Corporate Responsibility: Ensuring Independent Judgment of the General Counsel - A Look at Stock Options

32 Pages Posted: 10 Nov 2011  

Z. Jill Barclift

Hamline University - School of Law; Hamline University

Date Written: January 1, 2005

Abstract

Recent corporate scandals and allegations of corporate fraud in public companies have most people asking how things went so wrong. When looking to assess blame for corporate malfeasance, many ask, “Where were the lawyers?” In several high-profile corporate fraud investigations, outside and in-house lawyers were criticized for not doing more to prevent corporate executives from violating the law, and several general counsels were charged with criminal misconduct by state and federal authorities. Why would the general counsel of a public corporation risk his or her career, reputation, and criminal prosecution to assist executives in perpetuating corporate fraud? The answer may be in the purported reason for corporate greed and ultimately corporate fraud – the desire for equity wealth. This article generally explores the issue of whether stock options granted to the general counsel increases financial dependence of the general counsel on a single client, aligns the financial interests of the general counsel too closely with the financial interests of senior management, and risks the loss of independent judgment and candor by general counsel. Part II of the article reviews the role of the general counsel in public companies, the growth in salary and stock option compensation, and introduces discussion of the Sarbanes-Oxley Act. Part III examines case law and administrative decisions, the Sarbanes-Oxley Act, and subsequent Securities and Exchange Commission regulations.

Keywords: Stock Options, Sarbanes-Oxley Act, general counsel, Securities and Exchange Commission, independent judgment

Suggested Citation

Barclift, Z. Jill, Corporate Responsibility: Ensuring Independent Judgment of the General Counsel - A Look at Stock Options (January 1, 2005). North Dakota Law Review, Vol. 81, p. 1, 2005. Available at SSRN: https://ssrn.com/abstract=1955180

Z. Jill Barclift (Contact Author)

Hamline University - School of Law ( email )

1536 Hewitt Avenue
Saint Paul, MN 55104-1237
United States

Hamline University ( email )

1536 Hewitt Avenue
St. Paul, MN 55104
United States

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