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E. NORMAN VEASEY L’57, former chief justice of the Delaware Supreme Court, refutes those who say that the Court with the last word in corporate jurisprudence has tilted toward stockholders in the post-Enron world.
"Our courts do not have a political agenda that vacillates from time to time to favor one litigant over another," Veasey said during the Distinguished Jurist Lecture last October. While acknowledging that directors face closer scrutiny under Sarbanes-Oxley and ramped up SEC enforcement, Veasey declared that the Court remains as objective and balanced as ever. "The substantive law has not changed," he said.
Veasey delivered these verdicts as he reviewed trends in corporate jurisprudence and his twelve years on the bench. He led the Court from 1992 to 2004.
Ranging over many issues, including derivative suits, disclosure, corporate best practices, and the business judgment rule, Veasey suggested a bottom line value that guided the Court during his tenure and guides it still. He said good corporate governance, in the form of independent directors, sound business decisions, and best practices, offer a measure of immunity against liability.
"The business judgment rule is alive and well," said Veasey, now a senior partner in the Wilmington office of Weil, Gotshal & Manges LLP. "Our jurisprudence is clear that even when directors are expected to maximize stockholder value, all that the law requires is that they act reasonably under the circumstances."
According to Veasey, Paramount’s board of directors failed that test in Paramount v. QVC, which came before the Court in 1994. In that case, the board had signed a merger agreement with Viacom that not only ceded control to them but attempted to fend off a better offer from QVC.
Veasey said the Delaware Supreme Court ruled in QVC’s favor because "the Paramount board had not undertaken any negotiations with the other suitor or done a market check, but had simply, and blindly, locked up the merger with various deal protections that shut out the higher bidder."
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