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A LITTLE BIRDIE SAID: HOW TWITTER IS DISRUPTING…, 20 Fordham J. Corp….
20 Fordham J. Corp. & Fin. L. 695
Fordham Journal o --- Corporate and Financial Law
2015
Essay
A LITTLE BIRDIE SAID: HOW TWITTER IS
DISRUPTING SHAREHOLDER ACTIVISM
Seth C. Oranburg a1
Copyright © 2015 by Fordham Journal o --- Corporate & Financial Law; Seth C. Oranburg
ABSTRACT
Shareholders are organizing and mobilizing on new social media plat
orms like Twitter. This changes the dynamics o — shareholder proxy contests in ways that — avor shareholders over management. Disruptive technology may bring about a shareholder revolution, which may not be in shareholders’ best interests, at least — rom the perspective o — shareholder wealth maximization, and it also has power — ul implications — or the — uture o — corporate social responsibility.
TABLE OF CONTENTS INTRODUCTION 695 I. THE REVOLUTION WILL NOT BE TELEVISED 697 A. Rule 14a 700 B. The 1992 Amendments 701 C. Shareholder Social Media 705 II. TILTING THE PLAYING FIELD AGAINST MANAGEMENT 707 III. TECHNOLOGY AND DEMOCRATIC SHAREHOLDER REFORMS 712 CONCLUSION 716
INTRODUCTION
Twitter o
ers a plat — orm — or global social interaction. Twitter users send “tweets,” which are a sort o — 140-character text message to the world. About 500 million tweets are sent every day. 1 This social media *696 plat — orm can be a power — ul — orce — or enabling collective action in modern society.
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This essay will
ocus on one type o — collective action that many scholars have concluded simply does not work. Shareholder activism, which has long been plagued by collective action problems including rational apathy and — ree riding, could be rejuvenated by emerging social media tools like Twitter. Tweets are a cheap and easy way — or shareholders to engage with each other and build consensus and support — or collective action.
The notion that Twitter
acilitates collective action is not new 2 (although this paper’s application o — Twitter to shareholder activism is novel). Twitter and other — orms o — social media have been widely adopted by marketing — irms and political campaigns as a means o — coordinating otherwise disconnected individuals and groups. Perhaps most — amously, scholars o — the Arab Spring widely credit Twitter, along with Facebook, YouTube, and other social in — ormation networks, with galvanizing Arab Spring activism. 3
The Arab Spring was a revolutionary movement that began in Tunisia on December 17, 2010 and erupted into large-scale protests across the Arab world by mid-2012. 4 The result o — these civil uprisings was the overthrow o — authoritarian and totalitarian leaders in Tunisia, Egypt, Yemen and Libya. 5 The root causes o — these mass protests are complex and multi — aceted. But many scholars agree that a major catalyst *697 — or the Arab Spring was the advent o — social media, especially Twitter, and its role in driving awareness and collective action. 6
I. THE REVOLUTION WILL NOT BE TELEVISED
Many scholars have made analogies between corporations and nations. 7 A corporation’s charter is o — ten re — erred to as a “private constitution.” 8 Shareholders have the right to elect the leaders o —
corporations, the board o
directors, much as democratic citizens have the right to elect legislators. Those analogies are worth revisiting in an era where overly authoritarian nations risk being overthrown by the tweeting masses and their charismatic leaders.
It turns out that a lot o
things can be said in 140 characters. For example, Carl Icahn, the — amous activist investor, grabbed Wall Street and the tech world’s attention when he tweeted caustically, “All would be swell at Dell i — Michael and the board bid — arewell.” 9 However, the SEC-mandated disclosure that is supposed to be included on all public-securities-related communications is not among them. 10 Another *698 problem with using Twitter to communicate about securities matters is that it might violate Regulation Fair Disclosure.
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As a purely legal matter, Twitter is limited in its ability to
acilitate shareholder activism. Shareholder communication rules are more liberal than ever, 11 but shareholder voting rules remain strictly limited by SEC rules and securities laws. Shareholders can and do use Twitter to communicate and become in — ormed about important upcoming shareholder votes. For example, shareholders who would never rationally read a 300-page proxy statement might respond to a 140-character tweet. But i — shareholders actually want to vote — or a precatory proposal or against management, they still need to — ill out a proxy card or attend the annual meeting to vote. 12 And the proposing shareholder still has to actually attend the meeting. 13 In an increasingly digital world, such traditional structures start to seem quaint, inconvenient, and unnecessary, leaving one to wonder why a physical meeting even needs to take place. 14
Attending an SEC-mandated shareholder voting procedure costs time and trouble beyond what a small shareholder is rationally willing to spend. But all that can change with online shareholder voting. 15 The *699 SEC could do away with the rules requiring physical meetings, and the proxy process could be replaced with direct, real-time democracy.
In
act, it is so onerous to attend the physical annual meetings that most shareholders do not go. 16 Instead they submit ballots to designated representatives who then tabulate them and vote by proxy. 17 Perhaps with the only exception being the widely — ollowed and well-attended Berkshire- Hathaway annual meeting, most shareholders cannot justi — y the cost o — exercising their voting rights in person. 18 Thus, a great deal o — shareholders cast their vote without the bene — it o — annual meeting presentations and participatory question and answer sessions. 19 More shareholders might attend and vote electronically, i — annual meetings were simulcast or otherwise electronically interactive. 20
The SEC could re
orm Rule 14a, which governs the public shareholder voting process, to allow voting online. The — ormal proxy solicitation process could be replaced by a more — luid and dynamic system to — acilitate social media shareholder activism. With just a — ew liberalizing re — orms, the SEC could usher in a new era o — shareholder activism, perhaps even creating a new — orm o —
corporation, governed by shareholder direct democracy.
*700 A. RULE 14A
Rule 14a governs shareholders’ rights to present proposals at the annual meeting. 21 In an interesting juxtaposition o — history, Rule 14a was itsel — born in the crucible o — war. In 1942, just
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a
ew months a — ter the December 7th attack on Pearl Harbor–when democracy itsel — seemed mortally vulnerable to totalitarian regimes–Congress decided to bolster democracy at home through the institution o — capitalism. 22
Congress determined that shareholders o
public companies regulated by the Securities Exchange Act o — 1934 lacked vital rights to voice their concerns about corporate mismanagement. Thus Congress passed, and the SEC promulgated, rules allowing shareholders to propose “precatory proposals” — or a shareholder vote. The rules, Congress reasoned, would provide — or a kind o —
“shareholder democracy.” 23
A precatory proposal is a type o
non-binding resolution. The shareholders get to vote on a precatory proposal, but even i — it passes, management does not have to accede to shareholder demands. But precatory proposals have — orce nonetheless. Just like the congressman who needs to think about the next election almost as soon as he is installed in o —
ice, directors cannot a —
ord to alienate their voting base. A director who constantly ignores shareholder proposals may not success — ully stand — or reelection, just as a congressman will have trouble securing votes i — he ignores demands — rom his constituents. 24
*701 The initial problem with precatory proposals was that they were just too easy to make. 25 Shareholders who had tiny stakes in huge companies could badger management with unrelated requests and pet projects. Over the course o — the next — i — ty years, shareholders’ rights to make proposals and communicate with each other about voting — or proposals and directors was limited by a succession o — amendments to Rule 14a. 26 In — act, Rule 14a is one o — the most heavily amended rules in all o — securities law. 27 The result o —
i — ty years o — pro-management amendments to Rule 14a was a shareholder voting system so convoluted and challenging that shareholder democracy virtually disappeared. 28
B. THE 1992 AMENDMENTS
In 1992, the SEC
inally reversed its course o — the previous — i — ty years and allowed shareholders to communicate with each other about shareholder voting. 29 SEC Chairman Richard C. Breeden gave a speech on October 15, 1992, announcing a total overhaul o — Rule 14a. His goal *702 was nothing less than to change the dynamics o — corporate governance in America. 30 Breeden recognized that the SEC had created a system that:
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was supposed to protect shareholders [but] sometimes works to insulate
management in problem cases --- rom accountability to their shareholders ... a system
in which it takes the permission o --- the --- ederal government, teams o --- lawyers and
millions o --- dollars --- or shareholders to discuss the --- uture o --- the company they own
in a newspaper op-ed or on a radio talk show. 31 Mr. Breeden analogized the proxy system to an undemocratic political system:
I --- the current proxy rules --- or corporate elections applied to our national political
elections, then every time citizens wanted to discuss their views o --- President Bush,
Bill Clinton or Ross Perot, they would have to --- ile a description o --- themselves
and their views with the SEC. Discussing tonight's debate in the newspaper or on
television would require mailing a proxy statement to every registered voter in the
country. 32
On October 22, 1992, the SEC announced that, “[t]he purposes o
the proxy rules themselves are better served by promoting — ree discussion, debate and learning among shareholder and interested persons, than by putting restraints on that process to ensure management has the ability to address every point raised in the exchange o — views.” 33 In accord with this newly espoused democratic shareholder philosophy, the SEC amended the Rule in many critical ways, including rewriting it in a user- — riendly, question-and-answer — ormat. 34
Prior to the 1992 amendments, the SEC generally pre-reviewed all shareholder communications regarding a shareholder vote. 35 Shareholder *703 opinions were thereby moderated by SEC review. 36 A — ter 1992, the SEC no longer per — ormed this pre-review — unction because most shareholder communications no longer had to be — iled. 37
A
ter the 1992 amendments (which were not promulgated until 1998), shareholders received many new techniques to communicate, organize, meet and share in — ormation with management without incurring huge expense or delay. Moreover, without SEC pre-review, unmoderated shareholder communications were — ar less polite to management. Vitriolic shareholder messages heralded in a new era o — aggressive shareholder campaigns against management.
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Even though Al Gore invented the Internet in the early 1990s, 38 the SEC did not allow shareholders and companies to post shareholder voting materials on the Internet until 2007. 39 That year, the SEC *704 amended Rule 14a to allow companies to do so (rather than require companies to physically mail all that paper to shareholders). 40
Making shareholder communications cheaper was clearly a primary purpose o
the SEC in enacting this amendment. 41 The SEC concluded that “[t]he amendments put into place processes that will provide shareholders with notice o — , and access to, proxy materials while taking advantage o — technological developments and the growth o — the Internet and electronic communications.” 42 It — urther stated that “[t]he amendments also might reduce the costs o — engaging in proxy contests
or soliciting persons other than the issuer.” 43
The next advance in shareholder communication was to allow it in real-time through “the use o — electronic shareholder — orums.” 44 The problem is, no one really knew what an electronic shareholder — orum *705 was. Was it a chat room? A social media web site? An open source blog?
C. SHAREHOLDER SOCIAL MEDIA
Facebook apparently is not an “electronic shareholder
orum.” Social media — irst got CEOs into trouble on July 3, 2012, when Net — lix CEO Reed Hastings posted to his personal Facebook page, “Net — lix monthly viewing exceeded 1 billion hours — or the — irst time ever in June.” 45 Net — lix stock price increased 10% that day, and the SEC investigated whether Hastings’ post violated Regulation Fair Disclosure. 46
Regulation Fair Disclosure, or Reg FD, requires public companies to disclose material in
ormation to all shareholders at the same time. 47 Reg FD is a relatively new rule promulgated in August 2000. At that time, only reporters and large investors were invited to the quarterly analyst con — erence calls, where results o — the past quarter were — irst disclosed. Small investors who traded over the Internet wanted equal access. Reg FD granted them equal access to material non-public in — ormation.
Eventually the SEC
ound that Reed Hastings’ Facebook post did not violate Reg FD. 48 But that particular determination did not settle the SEC’s general position on the issue because the SEC expressly stated that the Hastings decision had no precedential value, although the report did set
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out core principles. Accordingly, to avoid liability, companies and management now tend to
ile a Form FD and 8-K — or every potentially material tweet, blog post or other social media missive. 49
*706 But activist shareholders don’t have to make these
ilings. 50 In contrast to Hastings’ post, the SEC did nothing when Carl Icahn tweeted, “We currently have a large position in APPLE. We believe the company to be extremely undervalued.” 51 Apple’s stock price increased by nearly 5% on the day o — Icahn’s tweet, adding over $17 billion to its market capitalization at its intraday high. 52 Icahn has since become a poster child — or Twitter activism, employing Tweets to announce new activist e —
orts to the market, with great e —
ect. Icahn’s brie — dispatches o — less than 140 characters have moved markets, including announcing a 6% stake in Canadian oil and gas explorer Talisman Energy, resulting in a 6.4% stock price increase in a — ter-hours trading, 53 and announcing a 9.4% stake in Family Dollar Stores, resulting in a 9.7% stock price increase in a — ter-hours trading. 54 Forbes described Icahn’s use o — Twitter to publicize an investment in Gannett as “typical Icahn — ashion.” Shares in the media company rose 5% in a — ter-hours trading — ollowing Icahn’s announcement. 55
*707 II. TILTING THE PLAYING FIELD AGAINST MANAGEMENT
Shareholders can use social media in ways management cannot. Reg FD applies to Reed Hastings, CEO o — Net — lix, but not Carl Icahn, stockholder o — Apple. Activists can now access virtually all shareholders and in — luence public opinion through social networks, relatively unencumbered by reporting requirements under SEC rules. But management cannot simply tweet back to the critiques o — activists. Despite the — act that Hastings was — ound not to have violated Reg FD with his Facebook post, it is not clear that management can simply respond to activist banter without risking a disclosure violation. Management has to — ight proxy battles in the social network arena with one hand tied behind its keyboard while activists use the — ull power o — social media to their advantage.
Management does have one advantage: the power o
the purse. Management can pay — or its own re-election campaign with corporate money. In such a “proxy contest,” management might spend up to $22,000,000 o — corporate money to stay in power, 56 which is law — ul under Delaware law. 57 However, board access to the corporate co —
ers to — und reelection campaigns–an antidemocratic — eature o — corporate law–might become less signi — icant as shareholder engagement gets *708 cheaper and more democratized. 58 Modern low-cost yet e —
ective shareholder campaigns abound. For example, — or — our consecutive years shareholders have organized to press
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ExxonMobil and other oil and gas companies to disclose the dangers o
hydraulic — racking. 59 Management vehemently opposed this corporate social responsibility initiative. But when the ExxonMobil shareholders got enough votes to pass a precatory proposal — or — racking risk disclosure, management capitulated. 60
Other shareholder campaigns are less success
ul in moving management to change its policies, but they may yet be e —
ective in accomplishing goals o — awareness and corporate social responsibility. For example, Grassroots activist shareholders–who originally organized on the Internet–descended on Sa — eway’s annual shareholder meeting to protest genetically modi — ied (“GMO”) — oods. Inside the meeting, shareholders voted on a proposal to remove GMO — oods — rom Sa — eway shelves that was proposed by the Sisters o — Notre Dame de Namur, a Roman Catholic order, who owned 8,800 shares o — Sa — eway stock, 61 representing only about 0.00173% o — the outstanding shares at that time. 62
Only 2% o
shareholders supported the proposal to remove GMO ingredients — rom its products, 63 and the proposal did not pass, but the demonstrations– which consisted o — shareholders in biohazard suits *709 dumping Sa — eway produce in garbage bins in — ront o — the hotel where the annual meeting was held–attracted signi — icant media attention. 64
Another grassroots movement, 99% Power, an o
shoot — rom the Occupy Wall Street movement, 65 organized protests at the shareholder meetings o — major banks during their annual meetings in Spring 2012. 66 At least 500 protesters gathered at the Wells Fargo annual shareholders meeting, o — which about two dozen were arrested — or chaining themselves together to block entry to the meeting at the bank’s headquarters and — or entering the meeting and interrupting CEO John Stump — during his presentation. 67 The protest, which included signs that read “Hells Fargo” and hand-outs o — dollars bills with an image o — a stagecoach (Wells Fargo’s corporate logo) pulled by human beings with the caption “Debt Slavery,” became so active that some shareholders were not allowed to enter the meeting. 68 One such shareholder even used *710 the protest’s Twitter hashtag to voice her — rustration that the protest prevented her — rom voting her shares. 69
Just like the physical protests in the Arab Spring that were organized through social media plat — orms, grassroots shareholder activism can be organized and empowered by Twitter and Facebook. In — act, the Wells Fargo protest was planned, organized and broadcast live using social media. The web site “Stop Wells Fargo” was established to — ocus attention on and raise support
or “major disruptions” at the Wells Fargo shareholder meeting. 70 Visitors to that website were
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invited to “Follow the action on Twitter with #w
24 #w — shareholders #not — eelingwells 71 and on Facebook. 72
Such happenings suggest that shareholder activism may
ace some o — the same challenges as political activism and potentially look less like Bulldog Investors 73 and more like Occupy Wall Street. 74 Brayden King 75 *711 has noted that activism through social media is inherently di —
erent — rom “classic” activism. It is not, “we are going to tout the party line, we are going to say what the NGOs are telling us to say.” Instead, King notes that it is, “we are going to personalize it. And this can catch activists by surprise. They may have gotten the ball rolling, but what actually occurs — alls out o — the control o — any hierarchical entity.” 76 The most poignant distinction is that grassroots shareholder activism can quickly become unpredictable.
Grassroots shareholder activism is not necessarily directed at unlocking shareholder value. There have been numerous studies on whether shareholders’ ability to control or at least reign in corporate activity increases share prices. 77 This inquiry is particularly pertinent to the shareholder social media activism. Many grassroots shareholder campaigns are sponsored by shareholders with minimal holdings. The old name — or these pesky shareholders was “corporate gad — lies.” 78 Some gad — lies are peskier than others: two-thirds o — all proposals submitted to Fortune 150 companies between January 1, 2008 and August 1, 2011 by individual investors came — rom Evelyn Davis and members o — the Steiner, Chevedden, and Rossi — amilies. 79
Non-pro
its have — ormed solely to purchase minimal amounts o — securities and leverage Rule 14a to make precatory proposals to major *712 corporations. As You Sow, a non-pro — it — ounded in 1992 to increase corporate accountability, launched its shareholder activism program in 1997, 80 whereby As You Sow would purchase $2,000 in securities, hold them — or one year, then make precatory proposals related to various social issues. 81 Corporate social responsibility activist As You Sow is a per — ect example o — how a shareholder may purchase securities — or purposes other than value creation.
Whether shareholder democracy is good or bad is an immensely personal and political question. Corporate law has not–and may never–settle on whether corporations must maximize shareholder wealth or prioritize corporate social responsibility. It is clear, however, that social media, in an age o — already increasing shareholder democracy and activism, is a power — ul new tool — or proponents o — corporate social responsibility.
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III. TECHNOLOGY AND DEMOCRATIC SHAREHOLDER REFORMS
A public corporation is similar to a republic in that both employ representative democracy. Shareholders delegate broad decision-making powers to a board o — directors, just as voting citizens delegate lawmaking powers to legislators. A direct democracy, 82 on the other hand, allows citizens to directly partake in voting on policy *713 decisions by re — erendum. 83 The — ramers o —
the American constitution dis
avored direct democracy, 84 as does corporate law.
Historic trans
ormations in the way we communicate could make corporate direct democracy, in which shareholder voters play an integral role in a broad scope o — corporate decision-making, possible and even practical. With just a — ew SEC-sponsored tweaks to the — ederal securities law and some modi — ications to key state statutes like the Delaware General Corporations Law, American public companies could be run as direct democracies. Innovations like webcasting, Twitter and Internet Protocol Security make it — easible — or shareholders to gain immediate access to extensive managerial and operational in — ormation and vote in real-time on a wide array o — corporate matters.
In light o
the social-media organized mass movements like the Arab Spring and Occupy Wall Street–and being mind — ul o — corporate social responsibility organizations like As You Sow– would shareholder direct democracy be a glorious conclusion to the capitalist era, or would it be a crippling impediment to e —
icient economic — unctioning? Some may have a bias toward one approach or the other. But a middle road to this modern circumstance is to let the market determine which corporate political structure is best.
The SEC does not have to mandate corporate direct democracy. But the SEC could allow it. Individual public corporations would then have the option to allow shareholder direct democracy or retain the traditional — ramework o — delegation to and representation by a board o — directors.
Empirical studies are con
licted on whether shareholder primacy is e —
icient, and whether markets value it. 85 A 2003 study — ound that *714 stronger shareholder rights correlated with higher
irm value, higher pro — its, higher sales growth, lower capital expenditures and — ewer corporate acquisitions. 86 But in 2013, Lynn Stout argued that more recent studies conclusively show that shareholder primacy does not maximize shareholder value (measured by share price). 87
Maximizing shareholder value, however, is only one goal o
corporate activity. Corporate social responsibility is, increasingly, another. Corporate direct democracy should not be prohibited as a
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possible corporate
orm even i — it does not maximize shareholder value in every instance or even in the majority o — cases.
Certain businesses may bene
it — rom direct shareholder democracy while others may be harmed by it. Highly secretive — irms like Apple, — or instance, may — ind their bottom line is hit hard when decisions are made by the masses. Organic — ood retailers like Whole Foods, however, may — ind shareholder direct democracy gives them legitimacy in a marketplace where shoppers choose the most transparent and community oriented company.
In point o
act, many corporations today voluntarily expend money, make disclosures, and commit to social-bene — it promises to become certi — ied as bene — it corporations, or B-corporations. 88 A B- corporation is a type o —
or-pro — it entity that has some non-pro — it characteristics (but not its tax- exempt treatment). The shareholders o — a B-corporation agree (at least theoretically) to evaluate the company based on its societal or environmental impact, and not solely on its pro — its.
The corporate landscape is changing. Corporations have a broader range o
purposes than they did even a — ew short years ago. The world is *715 changing, too. Technology is allowing people to connect and coordinate across virtually any distance, regardless o — social or political barriers.
Corporate America is not immune to these changes. New
orms o — corporations are emerging, as are new — orms o — corporate governance, and new goals o — investors. In light o — these changes, the SEC has the opportunity to unlock shareholder governance, allowing states to create new kinds o —
corporations. Justice Brandeis
amously stated that, “It is one o — the happy incidents o — the — ederal system that a single courageous State may, i — its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest o — the country.” 89 Shareholder direct democracy is a prime example o — just such an economic experiment. Continuing the trend o —
shareholder empowerment exempli
ied by states like North Dakota, 90 a courageous state might take on Delaware’s hegemony over incorporation by o —
ering shareholders an unprecedented level o — in — luence and involvement in the companies they own.
One way to unlock new shareholder governance regimes is simply to allow Internet voting. The shareholder annual meeting is an anachronism. It imposes great expenses on shareholders, e —
ectively excluding many would-be participants. The direct bene — iciaries o — the current system are the institutional investors. Small shareholders who cannot a —
ord to attend the meeting are excluded — rom the process, or at the very least le — t with limited access to in — ormation and diminished interaction with board members and management, just as small shareholders who were not invited to attend the quarterly analyst calls were excluded — rom timely receiving material non- public in — ormation.
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Corporations will either modi
y their bylaws to allow virtual shareholder meetings and Internet voting, or they will preserve the status quo. By opening up a new avenue — or shareholder engagement, the SEC will create an opportunity — or the market to decide what mixture o —
shareholder corporate control it values most–even i
that control is democratized.
*716 CONCLUSION
The shareholder revolution will not be televised. It will be simulcast, tweeted, liked, shared and +1’d. Human communication is changing due to technologic advancement, and inter-shareholder communication is changing along with it. SEC rules about how shareholders may communicate with each other and management currently restrain the potentially disruptive — orce o — innovative communication, but changes to a — ew simple rules could open up a world o — new possibilities
or shareholder activism. I — the last twenty- — ive years o — shareholder regulation tend to predict its — uture, the trend o — SEC liberalization o — shareholder communication will likely continue. Shareholder democracy, long considered a myth, may soon become a reality. The question remains, how much democracy do we really want?
Footnotes a1 Visiting Assistant Pro — essor o — Law, Florida State University College o — Law; J.D., University o — Chicago Law School, cum laude; B.A., University o — Florida, manga cum laude.
1 About, TWITTER, https://about.twitter.com/company (last visited Mar. 5, 2015).
2 See, e.g., Alexandra Segerberg & W. Lance Bennett, Social Media and the Organization o
Collective Action: Using Twitter to Explore the Ecologies o — Two Climate Change Protests, 13 COMM. REV. 197 (2011) (concluding that Twitter and similar social technologies provide new social organizing mechanisms that provide new data about these movements and their participants).
3 See, e.g., P.N. Howard et al., Opening Closed Regimes: What Was the Role o
Social Media During the Arab Spring?, PITPI (2011), http:// pitpi.org/index.php/2011/09/11/opening-closed-regimes-what-was-the-role-o — -social-media-during-the-arab-spring/.
4 Ismaeel Naar, Timeline: Arab Spring, AL JAZEERA (Dec. 17, 2013), http://www.aljazeera.com/indepth/interactive/2013/12/ timeline-arab-spring-20131217114018534352.html; Garry Blight, Sheila Pulham & Paul Torpey, The Path to Protest, THE GUARDIAN (Jan. 5, 2012), http:// www.theguardian.com/world/interactive/2011/mar/22/middle-east-protest-interactive-timeline.
5 A Climate o
Change, THE ECONOMIST (July 13, 2013), http:// www.economist.com/news/special-report/21580624-spring- proved- — ickle-arabs-are-still-yearning-it-says-max-rodenbeck.
6 See, e.g., Howard et al., supra note 3 (analyzing over three million tweets, gigabytes o
YouTube content, and thousands o — blog posts. The study reported three main — indings: (1) social media played a central role in shaping political debates in the Arab Spring, (2) a spike in online revolutionary conversation o — ten preceded major events on the ground and (3) social media helped spread democratic ideas across international borders).
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7 See Leo E. Strine, Jr., One Fundamental Corporate Governance Question We Face: Can Corporations Be Managed
or the Long Term Unless Their Power — ul Electorates Also Act and Think Long Term?, 66 BUS. LAW. 1, 8-9 (2010) (“Although there are obvious and important reasons not to take analogizing the governance o —
or-pro — it corporations to the governance o — actual political republics too — ar, it is also vital not to ignore the clear in — luence republican principles have had on the American approach to corporate law.”).
8 See Alan R. Palmiter, Public Corporation as Private Constitution, 6 ICFAI J. CORP. & SEC. L. 8 (2009).
9 Carl Icahn, TWITTER, (July 24, 2013, 8:12 AM EST), https:// twitter.com/carl_c_icahn/status/360054783744294913.
10 Recent SEC guidance allows Tweets to hyperlink to the mandatory disclosure legend. Whether each Tweet or just one in a series o — Tweets must contain the legend is one o — several questions remaining about how the SEC will govern tweets. See, e.g., Candace Jackson, SEC’s Social Media Guidance on Required Legends Raises More Questions, HUSCH BLACKWELL (May 12, 2014), available at http://www.securitieslawinsider.com/2014/05/secs-social-media-guidance-on-required-legends-raises-more-questions/.
11 See John C. Co
ee, Jr., The SEC and the Institutional Investor: A Hal — -Time Report, 15 CARDOZO L. REV. 837, 840-41 (1994).
12 17 C.F.R § 240.14a-8 (2011).
13 Id.
14 Twenty-two states, including Delaware, allow virtual-only shareholder meetings. Federal laws are silent regarding virtual-only shareholder meetings. The New York Stock Exchange and NASDAQ require listed companies to provide shareholders with the opportunity to discuss company a —
airs with management, which a virtual meeting can supply. See, e.g., Guidelines — or Protecting and Enhancing Online Shareholder Participation in Annual Meetings: The Best Practices Working Group — or Online Shareholder Participation in Annual Meetings, BROADRIDGE (2012), available at http:// media.broadridge.com/documents/ Broadridge-Guidelines-For-Shareholder-Participation-Report.pd — .
15 See Stephen M. Bainbridge, Director Primacy and Shareholder Disempowerment, 119 HARV. L. REV. 1735, 1745 (2006) (“A rational shareholder will expend the e —
ort necessary to make in — ormed decisions only i — the expected bene — its outweigh the costs. Given the length and complexity o — corporate disclosure documents, the opportunity cost entailed in making in — ormed decisions is signi — icant. In contrast, the expected bene — its o — becoming in — ormed are quite low, as most shareholders’ holdings are too small to have signi — icant e —
ects on the vote’s outcome. Accordingly, corporate shareholders are rationally apathetic.”).
16 Lisa M. Fair
ax, Mandating Board-Shareholder Engagement?, 2013 U. ILL. L. REV. 821, 844 (2013) (“[M]ost shareholders in public corporations are dispersed and hence do not attend the annual meeting in person; instead they attend and vote by proxy.”).
17 Id.
18 See Bainbridge, supra note 15 and accompanying text.
19 See Fair
ax, supra note 16, at 845.
20 A simulcast or simultaneous broadcast is the transmission o
a live event across multiple di —
erent media simultaneously. For example, the annual meeting could be transmitted securely over the Internet using the H.323 Internet Protocol Videocon — erencing standard, while it is also being held live. For more in — ormation about secure Internet shareholder voting over webinar simulcast, see Andrew Regenscheid & Geo —
Beier, Security Best Practices — or the Electronic Transmission o — Election Materials — or UOCAVA Voters, NAT’L INST. OF STANDARDS AND TECH. (2011).
21 17 C.F.R § 240.14a-8 (2011).
22 Alan R. Palmiter, The Shareholder Proposal Rule: A Failed Experiment in Merit Regulation, 45 ALA. L. REV. 879, 879 (1994) (“The history o — Rule 14a-8 o —
ers, in microcosm, a study o —
ederal involvement in the shareholder-management relationship o — the American public corporation. Emerging — rom the Great Depression, the SEC promulgated the rule in 1942 to catalyze what many hoped would be a — unctional ‘corporate democracy.”’).
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23 Id.
24 Leo E. Strine, Jr., Breaking the Corporate Governance Logjam in Washington: Some Constructive Thoughts on a Responsible Path Forward, 63 BUS. LAW. 1079, 1095-96 (2008) (“A host o — precatory proposals on issues like classi — ied boards, poison pills, executive compensation, and even the voting system have had a power — ul admonitory e —
ect on corporate boards, with corporate boards o — ten voluntarily assenting to non-binding proposals rather than risking wrath at the next director election.”).
25 See Susan W. Liebeler, A Proposal to Rescind the Shareholder Proposal Rule, 18 GA. L. REV. 425, 428 (1984) (“Following the rule’s adoption in 1942, the SEC continually revised the rule in an attempt to curb abuses by proponents and to determine what constitutes a ‘proper subject’ — or proposals under state law.”). In — act, the president o — the New York Stock Exchange wrote an open letter to the SEC on October 16, 1942, opposing the new shareholder precatory proposal rule (which was then known as Rule X-14A-7), on the grounds that such a rule would be another brick in the wall between markets and e —
iciency. “[T]he advantages o — a listed market may some day be outweighed by voluminous regulations[,]” NYSE President Emil Schram argued. Ironically, through the continued lobbying e —
orts o — the NYSE and corporate groups, Rule 14a itsel — became a tangled morass o — voluminous regulations. Letter — rom Emil Schram, President o — NYSE, to Ganson Purcell, Chairman, SEC (Oct. 16, 1942), available at http://www.sechistorical.org/ collection/papers/1940/19421010 SchramPurcell.pd — .
26 Rule 14a was amended with additional substantive and procedural restrictions in 1948, 1952, 1954, 1960, 1972, 1976, 1983 and 1987.
27 See Palmiter, supra note 22, at 882 (“Since its promulgation
ive decades ago, the rule itsel — has undergone no less than — ourteen revisions.”).
28 See id. (“Lately, the agency’s interpretive
lip- — lops in no-action letters have become legion …. In short, the rule is today in chaos.”).
29 Bernard S. Black, Next Steps in Proxy Re
orm, 18 J. CORP. L. 1, 2 (1993) (“The Commission’s express goal was to make it easier
or shareholders to communicate with each other, and the amendments certainly move in that direction. The SEC made important strides in that direction.”).
30 Richard Breeden, Chairman, SEC, Opening Statement at the Open Meeting o
the Commission: Shareholder Communication and Executive Compensation (Oct. 15, 1992), available at http:// www.sec.gov/news/speech/1992/101592breeden.pd — .
31 Id. at 2-3.
32 Id. at 3.
33 Regulation o
Communications Among Shareholders, Exchange Act Release No. 34-31326, 57 Fed. Reg. 48276-01 (Oct. 22, 1992).
34 Id.
35 17 C.F.R. § 240.14a-8 (2011).
36 See Steven A. Rosenblum, The Shareholder Communications Proxy Rules And Their Practical E
ect On Shareholder Activism And Proxy Contests, in A PRACTICAL GUIDE TO SEC PROXY AND COMPENSATION RULES 10-34 (Amy L. Goodman et al. eds., 5th ed. 2013), available at http:// www.wlrk.com/webdocs/wlrknew/AttorneyPubs/WLRK.22925.13.pd — .
37 See id. (“Prior to the 1992 amendments, the SEC generally per
ormed a moderating — unction in proxy contests, tempering the more aggressive materials and — orcing the contestants to provide — actual support — or their arguments and assertions. Now, the SEC no longer per — orms this — unction — or most o — the materials used in the contest.”); see also An Overview o — the Proxy Solicitation Rules, in A PRACTICAL GUIDE TO SEC PROXY AND COMPENSATION RULES 9-13 (Amy L. Goodman et al. eds., 5th ed. 2013), available at http:// www.wlrk.com/webdocs/wlrknew/AttorneyPubs/WLRK.22925.13.pd — (“A bene — it o — circulating initial soliciting materials is that they are not subject to pre-review by the SEC sta —
. These materials are — iled in de — initive — orm with the SEC on the date they are — irst used, and can there — ore be disseminated quickly and cost e —
ectively to shareholders.”).
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38 Al Gore did not actually invent the Internet. This is a re
erence to a political ga —
e by the — ormer Vice President during his interview with Wol — Blitzer o — CNN on March 8, 1999. See Glenn Kessler, A Cautionary Tale — or Politicians: Al Gore and the ‘Invention’ o —
the Internet, WASH. POST (Nov. 4, 2013), http://www.washingtonpost.com/blogs/ --- act-checker/wp/2013/11/04/a-cautionary-tale-
or-politicians-al-gore-and-the-invention-o — -the-internet/. The purpose o — this re — erence is to highlight that even senior government o —
icials recognized the importance o — the Internet — or commerce at least as early as the 1990s.
39 17 C.F.R. § 240.14a-16 (2010).
40 Internet Availability o
Proxy Materials, SEC Release Nos. 34-55146; IC-27671; File No. S7-10-05 (Jan. 29, 2007), available at http:// www.sec.gov/rules/ — inal/2007/34-55146.pd — .
41 Internet Availability o
Proxy Materials, SEC Release Nos. 34-55146; IC-27671; File No. S7-10-05 (Jan. 22, 2007). The SEC underwent a cost-bene — it analysis and determined that “[t]he costs o — solicitations ultimately are borne by shareholders.” Id. at 1. The SEC identi — ied the bene — its o — the 2007 amendment: (1) more rapid dissemination o — proxy in — ormation to shareholders and (2) reduced printing and mailing costs — or issuers and other soliciting persons. Id. at 60. During the prior (2006) proxy season, Automated Data Processing, Inc.–the corporation which handles the vast majority o — proxy mailings–mailed 85.3 million proxy items to bene — icial owners at an aggregate cost o — $962.4 million in printing and mailing costs. Id. at 61. While the 2007 amendments may save the majority o — the almost $1 billion annually spent on paper proxy mailings, the amendment also brought three notable costs: (1) the cost o — preparing and sending a — inal paper notice to shareholders explaining that — uture notices would be on the Internet, (2) the cost o — processing shareholders’ requests — or paper copies, which are to be available on demand and (3) the cost to shareholders o — printing paper copies at home. Id. at 65. The highest estimate suggested the rule may potentially cost up to $100 million in website publishing, administration and home printing costs, although most o — those costs can be avoided i — shareholders simply view the proxy materials electronically instead o — printing them. In addition to — inding that the 2007 amendments would net nearly $900 million in annual savings, the SEC also — ound the amendments would improve the e —
iciency o — the proxy voting process. Id. at 69.
42 Id. at 1.
43 Id.
44 Press Release, SEC, SEC Adopts Proxy Rule Amendments Encouraging Electronic Shareholder Forums (Nov. 28, 2007), available at http:// www.sec.gov/news/press/2007/2007-247.htm/.
45 Reed Hastings, FACEBOOK.COM (July 3, 2012, 10:57 AM EST), https:// www.
acebook.com/reed1960/ posts/10150955446914584. The Hastings post was — ollowed by a 10% increase in Net — lix stock price.
46 Report o
Investigation Pursuant to Section 21(a) o — the Securities Exchange Act o — 1934: Net — lix, Inc., and Reed Hastings, Exchange Act Release No. 69279 (Apr. 2, 2013), available at http:// www.sec.gov/litigation/investreport/34-69279.pd — .
47 17 C.F.R § 243 (2011).
48 See supra note 46.
49 See Holly J. Gregory, Social Media and Regulation FD, WEIL GOTSHAL & MANAGES LLP (May 2013), http://www.weil.com/ ~/media/ — iles/pd — s/May2013_ Opinion.pd — .
50 Shareholders have some additional disclosure responsibilities a
ter they become “material” — ilers pursuant to Regulation 13(d) or 13(g). Obtaining more than 5% o — the outstanding stock or purchasing stock with the intent to solicit a tender o —
er can trigger material
iler status. 17 C.F.R. § 240.13d-1 (2011).
51 Carl Icahn, TWITTER (Aug. 13, 2013, 11:21 AM EST), https:// twitter.com/carl_c_icahn/status/367350206993399808.
52 Steven Russolillo, The iCahn E
ect: Apple’s Market Cap Jumps by $17 Billion A — ter Tweets, WALL ST. J. (Aug. 13, 2013). Commentators attribute a $12.5 billion increase in Apple’s market cap in just one hundred minutes to the Ichan tweet.
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See, e.g., Julianne Pepitone, Carl Icahn Takes ‘Large’ Apple Stake, CNN MONEY (Aug. 13, 2013), available at http://
money.cnn.com/2013/08/13/technology/mobile/carl-icahn-apple/.
53 Agustino Fontevecchia, Tweeting Carl Icahn: Billionaire Unveils 6% Stake in Talisman Energy, FORBES (Oct. 7, 2013, 5:45 PM EST), http:// www. — orbes.com/sites/a — ontevecchia/2013/10/07/tweeting-carl-icahn-billioniare-investor-unveils-6-stake-in-talisman- energy/.
54 William Alden, Carl Icahn Discloses Stake in Family Dollar, DEALBOOK–N.Y. TIMES (June 6, 2014), http:// dealbook.nytimes.com/2014/06/06/icahn-discloses-stake-in- — amily-dollar/?_r=0.
55 Samantha Shar
, Carl Icahn Reveals Gannett Stake, Breakup Support, FORBES (Aug. 14, 2014, 6:28 PM EST), http:// www. — orbes.com/sites/samanthashar — /2014/08/14/carl-icahn-reveals-gannett-stake-breakup-support/.
56 The estimated cost o
the management o — CSX Corporation to battle 3G Capital Partners in the proxy contest announced on October 16, 2007 was $22 million. The dissident–who won–spent approximately $9 million to obtain board representation o — this $18.6 billion company. SHARKREPELLANT.NET (last visited Sept. 21, 2014) (on — ile with author).
57 See Daniel M. Friedman, Expenses o
Corporate Proxy Contests, 51 COLUM. L. REV. 951, 952 (1951) (“The right o — the management to assess the corporate treasury — or certain expenses incurred in the solicitation o — proxies is well settled. The only requirement laid down by the courts is that the issue presented to the stockholders must involve a ‘question o — corporate policy,’ as distinguished
rom a ‘mere matter o — personnel.’ Once this test is met, the management may properly expend corporate — unds to present its side o — the controversy to the stockholders and solicit their continued support.”); see also Hand v. Missouri-Kansas Pipe Line Co., 54 F. Supp. 649 (D. Del. 1944) (“[W]here stockholders are called on to decide controversies over substantial questions o — policy as distinguished — rom inconsequential matters and personnel o — management, directors may make such expenditures — rom corporate
unds as are reasonably necessary to in — orm stockholders o — considerations in support o — the policy advocated by directors under attack, and in such communications directors may solicit proxies in their — avor.” (citing Hall v. Trans-Lux Daylight Picture Screen Corp., 171 A. 226 (Del. Ch. 1934))).
58 Tina Casey, Shareholders Press
or More Disclosure — rom Fracking Companies, TRIPLEPUNDIT (May 23, 2013), http:// www.triplepundit.com/2013/05/shareholders-press-companies-to-disclose- — racking-risk/.
59 Id.
60 Ernest Scheyder, ExxonMobil Agrees to Share More Data on Fracking Risks, REUTERS, Apr. 3, 2014, available at http:// www.reuters.com/article/2014/04/03/us-exxonmobil- — racking-data-idUSBREA3227020140403.
61 Dale Kasler, Biotech Foods Get Sa
eway Yes Vote–Shareholders Soundly Reject Ban Proposal, Sacramento Bee, May 10, 2000, at G1.
62 See Sa
eway Inc., Quarterly Report (Form 10-Q) (Sept. 11, 1999) available at https://www.sec.gov/Archives/edgar/ data/86144/0000950149-99-001830/0000950149-99-001830.txt (“As o — October 21, 1999, there were issued and outstanding 508.8 million shares o — the registrant’s common stock.”).
63 Sandra Gonzales, Ban on Genetically Engineered Foods Sacked by Sa
eway Shareholders De — eat Activists’ Bid, San Jose Mercury News, May 10, 2000, at C1.
64 See Julie Light, Seeds o
Resistance: Grassroots Activism vs. Biotech Agriculture, CORPWATCH (May 25, 2000), http:// www.corpwatch.org/article.php?id=572; Kasler, supra note 61.
65 See Jason Cherkis, Ninety-Nine Percept Power: Activists Ready to Crash Wells Fargo, General Electric Shareholder Meetings, HUFFINGTON POST (Apr. 23, 2012, 4:09 PM EST), http://www.hu —
ingtonpost.com/2012/04/23/ninety-nine-percent- power_n_1446605.html (last updated Apr. 23, 2012, 5:00 PM EST).
66 The protests are well documented in mainstream media, but curiously they are only attributed to “the 99%” by activist media. See, e.g., Maria Poblet, 99% Power Movement Kicks O —
with Massive Actions at Wells Fargo
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Shareholder Meeting, ALTERNET (Apr. 22, 2012) (“This year, there's a nationally coordinated e ---
ort o — the 99% to
ight back … We’re starting o —
with Wells Fargo.”), available at http://www.alternet.org/story/155097/99power_movement kicks_o —
with_massive_actions_at_wells — argo_shareholder_meeting; Tcnk, 99% Power–Wells Fargo Shareholders Meeting Disrupted, IN YOUR FACE RADIO (Apr. 26, 2012), available at http://inyour — aceradio.net/99-power-wells- — argo-shareholders- meeting-disrupted-mic-check/; 99% Power Week o — Action: Con — ront the Corporate 1% April 22-28, ACTIONWEB (“Tuesday’s action was the — irst in a series o — nation-wide protests set to taking on America’s largest corporations over the next two months, organized by a national coalition o — progressive organizations called 99% Power.”), available at https:// actionnetwork.org/campaigns/99-power-week-o — -action-con — ronting-the-corporate-1-including-walmart-bank- o — -america-wells — argo-and-sallie-april-22-28 (o —
icial website o — the 99% Power movement) (last visited Jan. 16, 2015).
67 Dakin Campbell & Mark Chediak, Wells Fargo Protestors Disrupt Stump Speech at Meeting, BLOOMBERG (Apr. 25, 2012), http:// www.bloomberg.com/news/articles/2012-04-24/wells- — argo-protesters-impede-shareholders-at-annual-meeting.
68 Josh Harkinson, Wells Fargo Turns Away Its Own Shareholders
rom Its Shareholder Meeting, MOTHER JONES (Apr. 24, 2012, 5:28 PM EST), http:// www.motherjones.com/mojo/2012/04/wells- — argo-turns-away-its-own-shareholders-annual-meeting.
69 Wanda, TWITTER (Apr. 24, 2012, 7:17 PM EST), https:// twitter.com/itsWanda/status/194973491412480000 (“Protesters air grievances at WellsFargo mtg … #w — 24 #w — shareholders #OSF #OWS Too bad I couldn’t get in to vote my shares[.]”); Wanda, TWITTER (Apr. 24, 2012, 6:21 PM EST), https:// twitter.com/itsWanda/status/194959323749822464 (“I was disappointed I didn’t get in to vote my shares at #WF24. &was lectured by a — ew brave human blockaders — or trying to go in. #suitbloc[.]”).
70 Press Release, Stop Wells Fargo, Major Disruptions Planned At Wells Fargo Shareholder Meeting As “The 99% Take Over” (Apr. 24, 2012), http:// www.stopwells — argo.com/en/press (“On Tuesday, April 24, thousands o — people will con — ront Wells Fargo executives at the — inancial institution’s annual shareholder meeting, risking arrest in by attempting to shut down the meeting and disrupt the proceedings in order to demand Wells Fargo CEO John Stump — and other executives address the concerns o — the 99%.”).
71 Id. (“Follow the action on Twitter with #w
24 #w — shareholders #not — eelingwells [and] On Facebook at: http:// www. — acebook.com/ events/203308649774621/.”).
72 Id.; see also The 99% Take Over #w
24, FACEBOOK (last visited Mar. 5, 2015), https://www. — acebook.com/ events/203308649774621/ (Facebook page used to in — orm participants about Stop Wells Fargo protests).
73 Bulldog Investors is run by activist investor Phillip Goldstein, who is notable
or his consistent value-oriented investment strategy. Goldstein identi — ies companies that appear to be undervalued because o — mismanagement and seeks to replace management.
74 Occupy Wall Street was a grassroots protest movement characterized by concerns with global and social inequality but lacking central leadership or a clear message. In — act, Adbusters lampooned the movement in a poster — or it that read, “What is our one demand? #occupywallstreet September 17 th . Bring Tent.” See Michael Bierut, The Poster that Launched a Movement (Or Not), The Design Observer Group (April 30, 2012), http://designobserver.com/ — eature/the-poster-that-launched-a-movement-or-not/32588/.
75 Northwestern University Kellogg School o
Management, Associate Pro — essor o — Management and Organizations, http:// www.kellogg.northwestern.edu/ — aculty/directory/king_brayden.aspx.
76 Jessica Love, Corporate Activism Yesterday, Today, and Tomorrow, KELLOGG INSIGHT (Mar. 3, 2014), available at http:// insight.kellogg.northwestern.edu/article/corporate_activism_yesterday_today_ and_tomorrow (Interview with Brayden King & Klaus Weber).
77 See, e.g., Activists Beat S&P 500 in 48 Percent Gain
or Shareholders, BLOOMBERG (Mar. 31, 2014), available at http:// www.bloomberg.com/in — ographics/2014-03-31/activists-beat-s-p-500-in-48-percent-gain- — or-shareholders.html.
78 The gad
ly is a tiny — ly that annoys horses. The name also re — ers to a person who upsets the status quo.
79 James R. Copland, A Report on Corporate Governance and Shareholder Activism, PROXY MONITOR (Sept. 2011), http:// www.proxymonitor.org/Reports/Proxy_Monitor_2011.pd — .
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80 This program was
ormerly described on the website o — As You Sow under a section titled “Our Methods,” but that non-pro — it has since removed any explanation o — its methods — rom its web site. Instead, their tactic is now described in a blurb titled “Power o — the Proxy” on their web site. Our Work, AS YOU SOW, http://www.asyousow.org/our-work/.
81 See id. As You Sow has proposed shareholder votes on topics including: no smoking in movies (not only in the theatre but also on the screen), keeping nanomaterials and genetic modi — ications out o —
ood, reducing consumer packaging, eliminating child labor — rom cotton — ields in Uzbekistan and mineral mines in the Congo and reducing executive compensation.
82 Examples o
political direct democracies include the ancient Greek city-state o — Athens and the modern Swiss Cantons o — Glarus and Appenzell Innerrhoden.
83 Some American states allow citizen-sponsored direct initiatives to amend the state constitution, including: Arizona, Arkansas, Cali — ornia, Colorado, Florida, Illinois, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, Oregon and South Dakota.
84 Alexander Hamilton stated “that a pure democracy, i
it were practicable, would be the most per — ect government. Experience has proved, that no position in politics is more — alse than this. The ancient democracies, in which the people themselves deliberated, never possessed one — eature o — good government. Their very character was tyranny; their — igure de — ormity. When they assembled, the — ield o — debate presented an ungovernable mob, not only incapable o — deliberation, but prepared — or every enormity.” Alexander Hamilton, Speech on the Compromises o — the Constitution, Poughkeepsie, New York (June 20, 1788) in THE WORKS OF ALEXANDER HAMILTON 22 (Federal Edition, vol. 2, Henry Cabot Lodge ed., G.P. Putnam’s Sons 1904), available at http:// oll.liberty — und.org/ titles/1379.
85 See., e.g., Jill E. Fisch, Measuring E
iciency in Corporate Law: The Role o — Shareholder Primacy, 31 J. CORP. L. 637, 642 (2006).
86 Paul Gompers, Joy Ishii & Andrew Metrick, Corporate Governance and Equity Prices, 118 Quarterly J. Econ. 107, 107 (2003).
87 Lynn A. Stout, The Shareholder Value Myth, CORNELL LAW FACULTY PUBLICATIONS, http://scholarship.law.cornell.edu/
acpub/771/.
88 Today, there are at least twelve third-party companies that provide standards and evaluations to register as a “B-corporation.” “B- corporation” is not a legal status. The designation is more like a USDA Organic certi — ication. Most B-corporations are, — rom a legal perspective, Delaware corporations that do not make the “S” election. However, B-corporations in certain states may not have to con — orm with shareholder wealth maximization modes o — existence, such as those articulated by the seminal case, Dodge v. Ford Motor Co., 170 N.W. 668 (Mich. 1919).
89 New State Ice Co. v. Liebman, 285 U.S. 262, 311 (1932).
90 See Larry Ribstein, The North Dakota Experiment, THE HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE AND FINANCIAL REGULATION (Apr. 23, 2007), available at http://blogs.law.harvard.edu/corpgov/2007/04/23/the-north- dakota-experiment/.
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