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Board Games: The Changing Shape of Corporate Power
By Arthur Fleischer, Jr., Geoffrey C. Hazard, Jr. and Miriam Z. Klipper
2002/11 - Beard Books
1587981629 - Paperback - Reprint - 248 pp.
US$34.95

This vital book traces the connection between the responsibilities of corporate directors and their influence on American industry.

Publisher Comments

Categories: Banking & Finance

Of Interest:

A Not-So-Tender Offer

Dangerous Pursuits: Mergers and Acquisitions in the Age of Wall Street

Macy's for Sale

The Corporate Merger

The General Mills/Parker Brothers Merger: Playing by Different Rules

The Human Side of Mergers and Acquisitions: Managing Collisions Between People, Cultures, and Organizations

Welcome to Our Conglomerate -- You're Fired!

The prevalence of corporate misconduct on an unprecedented scale has significantly intensified the pressure on corporate directors to improve their performance and has spawned new regulatory initiatives to redefine the principles of corporate governance. The accountability of directors to their shareholders is the subject of this important book, first published in 1988. This dynamic, eminently readable book analyzes the metamorphosis in the role of directors and the new level of responsibility assumed in the board room. It is relevant to the current corporate crisis and will assist in understanding today's critical issues of corporate governance.

 

Review by Henry Berry
>From Turnarounds and Workouts, February 15, 2004:

A ruling by the Delaware Supreme Court on January 29, 1985 was a wake-up call to directors of U.S. corporations.  On this date, overruling a lower court decision, the Delaware Supreme Court ruled that the nine board members of Chicago company Trans Union Corporation were "guilty of breaching their duty to the company's shareholders."  What the board members had done was agree to sell Trans Union without a satisfactory review of its value.  The guilty board members were ordered by the Court to pay "the difference between the per share selling price and the 'real' market value of the company's shares."

Needless to say, the nine Trans Union directors were shocked at the guilt-verdict and the punishment.  The chairman of the board, Jerome Van Gorkom, was a lawyers and a CPA who was also a board member of other large, respected corporations.  For the most part, it was he who had put together the terms of the potential sale, including setting value of the company's stock at $55.00 even though it was trading at about $38.00 per share.  News of the possible sale immediately drove the stock up to $51.50 per share, and was commented favorably in a New York Times business article.  Still, Van Gorkom and the other directors were found guilty of breaching their duty, and ordered by Delaware's highest court to pay a sum to injured parties that would be financially ruinous.  This was clearly more than board members of the Trans Union Corporation or any other corporation had ever bargained for.  It was more than board members had ever conceived was possible without evidence of fraud or graft.

The three authors are all attorneys who have worked at the highest levels of the legal field, business, and government.  Using the Trans Union Corporation case as a watershed event fro members of boards of director, the highly-experienced legal professionals lay out the new ground rules for board members.  As case examples, the authors cite Household International, Union Carbide, Gelco Corp., Revlon, SCM, Freuhauf and other major corporations whose merger-and-acquisitions activities resulted in court cases.  They analyze the circumstances and facts of these cases and point to where and how board members went wrong.

With respect to each of the cases, the authors outline the business environment, identify important individuals, analyze decisions, and discuss considerations regarding laws, government regulations, and corporate practice.  In all of this, however, given the exceptional legal background of the three authors, the book recurringly brings into the picture the legalities applying to the activities and decisions of board members.  Passages from court transcripts are occasionally recorded and commented on.  In the present-day, post-Enron business environment where shareholders and government officials are scrutinizing boards' behavior and decisions, Board Games is a work of importance to board members and others responsible for overseeing and running corporations.

Mr. Fleischer is a senior partner with Fried, Frank, Harris, Schriver & Jacobson.  He is also the author of the textbook, Takeover Defenses, which is now in its 6th edition.  Mr. Hazard is a law professor and former reporter for the ABA's special committee on the lawyers' ethics code.  Miriam Klipper has been a New York assistant district attorney prosecuting corporate and financial fraud and was also a corporate attorney on Wall Street.

From Publishers Weekly: 

A corporate lawyer, a professor at Yale Law School and a former managing editor of Institutional Investor magazine join here in a study showing how business acquisitions, mergers, hostile takeovers, proxy battles and leveraged buyouts during the last decade along with related court decisions have transformed American industry, finance, investment and corporate governance. In eight significant case histories (Unocal vs. T. Boone Pickens's Mesa Corp., Union Carbide vs. GAF, Revlon vs. Pantry Pride, et al.) the authors demonstrate that sophisticated shareholder influence can put pressure for quick profit on management executives, as financial "raiders" seek control of conglomerates to sell off components at a premium, bidding up share prices in the process, often with minimal regard for ongoing company operations, revenues or integrity. Discussed are ingenious ploys of attack and defense so-called poison pills, golden parachutes, greenmail, white-knight alliances, etc. that lend seemingly endless intricacy to these new "board games." Professionals should find plenty here to keep them agreeably "in play." Copyright 1988 Reed Business Information, Inc

From Book News, Inc.:

In an era of intensified pressure on corporate directors resulting from misconduct in major companies such as Enron, this book (originally printed in 1988) offers an analysis of the transformation of the role of corporate directors including the increased level of responsibility they assume in the boardroom. Focusing on the accountability of directors to their shareholders, Fleischer, Hazard, and Klipper (all legal professionals) offer case studies illustrating topics such as defending against corporate takeovers, financial restructuring, and management buyouts and open bidding. Annotation 2003 

Arthur Fleischer, Jr. is a Senior Partner of the law firm, Fried, Frank, Harris, Shriver & Jacobson. For the last 25 years, he has led the firm's mergers and acquisitions practice. He is the co-author of Takeover Defenses (6th edition) and the author of numerous articles in the filed of securities regulation. Mr. Fleischer is a graduate of the Yale Law School. Photo taken from the Fried, Frank, Harris, Shriver & Jacobson firm website.

Geoffrey C. Hazard, Jr. is the Trustee Professor of Law, University of Pennsylvania and Director Emeritus, American Law Institute. Professor Hazard was Reporter for the American Bar Association special committee that drafted the lawyers' ethics code and is the author of several books and articles on legal ethics and civil procedure. He is a graduate of Columbia Law School. Photo taken from the University of Pennsylvania website.

Miriam Z. Klipper is an Assistant District Attorney at the New York County District Attorney's Office, prosecuting corporate and financial fraud. She has practiced as a corporate attorney with a Wall Street Firm and served as a consultant on privatization and corporate governance in Eastern Europe. Ms. Klipper is a graduate of the Yale Law School.

Acknowledgments ix
The Parsley on the Fish 3
Prologue. Nine Honorable Men 15
Part I. THE POWER STRUCTURE, SHARK REPELLENTS, AND THE POISON PILL 41
Chapter 1 .  "To Direct and Superintend the Affairs of the Corporation" 43
Chapter 2.  Shark Repellents, Poison Pills, and Other Corporate Pharmacy 71
Part II. FINANCIAL RESTRUCTURING: THE BOARDROOM RESPONSE 89
Chapter 3. Sauce for the Goose: The Exclusionary Self-tender 91
Chapter 4. Its Own White Knight  112
Part III. THE BIDDING TRILOGY 133
Chapter 5. Leveling the Playing Field 135
Chapter 6. On the Block: Management Buyouts and Open Bidding 160
The New Prices of Industry 189
Appendix 201
Notes 219
Index 229

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