Over on the Harvard Corporate Governance Forum, Martin Lipton and some of his Wachtell acolytes blithely brush off the rise of anti-woke capitalism investors and politicians and the growing resistance to ESG. Instead, he clings to the so-called "New Paradigm," which purports to offer "a pragmatic and balanced approach to preserving open market capitalism, while also creating economic prosperity that will benefit all, not just a few," by embracing stakeholder capitalism.
I'm deeply skeptical about all of this nonsense. I don't think Lipton is a woke capitalist. To the contrary, he's embraced ESG as the latest way of marketing his services to corporate managers. As I explain in my book, The Profit Motive: Defending Shareholder Value Maximization:
Martin Lipton rose to fame by defending Imperial CEOs from the raiders. Lipton’s invention of what he called the shareholder rights plan—better known as the poison pill—was a major reason the brief hostile takeover era fizzled out by the early 1990s. . . .
Martin Lipton has morphed from anti-takeover warrior into a vigorous advocate of what he calls “the New Paradigm,” which “conceives of corporate governance as a collaboration among corporations, shareholders and other stakeholders working together to achieve long-term value ….” . . .
But it is difficult to take Lipton’s arguments at face value.
When you look closely at The New Paradigm it quickly becomes apparent that Lipton is still in the business of defending corporate managers. The only difference is that the corporate raiders of the 1980s have been replaced by hedge fund activists. Accordingly, one suspects that Lipton’s goal is not to empower his CEO clients to be more prosocial, but to use stakeholder capitalism as a lever for restoring the CEO’s former imperial powers. Those suspicions find confirmation in Bebchuk’s study of deals negotiated during the COVID-19 pandemic. Lipton’s law firm, Wachtell, Lipton, Rosen & Katz, represented target companies in 15% of the studied deals. Despite Lipton’s frequent pronouncements about the need to embrace stakeholder capitalism, none of the Wachtell Lipton deals contained any contractual protections for labor, customers, creditors, or the environment.
Hypocrisy?
