From Dealbreaker: There are two competing theories of how
companies should be governed; one says that management should have a lot of
leeway to do what it thinks is best and shareholders should keep quiet and, if
they’re unhappy, maybe sell their shares; the other says that shareholders own
the company and anything that stands in the way of their replacing inept or
corrupt management is bad.
The pro-shareholder side has I guess been having a
good run lately, what with Chesapeake bowing to Carl Icahn’s demands to be less
evil, and with the performance of the Facebook IPO giving evil governance a bad
name, but the let’s-say-anti-shareholder position is pretty well entrenched.
And the leading exponents, or at least my favorite exponents,* of that view are
the law firm of Wachtell Lipton, which invented the poison pill so that
managers wouldn’t have to lose their jobs just because someone else wanted to
buy their company and their shareholders wanted to sell it….
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