Wachtell Lipton Was Wrong About the Shareholder Rights Project

The Harvard Law School Forum on Corporate Governance and Financial Regulation 2013-04-09


Editor’s Note: Lucian Bebchuk is the Director of the Shareholder Rights Project(SRP). The SRP, a clinical program operating at Harvard Law School, works on behalf of public pension funds and charitable organizations seeking to improve corporate governance at publicly traded companies, as well as on research and policy projects related to corporate governance. Any views expressed and positions taken by the SRP and its representatives should be attributed solely to the SRP and not to Harvard Law School or Harvard University.

This post responds to four memoranda issued by Wachtell Lipton Rosen & Katz, available on the blog here, here, here, and here.

In a memorandum issued recently by the law firm Wachtell, Lipton, Rosen & Katz (WLRK), WLRK co-founder Martin Lipton criticized me for supporting shareholder activism that allegedly has detrimental effects in the long term. The memorandum followed two earlier, strongly-worded WLRK memoranda signed by Lipton and several other prominent corporate partners at the firm, titled "The Shareholder Rights Project is Wrong" and "The Shareholder Rights Project is Still Wrong". Those memoranda criticized the work of a program I direct, the Shareholder Rights Project (SRP), for destroying long-term value by contributing to numerous board declassifications.

I am currently carrying out research work that addresses the view held by WLRK and others that investor activism is generally detrimental to the long-term interests of companies and their shareholders. In the meantime, however, the SRP’s recent release of its 2013 results provides an appropriate opportunity to respond to WLRK claims that the SRP’s work, in particular, has contributed to the destruction of long-term value. As I explain below, these results indicate that relevant institutional investors and corporate boards have largely rejected WLRK’s views – and require that WLRK reconsider its position.

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Lucian Bebchuk, Harvard Law School,

Date tagged:

04/09/2013, 15:08

Date published:

04/09/2013, 08:51