In a new article, Joseph Kieran Leahy argues that "essentially all corporate political contributions made by large, public corporations today constitute bad faith because they reflect management's conscious disregard for shareholders' political views."
I find his argument unpersuasive. After all, as Chancellor Allen observed many years ago:
The corporation law does not operate on the theory that directors, in exercising their powers to manage the firm, are obligated to follow the wishes of a majority of shares. In fact, directors, not shareholders, are charged with the duty to manage the firm.... That many, presumably most, shareholders would prefer the board to do otherwise than it has done does not... afford a basis to interfere with the effectuation of the board's business judgment.
Paramount Communications Inc. v. Time Inc., Nos. 10866, 10670, 10935, 1989 WL 79880, at *30 (Del. Ch. July 14, 1989), aff'd, 571 A.2d 1140 (Del. 1990).
I see no reason that principle would not extend to political contributions.
Update: Leahy responds here.
