BOARD GAMES: The Changing Shape of Corporate Power by

BOARD GAMES: The Changing Shape of Corporate Power

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A literate as well as lawyerly update on the obligations of corporate directors in an era when high-stakes battles for control of commercial, financial, and/or industrial assets have become a convulsive norm. In absorbing fashion, the authors (all of whom are attorneys) trace the legal duties of directors back to a 1742 suit in which an English chancery court ruled board members have an agency responsibility akin to a public trust. Down through the years, US courts have rendered decisions spelling out details, but this principle of accountability has remained essentially unchanged. In brief, then, directors are charged with conducting the affairs of sizable enterprises (keystone institutions in a modern economy) in the best interests of their stockholders and, albeit to a lesser extent, creditors and employees. Circumstances alter cases, however, and, during the 1980's, takeover bids, tender offers, leveraged buyouts, restructuring proposals, and related transactions have greatly complicated the terms of directors' stewardship--and increased their personal liabilities. At any rate, the authors provide lucid rundowns on the implications of landmark legal actions arising from raiders' forays and the responses of target companies. All told, they cover eight causes cÉlèbres, including the grudge match in which Fred C. Hartley kept Unocal out of the clutches of T. Boone Pickens, Jr. (at no small cost), Revlon's fall to Pantry Pride, and precedential litigation involving Household International's use of a defensive measure widely known as a poison pill. Courts seldom quarrel with directors' business judgment, the authors observe, but they do focus on the process by which decisions were reached and try to ensure a level playing field for all competitors. An instructive and engrossing guide to the consequential imperatives of corporate governance.

Pub Date: Sept. 1st, 1988
Publisher: Little, Brown