Scott Hirst

Lecturer on Law

Fall 2016

Biography

Scott Hirst's research interests include corporate law, securities law, and mergers and acquisitions. His recent projects have included empirical and analytical considerations of distortions that limit investor suffrage, and the agency costs associated with institutional investment. His scholarship has appeared in The Yale Journal on Regulation, The Harvard Business Law Review, and The Business Lawyer. Scott teaches the Corporate and Capital Markets Law and Policy course, and has also taught the Shareholder Rights Project Clinical Seminar.

Scott received Doctor of Juridical Science (SJD) and Master of Laws (LLM) degrees from Harvard Law School, where he was a Considine Fellow in Corporate Governance and was awarded the John M. Olin Prize in Law & Economics and the Victor Brudney Prize for Corporate Governance. His doctoral dissertation considered distortions in shareholder voting, both analytically and empirically.

Scott serves as the Associate Director of the Harvard Law School Program on Corporate Governance and Program on Institutional Investors. Before joining Harvard Law School, Scott practiced as a senior associate in the mergers and acquisitions group of Shearman & Sterling LLP in New York.

Scott also received Bachelor of Laws and Bachelor of Commerce degrees, each with First Class Honors and University Medals, from the University of Queensland in Brisbane, Australia.

Areas of Interest

Scott Hirst, Frozen Charters, 34 Yale J. on Reg. 91 (2017).
Categories:
Corporate Law & Securities
Sub-Categories:
Corporate Law
,
Corporate Governance
Type: Article
Abstract
In 2012, the New York Stock Exchange changed its policies to prevent brokers from voting shares on corporate governance proposals when they have not received instructions from beneficial owners. Although the change was intended to protect investors and improve corporate governance, it has had the opposite effect: a significant number of U.S. public companies are no longer able to amend important parts of their corporate charters, despite the support of their boards of directors and overwhelming majorities of shareholders. Their charters are frozen. This Article provides the first empirical and policy analysis of the broker voting change and its significant unintended consequences. I provide empirical evidence that the broker voting change has resulted in the failure of more than fifty charter amendments at U.S. public companies, despite board approval and overwhelming shareholder support, and that hundreds more companies have frozen charters as a result of the change. The rule change has also made it more difficult to amend corporate bylaws and given some insiders a de-facto veto in proxy voting contests. These costs substantially outweigh the negligible benefits of the broker voting change. I compare a number of solutions to address these problems and identify several that would be preferable to the current approach.
Scott Hirst, Social Responsibility Resolutions, 43 J. Corp. L. (forthcoming 2017).
Categories:
Corporate Law & Securities
Sub-Categories:
Shareholders
Type: Article
Abstract
Shareholders exert significant influence on the social and environmental behavior of U.S. corporations through their votes on social responsibility resolutions. However, the outcomes of many social responsibility resolutions are distorted, because the largest shareholders – institutional investors, such as mutual funds and pension funds – often do not follow the interests or the preferences of their own investors. This paper presents evidence that institutions with similar investors and identical fiduciary duties vote very differently on social responsibility resolutions, suggesting that some institutional votes distort the interests of their investors. Other evidence presented suggests that institutional votes on social responsibility resolutions vary significantly from the preferences of their own investors. Whether such distortion of preferences is a problem is an open question. If such distortion is considered to be a problem, it could be addressed by institutions changing their voting policies on social responsibility resolutions to better approximate the preferences of their investors. The stakes are high: eliminating distortion could significantly influence the behavior of corporations on social and environmental matters in a way that investors, and society, would prefer.
Scott Hirst, Universal Proxies (Aug. 24, 2016).
Categories:
Corporate Law & Securities
Sub-Categories:
Shareholders
Type: Article
Abstract
Contested director elections are a central feature of the corporate landscape, and underlie shareholder activism, which is currently the subject of contentious debate. Shareholders vote by unilateral proxies, which prevent them from ‘mixing and matching’ among nominees from either side. The solution is universal proxies, whereby shareholders could vote for nominees from each side. A universal proxy rule being considered by the Securities and Exchange Commission is the subject of conflicting claims, and possible prohibition by Congress. This paper aims to shed light on these claims about universal proxies. It shows that unilateral proxies can lead to distorted proxy contests, which disenfranchise shareholders. The paper provides the first empirical evidence of the incidence of distorted proxy contests, and shows that they are a significant problem. 22% of proxy contests at large U.S. corporations between 2008 and 2015 may have been distorted. At 10% of contests, distortions may have resulted in dissident nominees being elected in place of management nominees, and at 8% of contests, management nominees being elected in place of dissident nominees. Contrary to concerns raised by its opponents, a universal proxy rule is unlikely to lead to more proxy contests, or to greater success by special interest groups. The significant benefits of universal proxies in eliminating distorted proxy contests outweigh these perceived costs, and would enfranchise shareholders.

Academic Appointment and Employment History

Education History

Current Courses

Course Catalog View

Clinic Work

Scott is the co-founder, along with Lucian Bebchuk, and the Associate Director of the Shareholder Rights Project (SRP), which was established by the Harvard Law School Program on Institutional Investors to contribute to education, discourse, and research related to efforts by institutional investors to improve corporate governance arrangements at publicly traded firms.

From 2011 to 2014 the SRP operated a clinic that assisted institutional investors (several public pension funds and a foundation) in moving S&P 500 and Fortune 500 companies towards annual elections. This work contributed to board declassification at about 100 S&P 500 and Fortune 500 companies. With work on the declassification project completed in 2014, the clinic has not been operating during more recent academic years.