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Essay / Research Paper Abstract
This is a 4 page paper which examines the power of shareholders to removel directors of boards with or without cause primarily under Delaware Corporate Law.
The bibliography has 6 source.
Page Count:
4 pages (~225 words per page)
File: D0_JHRemo.rtf
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Unformatted sample text from the term paper:
mistrust and skepticism of shareholders, which was generated by the corporate scandals. Stockholders have for a long period of time understood that their respective boards of directors represent them as
the owners of the company, but the recent frauds perpetuated at Tyco and Enron have lead stockholders to believe that the boards of directors are not living up to their
responsibilities. In an attempt to hold boards of directors more accountable, shareholders are continuing to increase their proposals for proxy solicitation and annual meetings (Schooley, 2003). POWERS OF SHAREHOLDERS
Just as the boards of directors have duties and responsibilities, the shareholders need to realize that they can influence the boards of directors and the overall direction of the company.
This can be achieved by making the directors of companies independent of corporate insiders, and in some ways dependent on the shareholders (Bebchuk, 2004). Implementation of a meaningful
safety value that shareholders could use to replace directors who fail to serve them well, would be a major way to improve director selection. In theory, the current process of
director election is supposed to provide such a safety valve (Bebchuk, 2004). A well-known decision by a Delaware court defines "The shareholder franchise as the ideological underpinning upon which
the legitimacy of directorial power rests" (Bebchuk, 2004). In theory, if directors fail to serve shareholders, or appear to lack the qualities necessary for doing so, shareholders have the power
to replace them (Bebchuk, 2004). That power, in turn, is supposed to provide incumbent directors with incentives to enhance shareholder value (Bebchuk, 2004). This Delaware court decision is also
acknowledged and used as the basis for shareholders powers in the state of New York (Bebchuk, 2004). Prior to the recent scandals and perspective needs for reform by shareholders, the
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