The Institutional Investor's Goals for Corporate Law in the Twenty-First Century
45 Pages Posted: 31 Oct 2000
PROFESSOR HAMERMESH: Let me introduce our panelists, but do that after a few opening words about the subject of our presentation. Vice-Chancellor Jacobs' story about the predictions of the dominance of Rule 10(b)(5) in corporate governance, in corporate law generally, prompts me to make the following observation. The content of this panel will include forward-looking information. There can be no assurance that the actual outcome of future events will correspond to what is suggested here. Such outcomes will depend upon many factors, including business results, marketing changes, etcetera, etcetera. And having discharged my duty under the Private Securities Litigation Reform Act of 1995, we can now proceed with the substance. It was a very happy accident that occurred to me one day a little over a year ago that the hundredth anniversary of the enactment of the original Delaware General Corporation Law coincided, pretty closely anyhow, with the millennium. And with the deluge of millennial thinking, it prompted me to wonder whether or not it might be an opportune time for us to gather to think about major changes forthcoming in corporate law over the next hundred years.
The occasion was not purely the product of a chronological accident. The speakers in our previous panel have already pointed out major seismic changes in the world in technological progress, globalization, all interrelated, all of which will have an enormous effect on the way we do business as lawyers and as business people in the coming years.
Picking up on Dick Agnich's suggestion, I start out this panel with one blindingly obvious observation: a revolution has occurred in corporate law through the advent of the institutional investor. The term "institutional investor" is one that perhaps twenty years ago didn't roll off the tongue as commonly as it does today, but it does roll off the tongue all the time today for very good reason. As Dr. Carolyn Brancato will explain in specific numerical graphic detail, the institutional investor has arrived as a major economic force and, therefore, a major force in corporate governance and the structure of corporate law generally. Our job in light of this sea change seismic development with the advent of the institutional investor is to consider what its likely impact is going to be on corporate law and Delaware general corporate law in particular in the coming years.
I have the pleasure to have here with us today some of the very top people who are in a position to analyze that question and tackle that job. Dr. Carolyn K. Brancato is the director of the Global Corporate Governance Research Center of the Conference Board, the author of two major books on corporate governance, Institutional Investors in Corporate Governance, Best Practices for Creating Corporate Value,1 and Getting Listed on Wall Street.2 Dr. Brancato has twenty-five years of experience in this field and I think judging by her curricular performance and what materials she's churned out, I think it's fair to characterize her as one of the deans, one of the top analysts of institutional investor behavior. So it's definitely a pleasure to have you with us this morning. I will say for the benefit of those who would prefer to be out sailing on a nice day like today that Dr. Brancato has given up that opportunity, has abandoned her vessel moored usually in Annapolis and is with us today instead.
Let me next introduce Michael Price. Mr. Price is also someone one would fairly characterize as a dean of institutional investors. The difference is that, I think Dr. Brancato would concede this, he is an active practitioner of the art as opposed to an accomplished analyst of it. Mr. Price is distinguished, in part, by having received a Doctor of Humane Letters from the University of Oklahoma from which he graduated, but I think among the minds of most of us he's most distinguished by his long and distinguished career as an institutional investor and a leader in what might be described broadly as the corporate governance movement. He's the Chairman of the Board of Franklin Mutual Advisers and Franklin Mutual Series Fund, formerly chairman of Mutual Shares Fund. And we're also very pleased to have his insights with us today.
As commentators, aside from myself, I want to introduce two very distinguished people. First of all, let me introduce Joseph Rosenthal of the Wilmington firm of Rosenthal, Monhait, Gross & Goddess. I would characterize Joe as being someone who has used his long years in the Bar to stride the colossus of the plaintiff's bar and corporate class action litigation with a deep devotion to shareholder rights and a commanding knowledge of shareholder litigation. And I'm most interested in having his observations about how his field dovetails with the institutional investor phenomenon we'll be looking at here today. Last and certainly not least, Chancellor William B. Chandler, III, Chancellor of the Delaware Court of Chancery. Chancellor Chandler has made it, as many of you are well aware, a practice of commenting publicly on corporate law developments, and he and the other members of his Court and the Delaware Supreme Court to my mind are to be complimented for their extracurricular devotion to the subject that brings us here today, corporate law and corporate governance.
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