As debates over corporate purpose and governance intensify, a refreshing perspective from history and Delaware law may be of interest.
Last week, Mayer Brown’s Lawrence Cunningham delivered the 37th Annual Francis G. Pileggi Distinguished Lecture in Law at Delaware Law School to the state’s corporate bench and bar. Cunningham compares the traditional “made-to-measure” and shareholder-value approach to corporate governance, long reflected in Delaware law, with recent divergent pressure towards a “one-size-fits-all” social and stakeholder approach.
Cunningham explains these crosscurrents through the lens of shifting shareholder typologies, contrasting the preferences of focused long-term shareholders (“quality shareholders”) with those of the indexing community and policy activists. Noting similar tensions arising throughout modern corporate history, he observes a recurrent pattern: social movements in the corporate sphere invariably achieve gains, but then overreach and face setbacks, with a return to the centrist position.
Delaware has long been in the middle of such debates, often serving as a guardrail against excesses, Cunningham notes. In this lecture, he urges the state, which he calls “a national treasure,” to maintain its traditions and be prepared to contribute decisive practical clarity to today’s debates.
You can read the full lecture on the Harvard Law School Forum on Corporate Governance.