M. Eleanor Schmalzl ‘20
Last Friday, John W. Glynn and the Virginia Law Business Program co-hosted A View From the Boardroom: Directors in an Era of Activism. The event included a variety of panelists and, as the keynote speaker, Delaware Chancery Court Vice Chancellor J. Travis Laster ’95. Speakers throughout the day discussed a variety of hot-button corporate legal matters, including issues around activist investors, what it means to maximize value while serving as a member on a corporate board, and topics surrounding diversity in the boardroom.
The day kicked off with an all-female panel that discussed the question of how to improve diversity on corporate boards. Mary Margaret Frank, a professor of business administration at Darden, discussed the pitfalls of regulations mandating a certain number of women on corporate boards. Frank emphasized the importance of seeking quality over quantity and her optimism that, by letting market forces work, companies will realize the value of board diversity and suffer adverse consequences if they do not move with the tide. Gloria Larson ’77, President in Residence at the Harvard Graduate School of Education, agreed with Frank and discussed how important male allies are. And our own Michal Barzuza of UVA Law echoed Frank and Larson on how critical it is to expand the search when seeking new board directors. Without a thorough search, the best female candidates can go unnoticed.
Panelists during the rest of the day discussed the continued growth of activist investors, individual people or firms that acquire large shares of stock in a company to try and influence who sits on the board and what company decisions look like. While panelists thought some players in the investing sector played bigger roles than others and had differing ideas on what activism would look like in the future, most agreed that activism is here to stay. As we continue to see growth in activist investing and outsiders work to gain control over board seats, the role of those on the board to maximize value becomes increasingly complex. Laster discussed the role boards should play in maximizing company value, even if that means merging the company or otherwise ending its corporate life.
Laster, who graduated first in his UVA Law class before clerking, starting his own law firm, and beginning his service on the Delaware Court of Chancery, spoke to students to discuss the key fundamentals behind corporate law and boards of directors. He centered in on key questions such as to whom board members owe fiduciary duties, what those duties are, and what happens when these duties are breached. Laster discussed the differing standards of review on the Court of Chancery and how critical these standards are in making decisions. In closing, Laster encouraged students to apply for clerkships and to not overlook how valuable clerking at the state level can be.
After spending last semester in Corporations with Professor Curtis, I thought Laster did an excellent job summarizing the key doctrines of corporate law and describing what big issues remain relevant. Most compelling to me was his discussion on what it means to maximize shareholder value. He stressed the importance of remembering that, in aiming to maximize shareholder value, board members shouldn’t necessarily be doing whatever is in their power to keep the company alive as its own entity. Sometimes the best move is to pursue a merger, allow a takeover, or otherwise terminate the corporation for the sake of creating the most value for investors. Laster cited movie rental companies as an example of this important point; these businesses faced an increasingly uphill battle in maintaining value for stakeholders and some, instead of trying to stay relevant, looked for ways to maximize value beyond remaining a corporate entity. Laster emphasized the importance of strategy in the boardroom and left the audience with a lot of great takeaways.
Several students attended all the panels and discussions held in Caplin Pavilion, excited to learn more about what key issues were dominating the corporate legal profession. Read Mills ’20, said, “The keynote address was fantastic. Vice Chancellor Laster provided valuable insight into how courts view and assess a corporation’s fiduciary duties to activist shareholders. I was really interested to hear his perspective on why Delaware’s standard of conduct and standard of review work together to give corporations flexibility and promote efficiency.” Sydney Mark ’20 also found the event to be a great learning experience. Mark told the Law Weekly, “I thought Professor Curtis did a great job of getting a variety of opinions and thought it was a well-done event. Everyone should be required to listen to the first panel because they were amazing and [the panel] is totally applicable beyond the boardroom.”
Mark and Mills, along with several others, really enjoyed the day spent learning about the big issues that they and their colleagues could be directly addressing in their future legal careers. As these issues continue to evolve, it is important to continue to be engaged in the conversation. Events like this help students take control of their learning and hit the ground running when they enter the legal profession after law school.