Harvard Law School Forum on Corporate Governance

Yes, from https://www.txse.com/solutions: TXSE's goal is to provide greater alignment with issuers and investors and address the high cost of going and staying public. The alignment part translates IMO to avoiding political / social science policy issues like avoiding affirmative action listing requirements like the Nasdaq Board Diversity Rules that was just recently repealed: https://corpgov.law.harvard.edu/2025/01/12/fifth-circuit-vacates-secs-… So it is as one might imagine, the formation was probably for similar reasons why owners are moving their company registration out of Delaware.

For those who want to geek out, here's a great memo that describes the liquidation process in great detail: https://corpgov.law.harvard.edu/wp-content/uploads/2008/10/092608-over… Someone holding a receivership certificate likely can sell it or borrow against it.

Some say the answer all starts with $5 days and Dodge vs Ford. https://corpgov.law.harvard.edu/2021/12/01/dodge-v-ford-what-happened-… Much more in-depth read: https://scholarship.law.vanderbilt.edu/cgi/viewcontent.cgi?article=479… If you'd like to read a book on each side of the coin: "The Shareholder Value Myth" - Lynn Stout and Stephen Bainbridge just published a rebuttal book "The Profit Motive" I've read Lynn Stouts book, it's good, I've yet to start Stephen Bainbridge but I've been told it's a good read.

> try to find an instance of a situation where the NL forced the US to comply to an NL-originated rule and was successful European countries routinely force American firms to do things [1]. Coinbase asking a Dutch user to follow American law isn’t dissimilar from an American having to follow Dutch law when using a Dutch service. No governments are forcing other governments to do anything in this case. [1] https://corpgov.law.harvard.edu/2012/02/18/dutch-court-decision-impact…

Lotta clickbait in that tweet. Down rounds suck (1) for employees and companies. Transparency and revaluations don't put money in your pocket. This is just the risk we take working at startups with our income in illiquid assets. I wouldn't say they're worthless, because some are actually less than worthless and others are more tax friendly depending on how you think your company is going to weather the storm. (1) https://corpgov.law.harvard.edu/2016/02/27/down-round-financings-and-o…

> ... top marginal rates in the 1950s and 1960s were extraordinarily high by present-day standards > ... observers from the 1950s to today repeatedly noted that, at one time, social rules curbed CEO greed. https://corpgov.law.harvard.edu/2016/08/18/executive-compensation-what… Other sources -- sorry no links -- ascribe the genesis of such "social rules" to a US WW II norm of austerity among elites, who might otherwise have found ways to seize a greater share of the economy's wealth for their own dissipative pleasures.

> Right now, that is all technically possible, so they'd be defrauding their shareholders if they didn't try. This sounds like a clumsy restatement of the urban legend that companies have an obligation to maximize shareholder value. There is in fact no such rule, for the obvious reason that nobody can accurately predict the future and calculate the optimal value. https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-value-myth/ In this case, a company like Apple could say that they are choosing to forgo short-term profits from selling out their users’ privacy because they feel that the long-term loyalty will be greater, and anyone arguing otherwise would still have to admit that this approach has been phenomenally profitable.

The SEC intentionally does “regulation by selective enforcement”, as shown by their actions following the 2017 ICO bubble: https://corpgov.law.harvard.edu/2019/11/21/regulation-by-selective-enf… It shouldn’t be a surprise to anyone in this space.

Apparently there is a 1 year lock-up period for the sponsors & directors during a SPAC [1] Which I guess means it's harder for e.g Social Capital to do a pump & dump (in the case of Clover they couldn't sell until June 2021 at the earliest) [1] https://corpgov.law.harvard.edu/2018/07/06/special-purpose-acquisition…

The board of directors has a fiduciary duty to act in the best interest of ALL stock holder EQUALLY. The case law that established this was the Trados[1] case. If your company issues a huge bonus to executives for completing a sale of the company, you might have a case against the company. There are lawyers that make a very good living taking cases like this on contingency. I'm sure that's what these employees are doing in this case. [1]https://corpgov.law.harvard.edu/2013/09/03/delaware-court-of-chancery-…

Here is a related article that is highly interesting: https://corpgov.law.harvard.edu/2018/04/15/are-dual-class-companies-ha… It reviews the evidence related to dual-stock companies. Facebook is such as company since there are class A and class B shares (which have 10 times the vote power). Here is a follow-up article that is worthy of attention as well: https://corpgov.law.harvard.edu/2019/04/17/whats-the-problem-with-dual…

“Overly optimistic”, by definition, is asking for trouble. I’m not a lawyer, but I think even just optimistic projections should be avoided at all costs in earnings forecasts. They may be fine, if accompanied with a zillion “if all stars align” phrases, but it’s a minefield best avoided. https://corpgov.law.harvard.edu/2012/11/08/giving-good-guidance-what-e… (near the end, after a zillion warnings to be careful): ”Viewed with hindsight, overly optimistic guidance can result in financial cost to the company and its directors and officers.”

CEOs will often have unfavorable characteristics. From startups to billion dollar corporations I've experienced far fewer "genuine" CEOs than narcissistic assholes. The latter are so prevalent because they take the valuation of the company as one of their primary drivers. This means that, for them, removing any obstacle (customers included) is the path they will traverse. I think the problems with "successful" CEOs don't paint the complete picture. Many CEOs come in after the hard work has been done and "final phase" CEOs enshittify the product and treat their partners and customers vastly differently than they did during their build phase. I experienced this first hand at Palo Alto Networks. At the time their second CEO (Mark McLaughlin) had just come into the org. Mark was one of those few genuine CEOs I experienced, probably one of the least narcissistic I've seen at that point in a young company's trajectory. However Nikesh Arora (Mark's successor) is a complete narcissistic asshole. I still talk to many in leadership there on the regular and the consistent theme is he's surely the reason PAN support and product quality has taken a dive compared to the engineering focus on product and customers back in the early 2010s. There are a lot of papers surrounding CEOs and many look at the narcissistic angle [0][1][2]. The reality is a lot of these companies could operate just fine without a CEO. I find it hard to believe CEOs are even remotely worth their compensation…

> DEI can be done badly, of course DEI in practice means racial preferences and quotas. That’s why the term arose around the same time as a renewed push for explicit racial quotas: https://corpgov.law.harvard.edu/2025/01/12/fifth-circuit-vacates-secs-… > and in an ideal world would be unnecessary It’s not only unnecessary, it’s illegal. If you think historic discrimination had negative effects, just target the negative effects among all people similarly situated. > Posit a merit-based test where any appointees of this administration would score better than their corresponding appointee of the previous administration Aggressively pursuing the President’s agenda: https://www.donaldjtrump.com/platform. Political appointees are just that—political. The relevant standard of merit isn’t who is the best nerd, but who will best carry out the agenda the President campaigned on. The whole point is that voters can change the direction of the executive branch through electing the President, who in turn appoints like-minded cabinet secretaries.

Hmm. This is actually an interesting experiment. Marking for favorites to check up on (side idea, expiring or favorites with deadlines ): My name is John Carter II, but in the greyweb underbelly, where I provide morally questionable, but otherwise perfectly legal items, I am known as OnlyEatsCheetos69. While I am not openly listed on any companies' documents, I have enough access and influence in them. I don't really lurk in the shadows, but if you ever wondered as to why FinCEN suspended CTA reporting requirements[1], then imagine me being very, very persuasive. But that is not who I really am or what I am really into. While my family name and crest ( 7 headed Cerberus - do not bother looking for it online; we are way too cool leave something this valuable open to the online masses ) are well-known to those that must know, we exist in relative obscurity. There is a reason for it. There is information, we do not believe should exist on the internet. But being the rebel that I am, I will now divulge some of our little known secrets: - in 1980, I moved my vessel to another continent, where I could more openly pursue my otherwordly interests - in 1999, me and Satoshi had a small get together, where we discussed the idea of international, digital currency - in 2009 I uncovered credible conspiracy guaranteed to remake the world and squashed it mildly hard my under well endowed heel. You are welcome. - in 2019 I held a closed presentation on a more.. live munition intended for…

It thought the CEO of a company is not ultra wealthy by a longshot. He's just an employee, well connected, ex-banker or ex-consulting who happens to be a multi-millionaire. Great gig if you can get it, especially if you avoid divorce -or death from stress.. or murder. The founder of a company -who may or may not be be CEO- is where the the money is at. That's where the value-creation is, and where the ultra wealthy reside. They also usually have somewhat functional families. But I wanted to answer this question objectively, so here's what I did: I suppose you can start with a definition of ultrawealthy[1] which is $30m assets minus primary residence. That seemed low to me, but its on wiki, so OK. Median CEO pay for publicly listed companies was 16.3M, gross. [2] . Take 50% off the top for taxes (US-avg so aggressive), then you are around ~$8M , before expenses. Factor expenses of $1M (probably low, considering consumption goes up relative to income), that means $7M for assets, meaning the avg CEO is working about 5 years to become hit ultra wealth. However, the average tenure for a CEO is 4.8 years [3] So i suppose a few of the CEOs are eventually making it into the ultra rich, if they can outlast the average tenure on the job. I stand corrected. [1] [1] https://en.wikipedia.org/wiki/High-net-worth_individual [2] https://www.resourcefulfinancepro.com/wp-content/uploads/2023/11/45455… [3]…

> they have a fiduciary duty towards shareholders to reduce the cost (and if needed the quality) to the point of maximising profit. This is the Friedman doctrine: * https://en.wikipedia.org/wiki/Friedman_doctrine It has been popular since the 1970s, but there is plenty of legal precedence that says otherwise: * https://en.wikipedia.org/wiki/Stakeholder_theory Including recent SCOTUS rulings: > While it is certainly true that a central objective of for-profit corporations is to make money, modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so. For-profit corporations, with ownership approval, support a wide variety of charitable causes, and it is not at all uncommon for such corporations to further humanitarian and other altruistic objectives. Many examples come readily to mind. So long as its owners agree, a for-profit corporation may take costly pollution-control and energy-conservation measures that go beyond what the law requires. A for-profit corporation that operates facilities in other countries may exceed the requirements of local law regarding working conditions and benefits. If for-profit corporations may pursue such worthy objectives, there is no apparent reason why they may not further religious objectives as well. * https://caselaw.findlaw.com/court/us-supreme-court/13-354.html * https://supreme.justia.com/cases/federal/us/573/13-354/case.pdf *…

If you're dissatisfied with this stuff, I wouldn't talk to management to solve this, but instead I'd work on communicating with ESG funds and ask them to change their guidelines for their DEI initiatives. Let me explain. The corporation you work for is just trying to get a better ESG score. The DEI initiative and programs were probably handed down in some quasi-government fashion from Blackrock and other ESG funds who chose investments and even board votes based on that. Your company's HR department might have had all this mandated from Blackrock who has a ton of control on the boards of publicly traded companies. Corporations have to regularly report their DEI initiatives to Blackrock and other ESG funds. "Last week, BlackRock released its 2021 proxy voting guidelines for the U.S. and other major markets ... These updated materials demonstrate how BlackRock intends to pair higher expectations for corporate responsiveness across a number of topics, including diversity, equity and inclusion and environmental risk, with a greater willingness to vote against management where these expectations are not met." "In 2021, BlackRock will expect disclosure of workforce demographics, such as gender, race, and ethnicity in line with the EEO-1 Survey, along with steps being taken to advance diversity, equity, and inclusion. Where BlackRock believes disclosures or practices fall short of market or peer practice, it may vote against members of the appropriate committee or support…

I think the notion is the index fund is simply buying a stock because it has a certain market cap. It is not evaluating the fundamentals of the company. The algorithmic art is similar in the sense that it is an averaging of previous effort. People made art and it was fed into the algorithm. The algorithm is some weighting of the art it was fed. Analogously, people who thought about companies bought and sold the stock. It landed at some price. The index fund just followed that. There has been criticism of index funds [1] and defense [2] as far as price discovery. Other people have raised the possibility that an index fund holding large amounts of competitor companies is an antitrust issue. [3] [1] https://www.ft.com/content/87a3b117-7085-40f4-8cca-66bb8353c971 [2] https://www.blackrock.com/corporate/literature/whitepaper/policy-spotl… [3] https://corpgov.law.harvard.edu/2018/12/04/why-common-ownership-is-not…

The current market so far. Interest rates will rise and CC transactions will migrate over time to less costly rails starting in the next 12-18 months (although Radar, Identity, and other value add products are likely to see continued use and rev growth). Imho, Stripe should've IPO'd at the top ~12+_ months ago. EDIT: @pbriet (HN throttling, can't reply directly to your comment) In the US, Zelle does $490B worth of volume annually (2021), all CC networks combined do about $1.9T (2021). That's significant volume for a real time payment system, and it's not even fully baked within the US financial ecosystem. FedNow [1] [2] [3] rails go live next year with instant settlement, moving up to $500k in value for 5 cents (what the bank partner charges the banking customer is up to them). I expect that to move the needle, considering merchants can charge a CC surcharge per SCOTUS' Expressions Hair Design v. Schneiderman (No. 15-1391) ruling. If you compare India's UPI implementation to CC volume, the open platform is fairly successful [4], hence my thesis (and this pattern is repeated, you'll find, across other economies where a low cost real time payment system is present). CC companies are raising their rates because their margin is soon to be compressed. Ignore BNPL, that's a feature/product masquerading as a business (see: Klarna's down round, Affirms' decline in share price, etc) and regulators are coming for it [5]. TLDR A new fintech product from the Fed is likely to shift…

https://corpgov.law.harvard.edu/2020/05/27/on-the-purpose-of-the-corpo… The purpose of a corporation is to conduct a lawful, ethical, profitable and sustainable business in order to create value over the long-term, which requires consideration of the stakeholders that are critical to its success (shareholders, employees, customers, suppliers, creditors and communities) ... https://www.aspeninstitute.org/programs/business-and-society-program/p… Business corporations are perhaps the most influential organizations in society and have long been recognized as important contributors to the common good. Society grants corporations unique privileges in order to harness their great capacities to serve its needs. https://www.ft.com/content/482a8435-c04c-4be8-9856-941e7ecf128a ... it would abandon shareholder primacy and redefine corporate purpose to create an economy that “serves all Americans”. https://hbswk.hbs.edu/item/the-role-of-the-corporation-in-society-an-a… : ... scholars Berle and Means (1932) predicted ... both owners and "the control" accepting public interest as the objective of the corporation.

That’s a reasonable value proposition for the type of company that would be relevant for. I think a more relevant role for a minority board member in the way you describe would be marketing partnerships with other firms that would help reach that demographic. However, this would still be, as all board members are, chosen for their connections, probably even more so than the old fogeys that grew up with the business. But fundamentally I see your point, and my guess is that the firms that this is relevant to know their business better than anybody else, and have been trying their best to find someone that will be good for the business. If I had to guess at the difficulty, it’s that well-connected women and minority business leaders face so much pressure to deliver social justice rather than profits, and these businesses might not be interested in sponsoring that. Your board makeup is very idealistic, as in, assuming that boards are active participants in the business. Think investor relations and partnerships. Expect the female and minority multiple representation trend[1] to accelerate with this mandate. [1] https://corpgov.law.harvard.edu/2021/06/25/the-board-diversity-census-…

Thank you for your kind words! I totally agree about how flippantly people throw out the value-maximization point. And it is definitely true that the real standards which govern directors' and officers' conduct are murkier than the maxim "maximize shareholder value." The Business Roundtable's recent embrace of stakeholder theory seems likely to complicated things [1], and efforts by influential people like former Delaware Supreme Court Chief Justice Leo Strine [2] and legendary corporate lawyer Martin Lipton [3] have meaningfully contested the accepted definition of corporate purpose outside of the academy in recent months. But I do think Delaware law is pretty clear on the principle behind D&Os' fiduciary duties. The best summation I have seen of it is in a talk that Vice Chancellor Travis Laster gave at UVA Law last spring; [4] it's a great talk. Cheers yo. [1] https://www.businessroundtable.org/business-roundtable-redefines-the-p… [2] https://corpgov.law.harvard.edu/2020/05/16/purpose-with-meaning-a-prac… [3] https://corpgov.law.harvard.edu/2020/05/27/on-the-purpose-of-the-corpo… [4] https://www.youtube.com/watch?v=ET8v47XPcUY&feature=youtu.be

It's great that RStudio is changing to a PBC. However from what I've read, being a Benefit Corporation doesn't actually mean anything. - From my reading it's possible for a Benefit Corporation to still be taken over or bought out. - Benefit Corporations can convert back to regular corporations (in contrast with most 501(c)3's which cannot convert to corporations except under very particular circumstances) - Unlike a 501(c)3, the charter of a Benefit Corporation is not legally binding It's not to say that being a Benefit Corporation is bad (or good), but rather to say that it's kind of meaningless. I believe people should judge a for profit company, which a Benefit Corporation is, by its leadership, not necessarily by its legal designation. Fortunately the leadership at RStudio have made themselves trustworthy, at least by the fact that they're relatively transparent and most of their stuff is open source. I'd be curious to know why they just didn't become a non-profit. I assume the main reason is because they want to be able to raise capital more easily. Source: https://corpgov.law.harvard.edu/2012/05/13/benefit-corporations-vs-reg…

For those interested in the world of non-GAAP accounting, there are a wealth of resources (particularly from the Big 4 accountancies who are eager to consult on such matters). Broadly, the use of non-GAAP has grown to a point where the SEC ramped up enforcement measures (sending letters to companies regarding their presentation of non-GAAP measures)[1]. Particularly, GAAP measures need to be presented "with equal or greater prominence" to their non-GAAP counterparts. From a Deloitte piece[2]: "A study published by Audit Analytics noted that 97 percent of S&P 500 companies used non-GAAP measures in earnings releases during 2017. Further, the number of non-GAAP measures used per filing has almost tripled from 2.35 in 1996 to 7.45 in 2016. In addition, a study published by FactSet indicated that for the second quarter of 2018, 77 percent of the companies in the Dow Jones Industrial Average reported non-GAAP earnings per share and 61 percent of these companies reported non-GAAP earning per share that exceeded GAAP earnings per share." [1] https://corpgov.law.harvard.edu/2019/02/07/sec-scrutiny-of-non-gaap-fi… [2] https://www2.deloitte.com/us/en/pages/audit/articles/a-roadmap-to-non-…

Naked short selling [1] and short and distort [2][3] were also a big part of the pump and dump then the crash, they nearly broke the entire market. > During the takeover of The Bear Stearns Companies by J.P. Morgan Chase in March 2008, reports swirled that short sellers were spreading rumors to drive down Bear Stearns' share price. Democratic Senator Christopher Dodd felt this was more than rumors and said, "This is about collusion." Chase was victimized by a similar "short and distort" scheme six years earlier when rumors arose about its purported relationship with Enron. Naked short selling rules went into effect Thursday, Sept. 18, 2008 three days after the Sept. 15, 2008 Great Recession cliff that dropped Lehman and kicked it off [3]. Much cheaper to buy value and extract it when it is cheaper from a crash, the worst kind of players in the market extracted the value from the value creators. Lots of the games played then are back with hedge funds creating movement to skim, short and distort and in some cases try to shakeup companies [3][4]. Amazon, Tesla, Apple, and many more are getting these attacks currently, we aren't ready for another big game, they might truly break public markets next time. [1] https://www.sec.gov/news/press/2008/2008-204.htm [2] https://en.wikipedia.org/wiki/Short_and_distort [3] https://www.sec.gov/news/press-release/2018-190 [4] https://corpgov.law.harvard.edu/2017/11/27/short-activism-the-rise-in-…

> Heck, a company with shareholders is practically legally obliged to... You are spreading the myth of a US (and most nations, for that matter) legal obligation (the term of art is "fiduciary duty") of profit maximization to shareholders. Please read the following. http://skeptics.stackexchange.com/questions/8146/are-u-s-companies-leg… http://corpgov.law.harvard.edu/2012/06/26/the-shareholder-value-myth/ https://hbr.org/2010/04/the-myth-of-shareholder-capitalism If you are an attorney, then in the past somewhere on Harvard Law's site I found an exhaustively-written piece that gives specific case law citations I could cross-reference from Lexis-Nexis. The bar to clear to prove fiduciary malfeasance in corporate governance is very high, and the latitude granted to company management very broad; shareholders can enforce a fiduciary preference through shareholder activism and throw out management, but the US judiciary has steadfastly refused to lightly step into the management-shareholder relationship in this regard. This blog post delves into the follow-on questions more in the vein of corporate social responsibility once you acknowledge the legal reality. http://www.robertstavinsblog.org/2009/05/12/straight-talk-about-corpor…

> And legally, the comapny's sole responsibility is "make money for shareholders". "the philosophy of putting shareholder profits over all else is a matter of ideology which is not grounded in American law or tradition" https://www.salon.com/2012/04/04/the_shareholder_fallacy/ This remains a matter of active debate, and there is no law that requires or enshrines it. It's a legitimate opinion to hold, that a company should maximize shareholder returns, but it is not in any way a requirement to do so. Here's a recent study on the matter: https://corpgov.law.harvard.edu/2025/06/12/the-costs-of-weakening-shar… Note that if shareholder primacy were the law of the land, this study could never have even occurred.

There's been some progress on killing Citizens United: https://transparentelection.org/ https://corpgov.law.harvard.edu/2025/08/07/transparent-election-initia…

> They've checked with their peers and lawyers, and decided it's a perfectly acceptable risk to have the founders and staff of a company they're already invested in do illegal things and potentially end up in jail ... No legitimate business person I have ever met holds this position, if for no other reason than criminal acts pierce the corporate veil[0]. > ... so long as the investors and their staff are all insulated from the illegal behavior and jail time risks. There is no such thing. 0 - https://corpgov.law.harvard.edu/2014/03/27/the-three-justifications-fo…