2012
CHOOSE YOUR OWN MASTER
15
standard.58 Thus, the eBay case, confined to its facts, controls only in the narrow and more scrutinized takeover defense and conflicted-interest contexts.59 In his 2012 Wake Forest Law Review article, however, Chancellor Strine recently provided reason to think eBay may actually provide guidance in the broader debate regarding the shareholder wealth maximization norm. Chancellor Stine wrote: From a different political perspective come those who seem to take umbrage at plain statements like the Chancellor ’s [in eBay] for unmasking the face of capitalism. These commentators seem dismayed when anyone starkly recognizes that as a matter of corporate law, the object of the corporation is to produce profits for the stockholders and that the social beliefs of the managers, no more than their own financial interests, cannot be their end in managing the corporation.60
Despite the need to recognize that eBay v. Newmark, unlike Dodge v. Ford, was mostly analyzed under heightened scrutiny, Dodge and eBay have a fair bit in common. In both cases, strong-willed defendants openly admitted that their focus was not on maximizing shareholder wealth —not in the short term, not in the long term, not at all.61 Henry Ford and the founders of craigslist confessed to the court that they made their decisions with the primary objective of benefiting non-shareholder stakeholders, appeared to have “openly eschew[ed] stockholder wealth maximization, ” and did not make serious attempts to tie their decisions back to benefits for the shareholders.62 Both the Michigan Supreme Court in 1919 and the Delaware Court of Chancery in 2010 found this stance unacceptable.63 Had the defendants made more of an effort to tie their decisions to long-term shareholder wealth maximization, the courts may have come to different conclusions.64 58. Id. at 28 –48. 59. Id. 60. Strine, Our Continuing Struggle with the Idea that For-Profit Corporations
Seek Profit, supra note 24, at 151. 61. See Dodge v. Ford Motor Co., 170 N.W. 668, 684 (Mich. 1919) ( “It is said by appellants that the motives of the board members are not material and will not be inquired into by the court so long as their acts are within their lawful powers. As we have pointed out, and the proposition does not require argument to sustain it, it is not within the lawful powers of a board of directors to shape and conduct the affairs of a corporation for the merely incidental benefit of shareholders and for the primary purpose of benefiting others, and no one will contend that, if the avowed purpose of the defendant directors was to sacrifice the interests of shareholders, it would not be the duty of the courts to interfere. ”) (emphasis added); eBay, 16 A.3d at 34 –35. 62. eBay, 16 A.3d at 35. 63. See Dodge, 170 N.W. at 684; eBay, 16 A.3d at 34 –35. 64. See supra Part I.B; see also ALLEN, KRAAKMAN & SUBRAMANIAN, supra note 44, at 298 (noting that Dodge v. Ford was an odd case because Henry Ford openly