Jesse Fried

An op-ed by Jesse Fried and Steven Davidoff Solomon. In December 2013, the American Studies Association adopted a boycott of Israel. The organization, which says it “promote[s] the development and dissemination of interdisciplinary research on U.S. culture and history in a global context,” banned ties to Israeli educational institutions. The Israel boycott resolution was first approved by ASA’s leadership, known as the National Council. Then, due to low voter turnout, it was ratified by a mere 20 percent of the organization’s members. Four distinguished ASA members have since sued the group and certain ASA leaders, claiming that the small turnout invalidated the vote’s result under the ASA’s bylaws and the District of Columbia Nonprofit Corporation Act.

An enigma baffling American economists for years has been solved, with a little help from outside. In a study published in January, professors Efraim Benmelech, Nittai Bergman and Hyunseob Kim explain why over the 68 years from 1948 to 2016 the productivity of the average American employee increased 242% while wages rose only 115%...One of the most important researchers in this respect is Lucian Arye Bebchuk, a professor at Harvard Law School. Fifteen years ago he published a book with Harvard Law colleague Jesse Fried, “Pay without Performance: The Unfulfilled Promise of Executive Compensation,” explaining why the correlation between executive pay on Wall Street and performance is so weak. It’s mainly because directors are captives of management, and the market for managers isn’t really a market, it’s more like a rigged game.

Twelve of the top 100 most-cited law professors of all time teach at Harvard Law School, according to the Social Science Research Network—and professors Lucian A. Bebchuk and Steven Shavell took the first two spots. An electronic service that aims to make research papers and scholarly articles easily accessible, the SSRN contains over 650,000 documents by more than 360,000 authors...“The rankings reflect the significant impact that the Harvard Law School faculty has on policy research and the legal academy,” Bebchuk wrote in an email. Law Professor Cass R. Sunstein ’75, who ranks in fourth place with 1,484 citations, said he thinks there is a significant benefit to publishing work on SSRN. “I think it’s a good thing if you have a paper that’s published and that could benefit from the comments and criticisms of others,” Sunstein said...The list also includes Law professors Louis Kaplow, Reinier H. Kraakman ’71, Mark J. Roe, Jesse M. Fried ’86, Alma Cohen, Allen Ferrell, John Coates IV, Oren Bar-Gill, and J. Mark Ramseyer.

An op-ed by Jesse Fried and Eugene Kontorovich. Emails unearthed in a federal lawsuit appear to show that the American Studies Association’s decision to boycott Israel was orchestrated by a small cadre of academics who infiltrated the ASA’s leadership to demonize the Jewish state. The ASA website says the scholarly group “promotes the development and dissemination of interdisciplinary research on U.S. culture and history in a global context,” but in December 2013 it endorsed an academic boycott of Israel. The ASA’s leadership, called the National Council, backed the boycott resolution and put it to a membership vote. A third of the members voted, and two-thirds of those endorsed the resolution.

...But as Uber CEO Travis Kalanick learned this week, founder control is something of an illusion when a company needs constant infusions of investor cash in order to survive...But notably, Kalanick remains on Uber’s board of directors—an indicator that he and his shareholders are making an economic decision, and not a purely ethical one. “You can have the legal power to keep yourself king, but still voluntarily abdicate if that’s what it takes to obtain much-needed capital,” says Jesse Fried, a Harvard Law School professor who specializes in corporate governance. “Who wants to rule over a collapsing kingdom?”

A predominant theme in Silicon Valley over the past year involves powerful founders behaving badly. Uber Technologies Inc. and Zenefits, a maker of human resources software, are two companies whose public reputations have been partly undone by such conduct. Now the same destructive dynamic appears to be playing out at Tanium Inc...The situation at Tanium underscores the risk of venture capitalists placing near-absolute power in the hands of a company’s creators. Orion Hindawi and his father David control more than 60 percent of votes on Tanium’s board. Similar structures have worked for Facebook Inc. and Snap Inc., but investors take on increased risk by ceding authority, said Jesse Fried, a professor of business law at Harvard University: “If you have a CEO who generally is doing a good job but is acting bad on the margins, you’re not going to get in their face.”

The United States District Court for the District of Columbia has rejected efforts by the American Studies Association (ASA) to suppress a lawsuit filed against the Association by its own members challenging its boycott of all Israeli academic institutions. The judge ruled in favor of the ASA professors in four out of six claims, and authorized the case to go forward...“The circumstances of the ASA’s purported adoption of an anti-Israel BDS resolution are deeply shocking,” stated Harvard University Law Professor Jesse Fried who served as an expert adviser to the litigation team representing the plaintiffs.

Snap Inc. often likens its app to a new form of television. It’s also borrowing from the playbook of traditional media companies to create a small circle of power in its top ranks...“Snap is doing something I have not seen before: creating and issuing non-voting shares at the IPO,” said Jesse Fried, a professor at Harvard Law School. “After the IPO, Snap can issue additional non-voting stock to employees or other parties without eroding the founders’ control rights.”

In seeking to defuse the firestorm over its sham accounts, Wells Fargo & Co.’s board turned to an old, but obscure gambit – getting its top leader to pay up. John Stumpf, the bank's chairman and CEO, will forfeit about $41 million of unvested stock awards and forgo his salary while the company investigates its retail banking sales practices...Companies’ general reluctance to claw back pay may stem from their desire to retain top executives, avoid litigation by departed executives, and minimize bad publicity, says Jesse Fried, professor of law at Harvard Law School. Some companies may choose to reduce a CEO’s current pay rather than claw back already-received pay. “It is much less embarrassing for the CEO,” Fried says. Dodd-Frank “will require companies to recoup excess pay arising in connection with a (financial) restatement. There will be a lot more clawbacks because companies will not have discretion to forgo recoupment when a covered executive has received excess pay,” Fried says.

Wells Fargo & Co's unprecedented move to strip Chief Executive John Stumpf of $41 million in stock awards has sent a chill through Wall Street with bankers fearful that a hardening political climate against corporate wrongdoing will encourage boards to be more aggressive about making them forfeit pay...."The Wells Fargo board made a mistake by not recouping some of the CEO's pay until after the firestorm developed," said Harvard Law School professor Jesse Fried. "Other boards will learn from this mistake."

Anyone paying attention to Tuesday's Senate Banking Committee hearing over Wells Fargo's sales tactics is likely to hear a lot about a single word: "Clawbacks." It's the practice of doing just what it sounds like: Taking money back from an executive for compensation they've already been paid for things such as misconduct, gross negligence or "material" errors...Jesse Fried, a professor at Harvard Law School who studies corporate governance, says "it's still extremely rare to hear of a public company using its own voluntarily adopted clawback provision" to go after their own executive's pay.

An op-ed by Jesse Fried and Steven Davidoff Solomon. The American Anthropological Association has been voting this entire month on a resolution calling for the boycott of Israeli academic institutions. Today marks the final day for members to cast their votes. Should the resolution pass, the anthropologists will be the largest US academic association to support an Israel boycott, joining a handful of smaller organizations such as the African Literature Association and the American Studies Association. These anti-Israel resolutions are being pushed by BDS (Boycott-Divest-Sanction) activists eager to demonize, demoralize and ultimately destroy the Jewish state. Academic BDS is widely and appropriately viewed as morally perverse. As the American Association of University Professors, the Association of American Universities and many of the country’s leading scholars have stressed, any academic boycott interferes with the commitment to the free exchange of ideas that is still shared by most academics.

Payments made to officers, directors and other “insiders” in control of a distressed corporate debtor are closely scrutinized by other stakeholders as well as the media in larger chapter 11 cases. Bankruptcy rules require companies to disclose insider payments during the 12-month period leading up to a bankruptcy filing. ...Whatever the merits of the disclosure debate may be, the debate is swept up in the larger controversy surrounding executive pay faced by healthy and distressed businesses alike. For example, in their controversial treatise on the unfulfilled promise of executive compensation, Lucian Bebchuk and Jesse Fried weave a detailed account of how structural flaws in corporate governance have enabled managers to influence their own pay and have produced widespread distortions in pay arrangements. They believe that directors must focus on shareholder interests and operate independently from the executives whose compensation they set by making directors more directly accountable to shareholders. In rebuttal, critics point to executive compensation practices of distressed businesses to demonstrate that reducing “agency costs”—the problem created by the separation of ownership and control in larger public companies which is mitigated in distressed situations through the consolidation of ownership interests and assertion of control by sophisticated investors—doesn’t lead to material changes in executive compensation arrangements.

The legal journal Corporate Practice Commentator recently announced the 10 Best Corporate and Securities Articles of 2014. Half of those selected this year were written by Harvard Law School faculty members.

An article by John C. Coates, Jesse M. Fried, and Kathryn E. Spier. An online survey of 124 practicing attorneys at major law firms suggests possible new directions for educating and training Harvard Law School students. The most salient result from the survey is that students should learn accounting and financial statement analysis, as well as corporate finance. These two subject areas are viewed as particularly valuable both for lawyers in litigation and lawyers working in corporate/transactional practice areas.