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The passage of Delaware SB 21 hasn’t stopped high-profile departures to sunnier states. Right before the Knicks’ crushing overtime loss to the Celtics, Madison Square Entertainment Corp. filed a proxy to seek shareholder approval to move to Nevada, joining Simon Properties and others that have decided to move out of Delaware despite the new law. It reminds us of the Knicks theme song from the early 2010s called “Go NY Go NY Go” when Amar’e Stoudemire and Carmelo Anthony protected the paint in the Garden. They’re indeed going.
The Knicks & Rangers owner writes in the proxy that “the increasingly litigious environment facing corporations, especially ones with controlling stockholders, has created unpredictability in decision-making…. Although these amendments are intended to enable boards of directors and controlling stockholders to negotiate and structure transactions with more legal certainty, interpretative questions will remain as prior doctrines are reconciled with the new statutory mandates.” Ouch!
Meanwhile, two recent papers look at the growth and influence of AI on shareholder activism and corporate governance. Our friend Pierluigi Matera of Boston University and Luiss Business School in Rome suggests that AI can be used to harness activism, particularly with identity-oriented and younger activists. He notes that boards as well will have AI as a tool that will impact governance.
David F. Larcker and colleagues agree, writing in the Stanford Closer Look Series that AI could impact governance in a series of ways, including narrowing the information asymmetry between managements and boards and increasing breadth and depth of information a board has access to, allowing “boards to be more proactive and less reactive.”
Speaking of governance, longtime Yale Law professor Jonathan Macey penned a paper, “Fair is Fair in Corporate Law” which takes a critical view of the Musk-Tornetta decision and concludes that informed shareholders should decide, not judges. “Judges should not invalidate deals that enhance the welfare of minority shareholders merely because judges object to the way they were structured, or to the way that boards of directors that approved them were populated.”
Lastly, we leave you with Tedeschi Trucks Band playing Grateful Dead’s Mr. Charlie, just because.
Have a great weekend,
GPP
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