Category: Corporate

While corporations have historically committed human rights and environmental conservation violations, it is undisputed that they have taken several steps in recent years to reduce their negative impact on the world. Perhaps the most important fundamental change in the framework of corporate responsibility is the United Nations Guiding Principles on Business and Human Rights. The principles lay out three “pillars”: (1)the state’s duty to protect human rights, (2)the corporate responsibility to respect human rights and (3)the need for available remedies for victims of corporate abuses. [1] But can companies live up to these standards? NGO(Non-government Organizations)/Corporate partnerships may be the answer, but they are in dire straits.

   The Guiding Principles were released to open support by the business community, with companies like Coca-Cola calling them flexible and a great foundation for corporate responsibility.[2] However, while companies have endorsed them for the most part, they remain responsibilities and … Read the rest

Background

In 2011, Martha Stewart called Macy’s CEO Terry Lundgren and announced she wanted to have her cake and eat it too – she was breaking her contract with the company. [1]

The contract granted Macy’s exclusive rights to sell Stewart’s bed, bath and kitchen merchandise. [2] In exchange for these rights, Macy’s spent millions to bring Stewart (then fresh out of prison) back to the forefront as America’s homemaker extraordinaire. [3]

But after some questionable missteps from competitor JC Penney, Stewart decided exclusivity was not in her best interest.

The Macy’s contract forbid Stewart from designing products in those categories of housewares for anyone else. The contract made a very narrow exception for Martha Stewart-owned stores. [4]

Ron Johnson, JC Penney CEO at the time, knew about the Macy’s contract when he offered Stewart a competing contract. [5] As part of his plan to keep his struggling department store … Read the rest

Pursuant to enacted legislation, shareholders of publicly owned companies are entitled to hold a non-binding vote on executive compensation packages (say-on-pay). With the 2011 say-on-pay votes complete and a substantial portion of the 2012 say-on-pay votes well underway, analysis of all the available data is beginning to give say-on-pay supporters reason to celebrate.

During the first Congressional hearing into the financial crisis, Richard Fuld, the former Chief Executive Officer of Lehman Brothers, was forced to defend his receipt of $484 million in salary, bonuses, and stock options between 2000-2008 http://abcnews.go.com/Blotter/story?id=5965360&page=1#.UIFzH6DNlFI. Part of his explanation was to suggest that, because the collapse of Lehman relegated his stock worthless, his actual earnings were closer to $350 million (Id.). He conceded, “That’s still a lot of money” (Id.).

That sure is a lot of money for someone who, by virtue of his title as CEO, bears responsibility for the taxpayer … Read the rest

During a typical six-month season, the environment in National Football League (“NFL”) stadiums can easily be characterized as masculine. However, during the month of October, players take the field in pink sweatbands, cleats, and chin straps; play with a pink, embellished pigskin; and even wipe their sweat with a pink towel. The referees also take part, blowing their pink whistles when a player in a pink-accented jersey does something that runs afoul of the game. This is the NFL’s way of supporting breast cancer awareness month alongside a multitude of other companies and nonprofits. During October, a breast-cancer-research “superfan” could purchase almost any product allegedly supporting the cause including dish soap, measuring cups, Snuggies, and bike helmets. If that fan is hungry, they can pick up a pink bucket of fried chicken from KFC. Breast cancer awareness month motivates companies to capture consumer dollars with a promise (even if … Read the rest

Chicago, Illinois… ever heard of it? Apparently their mayor, Rahm Emanuel, doesn’t think enough businesses have, or at least seriously consider it as a place to set up shop. Incorporated in 1999, World Business Chicago (“WBC”), a city-funded nonprofit group, is the city’s economic development office, tasked with the duties of “coordinating retention, attraction and expansion efforts in order to spur and accelerate economic growth.” Emanuel has taken a specific interest in this office, roughly tripling its size since his election this past May. Wanting to stimulate Chicago’s and Illinois’ economic growth is warranted. You may have seen the “IL: Deadbeat State” headlines highlighting debts totaling $200 billion.

Despite such need for economic growth, Chicago’s Inspector General has been skeptical of the WBC, even suggesting in the 2011 Budget Options to eliminate the $1.4 million city subsidy the WBC receives. This article explores the three reasons the Inspector General has proposed cutting the WBC: … Read the rest

Many television commentators and academics claim that executive compensation is skyrocketing out of control. While the commentary on television is most likely rooted in populism, academics explain this contention by resorting to board capture theory. According to board capture theory, corporate boards of directors are dominated by their firm’s top executives. Thus, when an executive negotiates his compensation, he is effectively negotiating with himself and people who want to keep him happy. Therefore, executives get substantially more favorable compensation packages than they would if their contracts were negotiated in an arms-length and adversarial manner.

A solution to this problem was recently presented to the Illinois Corporate Colloquium by Harwell Wells. In their working paper available on SSRN, “Executive Compensation in the Courts: Board Capture, Optimal Contracting and Officer Fiduciary Duties,”¹ Professor Wells and Professor Randall Thomas argue that the courts can step in to solve the problem … Read the rest

I. INTRODUCTION

The role of the General Counsel (GC) expands beyond the traditional chief legal officer of the company. [1] Scandals involving insider trading, white-collar crime, and the recent economic crisis have lead to the expansion of corporate governance regulations. [2] The GC serves as an overseer of corporate governance and compliance, therefore, it is important to analyze the board of directors’ methods for monitoring the expanding role of the GC. Furthermore, the many hats the GC wears in today’s modern corporation potentially includes holding dual roles as the corporation’s chief legal officer and a member of the executive management team. [3] This dual role will be analyzed to determine if the GC having a seat at the strategic management table benefits the corporation or hinders the GC’s role as the corporate police officer. [4] Given the complexity of the GC role and the important connection of the role to … Read the rest