One of the key claims of advocates of stakeholder capitalism, especially those in the legal academy, is that the foundational case – Dodge v. Ford Motor Co. – was not good law when it was first written, the key part of the decision, is mere dicta, and subsequent legal developments have undercut whatever validity the decision may have had at one time. All of these claims are demonstrably false. As Chief Justice Leo Strine put it, those who claim that shareholder value maximization is not the law are pretending.

There are very few cases holding directors liable for failing to maximize shareholder value. The reason is the business judgment rule, a corporate law doctrine that precludes judges from reviewing the merits of director decisions absent some evidence of fraud, illegality, self-dealing, failure to make an informed decision, or waste of corporate assets. Shlensky v. Wrigley is the classic case of the business judgment rules application to cases in which the directors are alleged to have failed to maximize profit.

In Smith v. Van Gorkom, the Delaware Supreme Court held that corporate directors owe a duty of care to act on “an informed basis, in good faith, and the honest belief that the action taken was in the best interest of the company.” This holding shocked boardrooms everywhere by subjecting directors to the threat of personal liability for gross negligence in decision-making. While legislatures moved swiftly to allow corporations to adopt exculpation clauses relieving directors from these heightened standards, Van Gorkom remains a high-water mark in holding directors liable for their actions. Lua Yuille’s feminist judgment expands Van Gorkom’s reach, focusing on the homogeneity of the all-white male board and resulting in lack of diverse qualities and perspectives. She takes the revolutionary step of only affording the business judgment rule presumption to the decisions of an appropriately diverse board. In her rewritten opinion, the majority’s cramped duty of care is expanded to encompass all stakeholders, not merely shareholders. Virginia Harper Ho contextualizes the feminist judgment and explores possibility of a faith-centered feminism and its relationship to stakeholder-centric governance.

Jessica Kiser situates the chapter, explaining that the plaintiff in Donahue was a minority shareholder who sued the company and its directors for breach of fiduciary on account of causing the company to purchase the stock of a former director and controlling shareholder, but refusing to treat her equally by purchasing her shares at the same price. The court held that the company and its directors had breached their fiduciary duty, reasoning that shareholders in a close corporation owe a heightened standard of good faith and loyalty as compared to public companies. Cindy Schipani’s feminist judgment preserves the original opinion’s holding, but expands on the nature of the Donahue’s oppression – not just as a minority shareholder, but as a woman shut out of employment opportunities by virtue of class and gender. Kiser highlights the intersectionality of Schipani’s rewritten opinion.

This chapter considers the institutional implications of the multi-factoral model in national law. Given its involving an ineliminable need for judgment, this chapter argues for an approach to law reform that focuses on enhancing the quality of decision-making within the corporation surrounding its fundamental rights obligations. Doing so, I argue requires focusing much attention on reforms to corporate law that can help ‘constitutionalise’ fundamental rights within the basic legal structure of the corporation itself. I propose a series of law reforms that include expanding the diversity of the directors; developing a new fiduciary duty specifically relating to fundamental rights; enhancing disclosure requirements; developing a new enforcement action allowing directors to be sued in their personal capacity for rights violations; creating regulatory fines and financial penalties for rights violations; implementing an enhanced framework for shareholder obligations; rejecting the business judgment rule where fundamental rights are involved; and the utilisation of dialogical remedies by courts.

Courts, practitioners, and academics alike have long considered corporate officers and directors to be fiduciaries of the public corporation and its shareholders. As corporate law has evolved, however, with the business judgment rule strengthening, the duties of care and loyalty narrowing in scope, and executive compensation schemes further introducing self-interest into corporate decision making, the fiduciary paradigm is no longer an accurate description of the nature of the relationship between corporate managers and the corporation. Corporate officers and directors have significant latitude to make decisions that take into consideration their self-interest while still satisfying their duties to the corporation. Further, the “best interests” of the corporate entity and its multitude of stakeholders are highly variable and often ill-defined, such that it would be impractical to pursue those interests as a singular goal. This Article argues that corporate officers and directors are not governed by fiduciary duties in the truest sense of the term. This misconceptualization inhibits an accurate understanding of the dynamics underlying corporate decision

This chapter argues that corporate law is unique in a way that is not widely recognized, and is not unique in the way it is widely thought to be. First, unlike other fields of law where fiduciary obligations play a key role, in corporate law, not one, not two, but three distinct actors owe fiduciary duties—executive officers, directors, and controlling shareholders. The beneficiaries of those actors' duties, the reasons for imposing duties, and the scope and demands of fiduciary duties differ for the three actors. Thus, there is not a singular duty of care and loyalty in Delaware corporate law, but multiple variations of those duties owed by multiple actors. Delaware has a law of fiduciaries, not a fiduciary law. Second, this chapter challenges the supposed standard of conduct-standard of review divergence first hailed in 1993 by Professor Melvin Eisenberg as unique to corporate law.The construct was descriptively inaccuratewhen Professor Eisenberg first wrote, it has been little used by the Supreme Court since then, and the standards often converge rather than diverge.