Recent Skirmishes in the Battle Over Corporate Voting and Governance

This Article considers how some recent developments affect our understanding of the relative superiority of our mixed federal system of corporate lawmaking as compared with either a purely state system or a purely national one. The mixed federal system can potentially capture the gains of efficiency, flexibility, and responsiveness from state competition, while using the threat and occasional reality of federal intervention to reduce Delaware's managerialist tendency. The Article argues that, on the whole, this story fits the reaction to the corporate scandals of the nineties. The Sarbanes-Oxley Act moved regulation in a less managerialist direction, and Delaware courts have responded, albeit subtly. The Article also considers evidence for counter-stories. It may be that federal intervention has gone too far, and led to a worse outcome than the states would have achieved on their own. Some claim that Sarbanes-Oxley is an example of such unnecessary federal intervention. That might be true, but the evidence to date does not clearly support that conclusion. On the other side, the ongoing leading role of Delaware in corporate lawmaking might be inhibiting the system from reacting as well as a purely national system would. The Article considers this possibility in the context of developments in the regulation of shareholder access to corporate proxy material for making board nominations. This skirmish is continuing, but the latest battle, the Second Circuit opinion in American Federation of State, County & Municipal Employees v. American International Group, Inc., suggests the mixed federal system is working pretty well.