University of California Hastings College of the Law
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Compensated to the Moon: The Impact of Excessive Compensation on Director Independence Post Tornetta v. Musk
No full textExcessive director compensation erodes the independence that directors are supposed to bring to boardrooms. In theory, directors are meant to serve as objective parties, overseeing corporations using their care, skill, and loyalty to promote sound decisionmaking. However, excessive compensation can create the unintended ill-effect of rendering a director beholden to upper management and unable to make clear-eyed, impartial decisions. To mitigate this problem, this Note advocates for the implementation of tenure limits, compensation caps, and enhanced proxy disclosures to ensure that board members uphold their fiduciary duties and make decisions in the best interests of the corporations they serve rather than in their own self-interests.
This Note explores the tension between offering competitive compensation to retain qualified directors while still expecting directors to remain free enough to challenge upper management’s decisions. Part I provides an overview of the historical background and recent trends in director compensation. Part II analyzes the recent case Tornetta v. Musk to understand how courts define materiality in director compensation, and to display the effect excessive compensation has on approving corporate transactions. Part III advocates for potential solutions to the problem of excessive compensation eroding independence by outlining measures aimed at increasing transparency for shareholders
Beyond Human Oversight: Corporate Law and the Case for AI Directors
No full textCorporate laws in the United States require corporations to be governed by a board of directors consisting of humans—otherwise known as the natural person requirement. Mandating governance by individual persons stands in contrast to typical American business ideals and the freedom of contract. There are various reasons for corporate law’s imposition of the natural person requirement—many of them historical. But the justification for the natural person requirement has not been sufficiently critiqued, particularly in the context of AI. This Note argues this corporate law requirement should be amended to give corporations the option to permit AI directors in addition to other human and organizational entity directors. After reviewing the current corporate law landscape, this Note shows that the changes advocated for are quite simple to implement from a purely legal standpoint. Next, the Note presents three reasons for amending the requirement: (1) AI directors can be beneficial in ways that human directors cannot; (2) the justifications normally put forth in support of the natural person requirement fail; and (3) doing so would promote American ideals. Lastly, this Note discusses additional caveats and considerations to its proposal and compares approaches to organizational entity directors to the proposal made in this Note. The natural person requirement is outdated when considered in the context of modern artificial intelligence technology, and it should be amended to provide corporations with flexibility in designing their boards of directors
Slow but Steady Wins the Race: The Rise and Rise of Euroscepticism.
No full textThis paper analyzes Euroscepticism in the European Union with a focus on two member-states Italy and France. This paper discusses the history of Euroscepticism in Europe, immigration law and economic policy in the European Union as it pertains to both the New Pact on Migration and Asylum and the Stability and Growth Pact, which were both negotiated or renegotiated in 2023. Euroscepticism is a wide sweeping political movement, and this paper does not analyze every aspect, but only seeks to magnify two issues that have plagued the EU since its inception. This paper argues that Euroscepticism will clearly rise with the push by Brussels for complete integration, due to successful weaponization of the EU’s lack of unified policy and the perceived chokehold on member states’ sovereignty. This paper also argues that Euroscepticism will likely be difficult to defeat because their success lies in political turmoil