The Right Coast
January 26, 2004
Prestigious Academic for Sale. Call 1-800-FOR-COLLEGE
By Tom Smith
Maybe I'm missing something in the interesting Oracle-PeopleSoft hostile tender offer. In its latest move, Oracle has nominated five new members it wants to put on the PeopleSoft board including two well know academics. PeopleSoft's response is that these academics and venture capitalists (as the other nominees are) are being paid by Oracle and are under contract with Oracle and so are just Oracle stooges, in effect. Now, what strikes me is that, well, yeah, that is obviously true. The PR point of hiring prestigious academics to be your nominees to the board of the target eludes me a little bit. Is it really any better than hiring Jones, your elevator operator, to be on the board, while assuring all the PeopleSoft shareholders not to worry, that he will do exactly what Larry Ellison (CEO of Oracle) tells him to do? Wouldn't the elevator operator be cheaper than the business school professor? I don't mean to sound superior. Law professors are famously for sale, by and large. When I was in practice we hired a very famous constitutional law professor to espouse some ridiculous proposition or other and it worked like this. We wrote the opinion, and faxed it to him. It came back with a few commas changed. We faxed it back and sent a check for ten large. The opinion came back with the law professor's signature. Perhaps judges are smart enough to completely discount such opinions--I don't know. But as to the Oracle bid, does anyone really think there is any significant chance that once in place the prestigious academic director would say "Ah ha! I have had a revelation! This takeover bid sucks!"
Come to think of it, there was another Delaware case involving Larry Ellison and a law professor at Stanford, Joe Grundfest, and Michael Boskin, an economics professor at Stanford, who were to sit on an independent litigation committee and moot whether some derivative suit or other should go forward against Oracle directors. The correct answer was undoubtedly NO!, since most derivative suits are a waste of time and shareholders' money, but it seemed to me the judge was equally correct when he said, oh, come on, you're telling me two Stanford professors are really independent when Larry Ellison practically has the Stanford pine tree tatooed on his forehead? Here Delaware law faced the difficult question of how ridiculous a joke an independent committee should be allowed to be. Ridiculous of course, but not very, very ridiculous is perhaps the rule. Maybe this case has been appealed and maybe it will be overturned. But I have seen what happens to professors whenever billions of dollars are in the vicinity, and let's just say "independence" is not the first word that springs to mind.
If I were a judge, I would only allow retained academic experts into my courtroom if I were desparate for a laugh. Otherwise, I would just hire my own on the tab of the parties, assuming the FRCP would allow this, which seems doubtful, but I wouldn't know.
Disclosure: Out of sheer laziness and disorganization, I have never, or only very rarely, consulted for pay, notwithstanding my fame as a brilliant corporate law professor. Should anyone wish to test my commitment to the above views by tempting me with huge pots of money, I suggest they contact me immediately.