup and A1G qualified as "too big to fail").
148. See Francesco Guerrera, Proposed Split Leaves Pandit's Role in Question, FIN. TIMES, Jan. 15, 2009, at 14 (Citigroup board);
149. Terence Corcoran, Guess Who Killed AIG,NAT'L POST, Sept. 18, 2008, at FP15 (AIG board);
150. Raymond J. Lehmann, Greenberg, Whistleblower Both Fault AIG Internal Controls, BESTS INS. NEWS, Oct. 8,2008 (on file with The Business Lawyer) (AIG oversight).
151. On categories within the GICS sectors, see STANDARD & POORS, THE GLOBAL INDUSTRY CLASSIFICATION STANDARD (GICS): AN OVERVIEW FOR STANDARD & POORS U.S. SECTOR INDICES app. Al, at 6-8 (2002), available at http://www2.standardandpoors.com/spf/pdf/index/ GICSIndexDocument. PDF?vregion=us&vlang=en.
152. A sector-by-sector breakdown of companies that make up the S& P 500 as of a particular date is available on an interactive chart set out at http://www2.standardandpoors.com/portal/site/sp/en/us/ page.topic/indices-500/2, 3,2,2,0,0,0,0,0,0,0,0,0,0,0,0.html (last visited Sept. 9,2009).
153. A list of all companies removed from and added to the S& P 500 since 2000 is available at http://www2.standardandpoors.com/portal/site/sp/en/us/page. topic/indices-500/2,3,2,2,0,0,0,0,0,4,l,0,0,0,0,0.html (last visited Sept. 9,2009).
154. See Press Release, Standard & Poors, Standard & Poor's Announces Changes to U.S. Indices (June 12, 2008), http://www2.standardandpoors. com/spf/pdf/index/athulathmudalilalith.pdf (explaining how Standard & Poors had greater latitude in 2008 to readjust its indices on the basis of market values of companies because M& A activity was modest as compared with other years).
155. Standard & Poors, in the press releases it issues to announce the reconfiguration of the S& P 500, typically gives the reasons for removing a company. For companies removed in 2008, it only refrained from doing so for two companies, Circuit City and Barr Pharmaceuticals. Circuit City apparently was removed because of a dramatic fall in its market value. See Jonathan Birchall, Activist Targets Circuit City, FIN. TIMES, Mar. 1, 2008, at 9 (indicating Circuit Citys share price had fallen by more than 70 percent in the past year). Barr Pharmaceuticals was removed because it was acquired by Teva Pharmaceutical Industries Limited, an Israeli company.
156. See David Marcus, Deals & Suits: Teva Barr, CORP. COUNSEL, Nov. 2008, at 31.
157. Republic Services, Inc., has been included in this category because its acquisition of Allied Waste Industries meant Republic Services, Inc., took Allied Wastes place in the S& P 500.
158. See Press Release, Standard & Poors, Standard & Poor's Announces Changes to U.S. Indices (Nov. 26, 2008), http://www2.standardandpoors.com/spf/ pdf/index/stopgapname500400600.pdf.
159. See Sam Mamudi, Tax Moves May See Index Shake-ups, MARKETWATCH, Dec. 23, 2008, http:// www.marketwatch.com/story/tax- moves-may-see-index (discussing ACE Ltd. and Transocean Inc.).
160. By August 2008, IAC/Interactive shares were trading at $17.75, well off a 2008 high of $80.
161. LAC Press Release, supra note 115; Mogul v Mogul, ECONOMIST, Mar. 15, 2008, at 76.
162. See Sarah McBride, Clear Channel's Outlooh Is Cloudy as Buyout Flops, WALL ST. J. (ASIA), Mar. 31, 2008, at
163. On Factivas content, see Dow Jones Factiva, http://factiva.com/sources/ contentwatch.asp?node=menuEleml522 (last visited Sept. 9, 2009).
164. For each company, the following searches were run: [Company name] and "corporate governance";
165. [Company name] and "shareholder value";
166. [Company name] and "outside directors";
167. [Company name] and "shareholder activism";
168. [Company name] and "activist shareholder";
169. [Company name] and "executive pay";
170. [Company name] and "executive compensation";
171. [Company name] and "Sarbanes Oxley";
172. [Company name] and "private equity";
173. [Company name] and "leverage";
174. [Company name] and "buyback";
175. [Company name] and "Chapter 11";
176. [Company name] and "fraud."
177. GEORGESON, 2008 ANNUAL CORPORATE GOVERNANCE REVIEW (2009), available at http://www.georgeson.com/usa/flash-viewer.html.
178. See http://securities.smnford.edu/fmi/xsl/SCACPUDB/findrecorcls. xsl7-view (last visited Sept. 9, 2009).
179. AFL-CIO, Executive Pay Watch, http://www.aflcio.org/corporatewatch/ paywatch/ (last visited Sept. 9,2009).
180. FORBES.COM, SPECIAL REPORT: EXECUTIVE COMPENSATION (2007), http://www.forbes.com/2007/05/ 03/highest-paid-ceos-lead-07ceo-cz-sd-0503ceojand.html.
181. See supra notes 25-33, 58 and accompanying text.
182. See supra note 43 and accompanying text.
183. See, e.g.,LUCIAN BEBCHUK & JESSE FRIED, PAY WITHOUT PERFORMANCE: THE UNFULFILLED PROMISE OF EXECUTIVE COMPENSATION 6-7,9-10, 121-22, 137 (2004).
184. See supra note 8 and accompanying text.
185. See supra notes 53-60 and accompanying text.
186. DennisK. Berman, The Game: Enron Lessons Are Thin; Crackdown Lulled Washington to Sleep; That Crisis Is a 'Gnat,' WALL ST. J. (EUR.), Oct. 29, 2008, at 24.
187. See also Michael Skapinker, Every Fool Knows It Is a Job for Government, FIN. TIMES, NOV. 18, 2008, at 13.
188. The Coming Recovery, ECONOMIST, May 30,2008, at 17.
189. See Roger Parloff, Wall Street: It's Payback Time, FORTUNE, Jan. 19,2008, at 56;
190. Paul M. Thompson, White Collar Crime: Investigating the Economic "Villains,"NAT'L L.J., Mar. 9, 2008, at SI (discussing congressional committees).
191. See Gretchen Morgenson, SEC Accuses Countrywide's Former Chief of Fraud, N.Y. TIMES, June 5, 2008, at Al;
192. Kara Scannell & JohnR. Emshwiller, Countrywide Chiefs Charged with Fraud, WALL ST. J., June 5, 2008, at CI.
193. Zachary A. Goldfarb, Banfe of America Pays $33 Million to Settle Merrill Bonus Charges, WASH. POST, Aug. 4, 2008, at All.
194. The Coming Recovery, supra note 141.
195. See Holly Sraeel, Vernon Hill's Magic as CEO Was Also His Down/all,U.S. BANKER, Aug. 2007, at 8;
196. TD Earns Kudos for Bold Southern Foray, TORONTO STAR, Oct. 8, 2007, at B03.
197. Andrew J. Ceresny, Gordon Eng 6l SeanR. Nuttall, Regulatory Investigations and the Credit Crisis: The Search for Villains, 46 AM. CRIM. L REV. 225,251-52 (2009).
198. See Jennifer LeviLz, Wells Fargo, BojA Pay to Settle Claims, WALL ST. J., June 10, 2009, at A25.
199. On the acquisition of Wachovia being a "rescue merger," see Arthur E. Wilmarth, The Dark Side of Universal Banking: Financial Conglomerates and the Origins of the Subprime Financial Crisis, 41 CONN. L. REV. 963,1044 (2009).
200. Pinpoint cites have not been provided for propositions advanced in Table 1 and other tables in this Article. Microsoft Word files containing the relevant sources, organized chronologically by when companies were removed and subdivided on a company-by-company basis, are available on request from The Business Lawyer. The sources included in the files are the relevant articles and news- wire reports derived from searches of Factiva and pertinent excerpts from the Stanford Law School Securities Class Action Clearinghouse database, supra note 132, the AFL-CIO web site on executive pay (for 2007), supra note 133, and the Forbes web site on executive compensation (for 2006), supra note 134.
201. Washington Mutual and its (former) directors did face, however, a class action launched by bondholders. See Gary Jacobson & Brendan Case, Tom Leppert Had Front-Row Seats to Washingon Mu- fuals's Collapse, DALLAS MORNING NEWS, Mar. 1, 2009, http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN/SC-LeppenWamu-22bus. ART.State.Editionl.4aaca63.html.
202. See Berman, supra note 140; Loren Steffy, Law Can't Stop Failure, Hous. CHRON.,Mar. 21,2008, at 1.
203. On the terminology, see generally Paul Rose, The Corporate Governance Industry, 32J. CORP. L. 887 (2008).
204. For an overview of the key commercial providers and the services they market, see id. at 898-906; Bhaghat, Bolton & Romano, supra note 11, at 1824-26,1872-76.
205. Bhagat, Bolton & Romano, supra note 11, at 1808,1814,1818,1859.
206. ee Zachary A. Goldfarb, SEC to Examine Boards' Role in Financial Crisis, WASH. POST, Feb. 20, 2009, at D1.
207. See Tim Barker, Loyalty of A-B Board May Be Put to the Test, ST. LOUIS POST-DISPATCH, June 20, 2008, at A1 (criticism of the board);
208. David Nickalus, In the End, A-B's Board Stopped Bluffing and Took Care of Business, ST. LOUIS POST-DISPATCH, July 14,2008, at Al (the boards response).
209. See Heineman, supra note 1; C.J. Prince, Is Countrywide a Corporate Governance Train Wreck?, CHIEF EXECUTIVE, June 2008, at 44.
210. On Bear Stearns, see Gretchen Morgenson, SEC Sends Investors to the Children's Table, N.Y. TIMES, Dec. 2,2007, at 31;
211. Paul Fain, Two University Chiefs Caught Up in a Wall Street Meltdown, CHRON. HIGHER EDUC, Nov. 7, 2008, at A17.
212. See Landon Thomas, Jr., Not a Jolly Season fori Top Bankers, N.Y. TIMES, Dec. 21, 2007, at CI (Bear Steams);
213. Andrew Gowers, Exposed: Dick Fuld, the Man Who Brought the World to its Knees, SUNDAY TIMES, Dec. 14,2008, at 1 (Countrywide, Lehman Brothers).
214. See Dillards Side-Steps Proxy Fight,KNOXVILLE NEWS-SENTINEL, Apr. 3, 2008, at 23; Toby Man- they, Dillard's Execs Got No 2007 Bonuses, ARK. DEMOCRAT-G AZETTE, Apr. 23, 2008, at 27.
215. For a list of companies where a proxy fight occurred during 2008, see GEORGESON, 2008 ANNUAL REPORT, supra note 131, at 46-47.
216. Carl C. Icahn, Corporate Boards that Do Their Job, WASH. POST, Feb. 16, 2009, at A15.
217. See also Francesco Guerrera Peter Thai Larsen, Gone by the Board? Why the Directors of Big Banks Failed to Spot Credit Risks, FIN. TIMES, June 26, 2008, at 13;
218. James Surowiecki, Board Stiff,NEW YORKER, June 1, 2009, at 34.
219. See Guerrera & Larsen, supra note 162;
220. see also supra note 6 and accompanying text.
221. See William Rees-Mogg, Good People + Impossible Task = Collapse, TIMES ONLINE, Mar. 2, 2009, http://www. timesonline.co.uk/toUcomment/columnistsAvilliarn-rees-mogg/article5827406.ece; Rebuilding the Banks, ECONOMIST, May 16, 2009, at 14.
222. Jack Welch & Suzy Welch, How Much Blame Do Boards Deserve?, Bus. WK. ONLINE, Jan. 14, 2009, http://www.businessweek.com/ magazine/content/09-04/b4117102356265.htm.
223. See Steven A. Ramirez, The Special Interest Race to CEO Primacy and the End of Corporate Governance law, 32 DEL. J. CORP. L. 345, 345-46 (2007) (endorsing the verdict offered by various observers).
224. This total does not include turnover occurring subsequent to an acquisition, where senior executives of the company being acquired will usually step down as a matter of course.
225. Sanjai Bhagat & Brian Bolton, Corporate Governance and Firm Performance, 14 J. CORP. FIN. 257, 269 (2008).
226. See supra note 146 and accompanying text.
227. Per-Ola Karlsson, Gary L. Neuson & Juan Carlos Webster, CEO Succession 2007: The Performance Paradox, STRATEGY + Bus., Summer 2008, at 1, 3.
228. See Heineman, supra note 1.
229. See Paul Davis, Execs Come, Execs Go, Effects Stay, AM. BANKER, June 18, 2009, at 1.
230. See James R. Hagerty, Mozilo's Pay Plunged 79%; He Still Made $10.8 Million, WALL ST. J., Apr. 25, 2008, at Bl (bonus for staying in office);
231. Stephanie Hoops, Countrywide Financial's 'Sad Day': Bo/A Deal Approved,VENTURA COUNTY STAR, June 26, 2008, http://www.venturacountystar.com/news/2008/ jun/26/countrywide-financials- sad-day-bofa-deal/ (share prices).
232. See Berman, supra note 140.
233. See, e.g., GRAEF S. CRYSTAL, IN SEARCH OF EXCESS: THE OVERCOMPENSATION OF AMERICAN EXECUTIVES 23-24 (1991);
234. John C. Bogle, The Executive Compensation System Is Broken, 30 J. CORP. L. 761, 762-63 (2005); Too Many Turkeys, ECONOMIST, NOV. 26, 2005, at 75.
235. See Greg Farrell & Barbara Hansen, Stocks May Fall, but Execs' Pay Doesn't, USA TODAY, Apr. 10, 2008, at Bl ("the public is focusing on CEO compensation as never before");
236. Francesco Guerrera & Joanna Chung, Fear of Falling, FIN. TIMES, Jan. 6, 2009, at 7 ("The level of anger and incredulousness around the country is at record levels." (quoting union leader Dan Pedrotty)).
237. See Surviving the Slump, ECONOMIST, May 28, 2009, at 3.
238. See Rachel Beck & Matthew Fordahl, CEO Pay Higher in '07 Despite Slow Economy, TULSA WORLD, June 22, 2008, at E5.
239. The eight companies were, in order of removal from the S& P 500, Circuit City ($6.5 million, CEO compensation as of 2006, all other figures are for 2007); Ambac Financial Group, Inc. ($730,000);
240. Brunswick Corporation ($3.4 million);
241. OfficeMax, Inc. ($5.1 million);
242. MGIC Investment ($3.5 million);
243. Unisys Corporation ($1.9 million);
244. Ashland, Inc. ($4.4 million).
245. See DavidJ. Reynolds, Wachovia CEO Steel Loses Big on Sale to Citigroup, DowJONES NEWSWIRES, Sept. 29, 2008.
246. See, e.g., Farrell & Hansen, supra note 176 (discussing losses suffered by Bear Steam's chief executive James Cayne); Martha Graybow, Lehman's Fuld Suffers Wealth Hit as Shares Fall,REUTERS, Sept. 12, 2008, http://www.reuters.com/article/idUKN 1240760720080912 (discussing impact of Lehman Brothers' September 2008 bankruptcy on the CEO);
247. Robert Frank & Kris Hudson, Darfe Days for Mall Dynasty, WALL ST. J., Dec. 10,2008, at Al (discussing how senior executives of General Growth Properties had to borrow money from the fimvs founding family to meet margin calls incurred buying the company's shares).
248. The Revolution Within, ECONOMIST, May 16, 2009, at 15.
249. See The Bonus Racket, ECONOMIST, Jan. 31, 2009, at 81.
250. See Alan S. Blinder, Crazy Compensation and the Crisis, WALL ST. J., May 28, 2009, at A15;
251. Attacking the Corporate Gravy Train, ECONOMIST, May 30, 2009, at 71;
252. ORG. FOR ECON. CO-OPERATION & DEV., CORPORATE GOVERNANCE AND THE FINANCIAL CRISIS: KEY FINDINGS AND MAIN MESSAGES 16-17 (2009), available at http://www.oecd.org/ dataoecd73/10/43056196.pdf.
253. See Graybow, supra note 181.
254. U.S. DEPT OF THE TREASURY, FINANCIAL REGULATORY REFORM: ANEW FOUNDATION 29 (2009), available at http://www.nnancialstability.gov/docs/regs/ FinalReport-web.pdf [hereinafter FINANCIAL REGULATORY REFORM"].
255. See supra notes 74-77 and accompanying text.
256. See Thorold Barker, Private Equity Could Yet Discover a Silver Lining, FIN. TIMES, Mar. 15, 2008, at 33;
257. Loan Rangers, ECONOMIST, Aug. 30, 2008, at 73.
258. See Martin Arnold, Buy-out Bosses See Halcyon Days Fade Away, FIN. TIMES, Jan. 3, 2009, at 17 (capital raised fell from $765.2 billion to $233.5 billion).
259. See Peter Lattman, Lacking Leverage, Firms Embrace EBOs, WALL ST. J., Mar. 12, 2009, at CI.
260. See Posting to Wall Street Journal Deal Blog, http//logs.wsj.com/ deals/2009/01/07/nnal-2008-data-confirm-little-but-tumbleweeds-in-lbo-arena/ (Jan. 7, 2009, 11:32 EST) ("Final 2008 Data Confirm: 'Little But Tumbleweeds' in LBO Arena") (discussing data compiled by data provider Dealogic).
261. See Heather Timmons, The Year that Made Deal Makers Giddy,N.Y. TIMES, Jan. 5, 2007, at C6.
262. See Pallavi Gogoi, Is Circuit City Headedfor a Blowout?, Bus. WK. ONLINE, July 2,2008, http://www. businessweek.com/bwdaily/ dnflash/content/jul2008/db2008072-040726.htm?chan=top+news- top+news+index- news+%2B+analysis;
263. Catherine R. Cobb, Sarah E. Lockyer & Peter Romeo, Arby's Parent Triarc to Acquire Wendy's in $2.34B Stock Swap, NATIONS RESTAURANT NEWS, May 5,2008, at 3.
264. See Loan Rangers, supra note 187;
265. Andrew Ross Sorkin, New Path for Kings of Buyouts, N.Y. TIMES, Apr. 8, 2008, at C6.
266. See WaMu's Lesson for Private Equity, N.Y. TIMES, Sept. 29, 2008, at C2 (Washington Mutual);
267. Arielle Kass, Details of Nat City, Corsair Deal Reveal Race for Capital, CRAINS CLEV. Bus., July 7,2008, at 1 (National City).
268. U.S.C.A. 1841-1850 (West 2001 & Supp. 2009).
269. See Loan Rangers, supra note 187;
270. Ralph E MacDonald III et al. Private Equity Investments in Bank Holding Companies: The Fed Expands and Clarifies Opportunities,J ONES DAY COMMENTS, Sept. 2008, http://www.jonesday. corn/pubs/pubs-detail.aspx?pubID=S5475; Bernard Condon & Nathan Vardi, Toe in the Water, FORBES, Mar. 2, 2009, at 32.
271. See Condon & Vardi, supra note 197;
272. Jason Kelly & Jonathan Keehner, Why Private-Equity Firms Won't Ride to Banks' Rescue, Hous. CHRON., Sept. 27, 2008, at 2.
273. See WaMu's Lesson, supra note 195; Peter Lattman, WaMu Fall Crushes TPG, WALL ST. J., Sept. 27,2008, at Bl.
274. See Reporters Notebook: Behind the News with Crain's Writers, CRAINS CLEV. BUS., Nov. 24, 2008, at 19.
275. See id.
276. See supra note 80 and accompanying text.
277. See Kevin Dobbs, Wamu Shareholder Criticizes Nominees, AM. BANKER, Mar. 28, 2008, at 20;
278. Francesco Guerrera & Ben White, WaMu Director Forced to Quit, FIN. TIMES, Apr. 16, 2008, at 16;
279. David A. Katz & Laura Mcintosh, Shareholders Focused on Stability in Proxy Votes,N.Y.L.J., Oct. 30, 2008, at 5 n.4.
280. See Washington Mutual Separation of CEO, Chair, PRNEWSWIRE, June 2, 2008.
281. Muralikumar Anantharaman, In Crisis, Mutual Funds Fail to Speak Up,REUTERS, Dec. 12,2008, http://www.reuters.com/article/ousiv/ idUSTRE4BB5IR20081212.
282. See Kristin Gribben, Shareholder Democracy Is on Hold, FIN. TIMES, July 7,2008, at 9.
283. Katz & Mcintosh, supra note 203.
284. See Long Live Activism: Investors Still Wield Influence in the Coming Downturn, FIN. TIMES, NOV. 5, 2008, at 8;
285. Lina Saigol, Activists Rise from the Ashes as Crisis Exposes Weaknesses, FIN. TIMES, NOV. 14, 2008, at 28.
286. See Armour & Cheffins, supra note 82, at 33-34;
287. Zachery Kouwe, Among Activist Investors, a New Hesitancy,N.Y. TIMES, Mar. 26,2009, at SPG4;
288. Flight of the Locusts, ECONOMIST, Apr. 11,2009, at 63.
289. See Armour & Cheffins, supra note 82, at 31-32; Activist Investors, FIN. TIMES, Mar. 10, 2008, at 14.
290. Roben Farzad, Shareholder Activists: Not So Active Anymore, Bus. WK., Dec. 11, 2008, at 80.
291. On Dillard's see supra note 160 and accompanying text. See also Maureen S. Malik, Activist Fund Banks on IT Turnaround, BARRONS, Oct. 6, 2008, http://online.barrons.com/article/SB1223 29241346007347.html (Unisys); Louis Uovio, Change for Circuit City: Retailer to Ask Shareholders to Add Board Seats, Diluting Gains by Dissident Company,RICH. TIMES-DISPATCH, May 17, 2008, at Bl 1 (Circuit City). At Dillanis, Barington Capital Group and Clinton Group also lobbied for the dismissal of CEO William Dillard II and for the company to buy out the special class of shares that gave the Dillard family voting control but were rebuffed. See Rachel Dodes, Hedge Funds Seek Ousters at Dillard's, WALL ST. J., Oct. 28, 2008, at B4.
292. See Monique Curet, End of an Era, COLUMBUS DISPATCH, Apr. 25,2008, at 1A;
293. Triarc and Wendy's Sign Definitive Merger Agreement, Bus. WIRE, Apr. 24, 2008, http://www.businesswire.com/portal/site/ home/perrnalink/?ndmViewId=news-viewamp;&newsIcl=20080424005640& newsLang=en; Wendy's Takeover Completed, WASH. POST, Sept. 30, 2008, at D2.
294. See Thomas Gryta, Applied Biosys Holders Get Desired Deal, but Premium Lacking, Dow JONES NEWSWIRES, June 12, 2008.
295. See Postingto New York Times DealBookBlog,http://dealbook.blogs. nytimes.com/2008/12/10/ ackman-raises-stake-in-general-growth/ (Dec. 10, 2008, 7:11 EST) ("Ackman Raises Stake in General Growth") (Pershing Squares ownership stake);
296. James Covert, Ackman's Mall Gamble, N.Y. POST, Apr. 17, 2009, at 32 (other aspects).
297. See Coven, supra note 215.
298. Harold Meyerson, Building a Better Capitalism, WASH. POST, Mar. 12, 2008, at A19.
299. See also supra notes 1-40 and accompanying text.
300. ORG. FOR ECON. CO-OPERATION & DEV., supra note 1840, at 12.
301. See Heather Landy, Executives Took, but the Directors Gave,N.Y. TIMES, Apr. 5, 2008, at BUI.
302. See Table 2 (criticism of board of directors); Table 5 (criticism of executive pay);
303. supra notes 158 & 158 and accompanying text (governance problems at Bear Steams and Lehman Brothers); John Cassidy, Anatomy of a Meltdown,NEW YORKER, Dec. 1, 2008, at 48 (Bear Stearns and systemic risk);
304. Douglas W Amer, The Global Credit Crisis of2008: Causes and Consequences, 43 INT'L LAW. 91,96, 113-14 (2009) (Lehman Brothers and systemic risk).
305. See supra note 118 and accompanying text.
306. See, e.g., Michael Schrage, How to Sharpen Banks' Corporate Governance, FIN. TIMES (ASIA), Nov. 18, 2008, at 13;
307. Too Big to Fail or Too Big to Save? Examining the Systemic Threats to Large Financial Institutions: Hearing Before the Cong. Joint Econ. Comm'n., 111th Cong. (2009) (statement of Joseph E. Stiglitz, Prof., Columbia Univ.), http//jec.senate.gov/index.cfm?FuseAction=Hearings. HearingsCalendar& ContentRecord-id=c89bl85b-5056-8059-7670-0ce56df64713.
308. Corporate and Financial Institution Compensation Fairness Act of 2009, H.R. 3269, 111th Cong., available at http://thomas.loc.gov/cgi-bin/query/z7cl 11:H.R.3269:.
309. Id. 4.
310. See supra note 6 and accompanying text; see also Daniel Gross, Reining in Bubbles so They Won't Pop,NEWSWEEK, Mar. 9, 2009, 0at 44;
311. Peter Tasker, Bonuses Don't Create Bubbles,NEWSWEEK, Apr. 6, 2009, http://www.newsweek.com/id/191512/page/l.
312. See CEOs and Market Woes: Is Poor Corporate Governance to Blame?,KNOWLEDGE@WHARTON, Dec. 10, 2008, http://knowledge. wharton.upenn.edu/article.cfm?articleid=2114 (quoting academics Thomas Gerrity and Wayne Guay).
313. See Joe Adler, Stress Tests Complicate "Too Big to Fail" Debate, AM. BANKER, May 18, 2009, at 1. But see Amer, supra note 220, at 116 (arguing that the collapse of Washington Mutual had systemic effects).
314. See Adler, supra note 227.
315. See Martin Wolf, Seeds oj Its Own Destruction, FIN. TIMES, Mar. 9, 2008, at 7.
316. See Rebuilding the Banfes, supra note 1640, at 14-15;
317. Jim Wexler, New Era oj Risk Control to Recruit All in Firm, AM. BANKER, Apr. 24,2008, at 9.
318. See Tasker, supra note 225.
319. FINANCIAL REGULATORY REFORM, supra note 186, at 21-22,24-25.
320. Icahn, supra note 162.
321. Id.
322. Shareholder Bill of Rights Act of 2009, supra note 4, 5 (stipulating that a public company would have to have an independent chairman, thus implicitly prohibiting a single chairman/CEO);
323. Shareholder Empowerment Act of 2009, H.R. 2861, 111th Cong. 2, available at http://www.govtrack.us/congress/billtext.xpd?bill=hl 11-2861 (same).
324. U.K. LISTING AUTHORITY, LR, 9.8.6(5), (6) (2009) (imposing an obligation on quoted companies to make disclosures in accordance with the Combined Code). The Listing Rules are available at http://fsahandbook. info/FSA/html/handbook/D85 (last visited Sept. 10, 2009).
325. FINANCIAL REPORTING COUNCIL, COMBINED CODE ON CORPORATE GOVERNANCE A.2.1, A.2.2 (2008). The Combined Code is available at http://www.frc.org.uk/documents/pagemanager/ frc/Combined-CodeJune-2008/Combined%20Code%20Web%20Optimized%20June%202008(2). pdf (last visited Sept. 10, 2009).
326. Id. pmbl.¶ ¶ 4, 5.
327. Kit Bingham, It's the Board Stupid, FIN. NEWS ONUNE, Oct. 27, 2008, http://www.efinancial- news.com/assetmanagement/ specialfeatures/content/3352296911.
328. See John O'Doherty, State to Own 43* of Merged Lloyds-HBOS, FIN. TIMES (FT.COM), Jan. 12, 2009,http://www.ft.com/cms/s/0/845e7956-e079-11dd-b0e8-000077b07658.html.
329. See Thomas Olson, Sarbanes-Oxley Law Eased Blow, Former Congressman Says at Duauesne, PITT. TRIB.-REV., Apr. 22, 2009, http://www.pittsburghlive.com/x/pittsburghtrib/business/s-621691. html (quoting Paul Sarbanes, one of the sponsors of the legislation, as saying, "Had it not been for Sarbanes-Oxley, this could have been a lot worse.").
330. See supra note 145 and accompanying text.
331. See James S. Linck, Jeffry M. Netter & Tina Yang, The EJJects and Unintended Consequences of the Sarbanes-Oxley Act on the Supply and Demand for Directors, 22 REV. FIN. STUDIES 3287 (2009).
332. See Roberta Romano, The Sarbanes-Oxley Act and the Making of Quack Corporate Governance, 114 YALE L.J. 1521,1587-88 (2005).
333. For examples of those making this case, see id. at 1594-99;
334. Larry E. Ribstein & Henry N. Butler, Where Was SOX? Believers in Democracy Should Let Shareholders Opt Out of Expensive Regulation, FORBES, Dec. 22, 2008, at 28.
335. See Robert H. Frank, Should Congress Put a Cap on Executive Pay?, N.Y. TIMES, Jan. 4, 2009, at BU5.
336. Emergency Economic Stabilization Act of 2008, Pub. L. No. 110-343, § 111,122 Stat. 3765, 3776-77, amended by American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, § 7001, 123 Stat. 115, 516-20 (to be codified at 12U.S.C. § 5221).
337. Shareholder Bill of Rights Act of 2009, supra note 4, § 3; Corporate and Financial Institution Compensation Fairness Bill, supra note 223, § 2; Investor Protection Act of 2009 § 941, http://www. treas.gov/press/releases/docs/tg-2181X.pdf (draft legislation delivered by the U.S. Department of the Treasury to the U.S. Congress on July 10, 2009). The Shareholder Empowerment Act of 2009, supra note 235, § 3, also provides for a non-binding annual vote on executive pay policy.
338. Robert J. Grossman, Executive Pay: Perception and Reality, HR MAG., Apr. 2009, at 26 (quoting Gerry Miller, Managing Partner, DolmatConnell & Partners).
339. See Directors Remuneration Report Regulations 2002, S.I. 2002/1986 (U.K.); Companies Act, 2006, c. 46, § 439 (U.K.).
340. See Fabrizio Ferri & David Maber, Say on Pay Votes and CEO Compensation: Evidence from the UK 15, 19-21, 34 (2009), available at http://papers.ssrn.com/sol3/papers.cfm?abstract-id=1420394.
341. THE TURNER REVIEW, AREGULATORY RESPONSE TO THE GLOBAL BANKING CRISIS 80 (2009), available at http://www.fsa.gov.uk/pubs/other/tumer-review.pdf.
342. See ORG. FOR ECON. CO- OPERATION & DEV., supra note 184, at 47 (citing research by Manifest).
343. See Jane Croft & Andrew Bolger, Thumbs Down for RBS Pay Report, FIN. TIMES, Apr. 4, 2009, at 12.
344. Up to July 2009, there were nine U.K. public companies where the shareholders cast majority votes against the annual remuneration report. These were Royal Bank of Scotland; GlaxoSmithKline, a pharmaceuticals company,
345. see Neil Collins, The Day Shareholders Finally Had Enough of Corporate Creed, TELEGRAPH, May 20, 2003, http://www.telegraph.co. uk/comment/personal-view/3591536/The-day-shareholders-finally-had-enough-of- corporate-greed.html;
346. Aegis, a marketing services company, see Clay Harris, Shareholders Reject Chief Executive's Pay Deal, FIN. TIMES, May 27,2004, at 21;
347. Freeport, a property group, see id.; United Business Media, a business information provider, see Remuneration Report Votes: UBM and MFI Reports Defeated, MANIFEST-I, June 2, 2005, http://www.manifest.co.uk/ manifest-i/2005/0506%20June/050602remuneration.htm; MFI Furniture, a furniture retailer,
348. see id.; Bellway, a builder, see Kate Burgess, Investors Up in Arms over Poor Governance, FIN. TIMES, Feb. 3, 2009, at 19; Royal Dutch Shell, the petroleum giant,
349. see Kate Burgess & Michael Steen, Investors Rebel over Executive Pay at Shell, FIN. TIMES, May 20,2009, at 1;
350. Provident Financial, a mortgage lender, see Kate Burgess & Jane Croft, Provident Bonuses Shot Down by Shareholders, FIN. TIMES, May 7, 2009, at 21.
351. See Cheffins Sr Armour, supra note 66, at 9-11.
352. See id. at 57-58.
353. See id.
354. See id. at 55-59.
355. See Karen H. Wruck, Private Equity, Corporate Governance, and the Reinvention of the Market for Corporate Control, 20 J. APPLIED CORP. FIN. 8,18 (2008).
356. See Press Release, Congressman Sandy Levin, Rep. Levin Reintroduces Carried Interest Tax Reform Legislation (Apr. 3,2009), http://www.house.gov/apps/list/press/mil2-levin/PR040309.shtml; FINANCIAL REGULATORY REFORM, supra note 186, at 37-38.
357. Lucian Ayre Bebchuk, The Case for Increasing Shareholder Power, 118 HARV. L. REV. 833 (2005);
358. see generally Battling for Corporate America, ECONOMIST, Mar. 11, 2006, at 69 (summarizing the debate).
359. See Battling for Corporate America, supra note 262; John Gapper, The Votes of Investors Should Count, FIN. TIMES, Apr. 17, 2006, at 13.
360. See, e.g., Carl C. Icahn, The Economy Needs Corporate Governance Reform, WALL ST. J., Jan. 23, 2009,atA13.
361. On majority voting, see Shareholder Empowerment Act of 2009, supra note 235, § 2; Shareholder Bill of Rights Act of 2009, supra note 4, § 5.
362. On eliminating "classified" boards, see Shareholder Bill of Rights Act of 2009, supra note 4, § 5;JAMES D. COX, THOMAS LEE HAZEN & E HODGE O'NEAL, CORPORATIONS § 13.30 (1999) (effect of classified board).
363. Press Release, U.S. Sec. & Exch. Comm'n, SEC Votes to Propose Rule Amendments to Facilitate Rights of Shareholders to Nominate Directors (May 20, 2009), http://www.sec.gov/news/ press/2009/2009-116.htm; Shareholder Empowerment Act of 2009, supra note 235, § 2.
364. Bebchuk, supra note 262, at 847-50.
365. Companies Act, 2006, c. 46, §§ 168, 303 (U.K.); Companies (Shareholders' Rights) Regulations 2009, S.I. 1632/2009, s. 4 (U.K.) (amending § 303(3) to reduce the threshold from 10 percent to 5 percent);
366. see also John Armour, Enforcement Strategies in UK Corporate Governance: A Roadmap and Empirical Assessment, in RATIONALITY IN COMPANY LAW: ESSAYS IN HONOUR OF D.D. PRENTICE 71, 105 (John Armour & Jennifer Payne eds., 2009).
367. See John Plender, Shut Out, FIN. TIMES, Oct. 17,2008, at 11; Changing Course, ECONOMIST, May 2, 2009, at 73.
368. Jennifer Hughes, FSA Chie/Lambasts Uncritical Investors, FIN. TIMES, Mar. 12,2009, at 1 (quoting Hector Sants).
369. See Kate Burgess, Myners Urges "Absentee Landlord" Shareholders to Be More Involved, FIN. TIMES, Apr. 22, 2009, at 17;
370. see also Burgess, Investors Up in Arms, supra note 255 (quoting Myners as saying "institutions should have been more challenging").
371. Gerald E Seib, In Crisis, Opportunity for Obama, WALL ST. J., Nov. 21, 2008, at A2.