180 InManagersWeTrust
AMP sought and won an injunction prohibiting AlliedSignal’s
consent solicitation unless and until each proposed director-
candidate affirmed that if elected, he or she was duty-bound under
Pennsylvania law to act in the best interests of the corporation as a
whole, not merely in the shareholders’ interest.
The court upheld AMP’s extraordinary actions against Allied-
Signal’s claim that AMP’s board had breached its fiduciary duties in
response to the AlliedSignal bid. In its opinion, the court repeatedly
emphasized a “stakeholder” standard, which appears to be at the
heart of Pennsylvania law, and used the following unequivocal terms:
“Directors may weigh the interests of the shareholders against the
interests of other constituencies.” They “may consider the effects
upon all groups affected, including shareholders, employees, sup-
pliers, customers and creditors.” They “shall not be required to re-
gard any corporate interest or group as dominant or controlling.”
These statements do not suggest a shareholder-primacy norm. A
less obvious point but one that is equally true is that these Penn-
sylvania standards are not all that different in practice from those
of other U.S. states. They are also not all that different from German
law and may even capture the German sense of the common inter-
est.
Consider both German-based Mannesmann’s battle against the
United Kingdom’s Vodaphone and the merger of Germany’s Daimler
Benz with the United States’s Chrysler. Although German law per-
mits directors to evaluate the interests of workers and lenders and
the so-called common interest, the law also required that the board
not act contrary to the best interests of shareholders—and both
boards did so, Mannesmann’s with a vengeance.
That kind of deference to shareholders may not illustrate share-
holder primacy, nor it it consistent with the usual rhetoric of the
bank/labor model. Accordingly, U.S. practice more closely resembles
European practice than it does U.S. rhetoric, and European practice
more closely resembles U.S. practice than it does European rhetoric;
managers in neither place are obligated to hold a thoroughgoing
owner orientation.
ONE WORLD TO COME
Trends in corporate practice worldwide suggest further harmoniza-
tion, and it is a mistake for investors to overlook them. These trends
spell the continued erasure of differences and a tendency to make