Scott Hirst

Research Director, Program on Institutional Investors

Lecturer on Law

Spring 2018

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 Research Director of the Harvard Law School Program on Institutional Investors and a Lecturer on Law, teaching the Corporate and Capital Markets Law and Policy class. 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, 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.
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.
Lucian Bebchuk, Scott Hirst & June Rhee, Toward the Declassification of S&P 500 Boards, 3 Harv. Bus. L. Rev. 157 (2013).
Categories:
Corporate Law & Securities
Sub-Categories:
Corporate Governance
,
Shareholders
Type: Article
Abstract
This report provides an overview and analysis of the work that the Shareholder Rights Project (SRP) undertook on behalf of a number of institutional investors during 2012 and 2013, the SRP’s first two years of operations. During 2012 and 2013, the SRP worked on behalf of eight SRP-represented investors on board declassification proposals submitted for a vote at the 2012 and/or 2013 annual meetings of 122 S&P 500 and Fortune 500 companies, and this work has produced substantial results: 100 Negotiated Outcomes: Negotiated outcomes involving a commitment to board declassification were reached with 100 S&P 500 and Fortune 500 companies, about three-quarters of the companies receiving proposals in 2012 and/or 2013. 58 Successful Precatory Proposals: During 2012 and 2013, declassification proposals brought by SRP-represented investors received majority support at 58 annual meetings of 53 S&P 500 and Fortune 500 companies (all but three of the annual meetings in which such proposals went to a vote), with average support of about 80% of votes cast. 81 Board declassifications: A total of 81 S&P 500 and Fortune 500 companies already declassified their boards during 2012 and 2013 as a result of the work of the SRP and SRP-represented investors. These 81 companies, which have an aggregate market capitalization exceeding one trillion dollars (as of Dec, 31, 2013), represent about 65% of the companies with which engagements took place and about 60% of the S&P 500 companies that had classified boards as of the beginning of 2012. Expected Impact by End of 2014: The work of the SRP and SRP-represented investors is expected to produce a significant number of additional board declassifications during 2014 as a result of (i) management declassification proposals that will go to a vote pursuant to 2012 and 2013 agreements, (ii) companies agreeing to follow the preferences of shareholders expressed in 58 successful precatory declassification proposals, and (iii) ongoing engagement by the SRP and SRP-represented investors. We estimate that, by the end of 2014, this work will have contributed to movements towards board declassification by about 100 S&P 500 and Fortune 500 companies; this large-scale change can be expected to increase board accountability and thereby to enhance shareholder value and company performance in the affected companies. Beyond Board Declassification: The SRP’s 2012 and 2013 work also facilitated a substantial increase in successful engagement by public pension funds, and in their ability to obtain governance changes favored by shareholders. The proposals that the SRP worked in 2012 and 2013 on represented over 50% of the shareholder proposals by public pension funds that received majority support in 2012 and 2013, and over 20% of all precatory shareholder proposals (by all proponents) that received majority support in 2012 and 2013. The Shareholder Rights Project (SRP) is a clinical program operating at Harvard Law School and directed by Professor Lucian Bebchuk. The SRP works on behalf of public pension funds and charitable organizations seeking to improve corporate governance at publicly traded companies, as well as on research and policy projects related to corporate governance. Any views expressed and positions taken by the SRP and its representatives should be attributed solely to the SRP and not to Harvard Law School or Harvard University.
Lucian A. Bebchuk & Scott Hirst, Private Ordering and the Proxy Access Debate, 65 Bus. Law. 329 (2010).
Categories:
Corporate Law & Securities
Sub-Categories:
Shareholders
,
Corporate Law
,
Corporate Governance
,
Securities Law & Regulation
Type: Article

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