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Unpublished Paper
WASTING THE CORPORATE WASTE DOCTRINE: WHY WASTE CLAIMS ARE OBSOLETE IN DELAWARE CORPORATE LAW AND WHY THE WASTE DOCTRINE IS THE WRONG SOLUTION TO THE PROBLEM OF EXECUTIVE COMPENSATION
ExpressO (2013)
  • Kris S. Swift
Abstract

Abstract

Kristen S. Swift

This Note makes several points, drawn from Delaware litigation history, on the futility of pleading corporate waste in Delaware. At inception, the waste doctrine was a tool for shareholder protection and empowerment; however, as calculated business risk became encouraged and later formally protected by the business judgment rule, the waste doctrine evolved to protect officers and boards and now sets a nearly impossible benchmark for misconduct that would allow shareholders to recover on a waste claim. The waste doctrine is inextricably tied to how business risk-taking is perceived by Delaware courts and shifting attitudes toward risk in business decision-making have transformed the doctrine into a mere specter of its former self, rendering it extinct.

Last, this Note addresses the post-financial crisis search for corporate accountability and recent attempts at revitalizing the waste doctrine as a means to this end. This Note illustrates how and why the waste doctrine fails as a means for curbing excessive executive compensation and as a means for ensuring corporate accountability in the face of alleged wrongdoing.

Keywords
  • corporate waste,
  • executive compensation,
  • Court of Chancery,
  • Delaware,
  • Fiduciary Duties,
  • Loyalty,
  • Practice
Publication Date
Spring May 3, 2013
Citation Information
Kris S. Swift. "WASTING THE CORPORATE WASTE DOCTRINE: WHY WASTE CLAIMS ARE OBSOLETE IN DELAWARE CORPORATE LAW AND WHY THE WASTE DOCTRINE IS THE WRONG SOLUTION TO THE PROBLEM OF EXECUTIVE COMPENSATION" ExpressO (2013)
Available at: http://works.bepress.com/kris_swift/1/