Copyright (c) 2009 All rights reserved. http://works.bepress.com/ethan_stone Recent documents in Ethan G. Stone en-us Sun, 31 May 2009 05:51:32 PDT 3600 http://works.bepress.com/ethan_stone/4 http://works.bepress.com/ethan_stone/4 Sat, 21 Jul 2007 09:04:47 PDT Commentators have speculated that pension funds do not act as activist investors because of the constraints of fiduciary duties under ERISA. This note examines the case law under ERISA and the common law of trusts on which it is based and concludes that there are no legal constraints. The institutional incentives of the people who manage pension funds seem a better explanation for their inactivity (assuming that activism is, in fact, cost-justified). Ethan G. Stone Corporate Law - Business Organizations ERISA http://works.bepress.com/ethan_stone/3 http://works.bepress.com/ethan_stone/3 Tue, 03 Jul 2007 09:50:38 PDT The paper examines the history of the building pressure during the 1940s the pass the UBIT and finds that the traditional explanations hide an underlying political function. As the charitable exemption became more important with the expansion of the income tax in the 1940s, it attracted new attention from both policymakers and a growing tax-shelter industry. Charities and sympathetic policymakers tried to justify a suddenly important blanket subsidy to charity on the basis of the charities exclusive dedication to good works. Tax-shelter promoters made the effort more difficult by featuring charities in roles, such as buying and leasing commercial real estate and operating businesses, distinctly incompatible with traditional perceptions of charitable activities. The UBIT prevents this cognitive dissonance. It discourages activities that make charities look uncomfortably uncharitable by taxing them, while simultaneously leaving exempt the old line of passive investment and business activities related to an exempt purpose. Ethan G. Stone Tax-Exempt Organizations Legal History Legislation Politics http://works.bepress.com/ethan_stone/2 http://works.bepress.com/ethan_stone/2 Tue, 03 Jul 2007 09:42:49 PDT For twenty years, Delaware courts have been developing special standards to review board decisions that interfere with hostile bids for control or the exercise of the shareholder franchise. These "Unocal" and "Blasius" doctrines seem to fit uneasily with theories of the board's role in corporate governance, constraining board discretion too little for shareholder primacy theories and too much for board autonomy theories. Nor have the Delaware courts succeeded in fitting Unocal and Blasius comfortably with their treatment of board decisions in other contexts. In this article, I propose that these special doctrines reflect the difference between two separate functions of the board of directors, which I term "operating power" and "coordinating power". The board's operating power is its familiar power to manage the operations of the corporate enterprise. The board's coordinating power, which is at issue in Unocal and Blasius cases, is its power to manage collective actions by the shareholders. With the difference in fiduciary purpose comes a difference in fiduciary duty. In the operating context, the prototypical breach of fiduciary duty is a decision that does not pursue the interests of the corporate enterprise. In the coordinating context, the prototypical breach of fiduciary duty is a decision to force the outcome of a decision the governance scheme allocates to shareholder collective action. A further implication of the operating/coordinating distinction is that coordinating power is more amenable to fixed rules of decision. Delaware statutory rules governing the administration of shareholder voting reflect this difference and the courts' preference for voting over tender offers seems to follow this statutory difference. Ethan G. Stone Corporate Law - Business Organizations http://works.bepress.com/ethan_stone/1 http://works.bepress.com/ethan_stone/1 Tue, 03 Jul 2007 09:34:28 PDT This article reexamines the controversy in the 1990s over the tax treatment of revenues charities earn by selling sponsor acknowledgments. The controversy erupted when the IRS tried to tax Mobil Cotton Bowl and John Hancock Bowl on their sponsorship revenues, claiming that it represented payment for advertising. It ended when Congress amended to tax code to grant sponsorship revenues an effective exemption from tax. Traditionally, this has been understood as a simple and sordid story of raw lobbying power supplanting good tax policy. I argue that the controversy reflects the overriding importance of political symbolism in understanding the charitable tax exemption and the unrelated business income tax (UBIT) that protects it. Ethan G. Stone Tax-Exempt Organizations Legislation Politics