Lipton on Shareholder Primacy
It should be no surprise that the inventor of the poison pill is pro-director, but Marty Lipton’s remarks at a June 25 conference at the University of Minnesota Law School left no doubt that he truly believes in his heart of hearts that we’re better off with strong, unencumbered boards. According to the WSJ’s deals blog (quoted in today’s print edition), Lipton wondered aloud whether the move to shareholder-centric governance will “simply overwhelm American business corporations.” He also remarked:
The board-centric model of governance is premised on the notion that boards merit the vote of confidence of shareholders and the public markets, and notwithstanding the strong current of distrust that runs through many corporate governance reforms, history has proven this vote of confidence to be well-deserved. I believe it is the only way to assure that public corporations will be able to compete with the state corporatism that is transforming the economies of China, Russia, and other rapidly industrializing countries, cope with the demands for short-term (and shortsighted) stock gains by activist hedge funds and make the long-term investments in the future of their businesses that are essential for the future prosperity of our nation.