Corporate Governanace Essay

634 Words3 Pages
As I begin teaching about boards of directors and their fiduciary duties, I have begun to wonder if there should be any corporate governance changes in response to the current crisis. On the one hand, a corporate governance response may not be advisable or appropriate, at least not right now.  Indeed, given the federal government?s efforts to craft some responsive legislation, it may not be appropriate to consider corporate efforts unless and until the federal effort does not pan out and/or we have sufficient time to analyze the impact of that effort.  Also, it could be that both the type of issues involved and the far-reaching impact of the crisis require a federal response.  Moreover, it could be that the crisis?at least at its core?does not stem from any significant corporate governance failures and hence does not need any significant corporate governance solutions.  From this perspective, there should be no corporate governance response because such response could not hope to have any appreciable impact on the problem--and perhaps would just be viewed as piling on. On the other hand, it is not clear what a corporate governance response would encompass.  To be sure, the federal response (at least the current version) includes at least some focus on executive compensation, suggesting that perhaps there should be some additional corporate law focus on the executive compensation problem.  Indeed, J. Robert Brown at TheRacetotheBottom.org argues that the crisis should prompt courts to more closely scrutinize executive compensation, and therefore apply a duty of loyalty analysis to such compensation decisions. It is certainly possible that the federal government's actions on this issue could prompt courts, particularly Delaware courts, to assess executive compensation issues more stringently (at least in the short term), presumably in order to

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