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37 Del. J. Corp. L. 731 (2012-2013)
Leave It to Delaware: Why Congress Should Stay out of Corporate Governance

handle is hein.journals/decor37 and id is 743 raw text is: LEAVE IT TO DELAWARE: WHY CONGRESS SHOULD STAY OUT OF CORPORATE GOVERNANCE BY JILL E. FISCH* ABSTRACT Commentators have debated the relative merits of state and federal regulation ofcorporate law and corporate governance for many years. The debate has attained heightened importance with the enactment ofthe Dodd- Frank Wall Street Reform and Consumer Protection Act of2012. In Dodd- Frank, Congress intruded into the allocation ofdecision-making authority between shareholders and directors, a subject generally relegated to state law, by adopting federal provisions on say on pay and proxy access. In so doing, Congress made an explicit determination that the financial crisis had exposed shareholders' inability to ensure management accountability. This Article criticizes the congressional usurpation of Delaware's traditional role in regulating corporate governance. Focusing on the topics of proxy access and say on pay, the Article demonstrates the continued superiority ofDelaware's approach over federal regulation. In particular, this Article reveals that in precisely those areas where Delaware's approach has been criticized, market developments have enabled investors to use moderated responses and private ordering to address perceived problems, without incurring excessive costs or destabilizing management authority. In contrast, Dodd-Frank's reforms eliminate the potential for issuer-specific tailoring and experimentation, while mandating procedures that are unlikely to provide investors with meaningful value. Nonetheless, Delaware's effective regulation ofcorporate governance and its ability to maintain its leadership position, face continuing challenges in the form ofbusiness and technological developments. The Article argues that Delaware's lawmaking structure is particularly well-suited to adapt to these challenges. The Article concludes by exploring Delaware's ongoing responses to three such challenges-private dispute resolution, globalization, and developments in shareownership. 731 Perry Golkin Professor of Law, University of Pennsylvania Law School. I am grateful for the helpful comments provided at the University of Pennsylvania Ad Hoc Faculty Workshop. My thanks to Charlotte Newell, Penn Law Class of 2012 for excellent research assistance.

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