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54 Sw. L. Rev. 155 (2025)
Director Primacy to the Hilt in the Public Benefit Corporation

handle is hein.journals/swulr54 and id is 163 raw text is: DIRECTOR PRIMACY TO THE HILT IN THE PUBLIC BENEFIT CORPORATION David Yosifon* I. INTRODUCTION Corporate law requires the directors of ordinary, for-profit corporations to manage firms in the best interests of the shareholders, forbidding directors from sacrificing corporate profits in service of any other goal. There has been a longstanding debate about whether this ought to be the law of corporate purpose, but today, shareholder primacy is well established as black letter corporate law. There has also been a longstanding debate, even among proponents of the shareholder primacy rule, about the appropriate balance of power between directors, management, and shareholders in the governance of the corporation as it pursues shareholder value. In the United States today, this contest has, at least for now, been resolved in favor of the dominance of the board of directors in the machinery of corporate governance. The law allows no discretion as to the goal of corporate governance, but nearly all formal power to pursue the prescribed purpose of profit maximization, and total discretion as to how to pursue it, is bestowed on the board of directors. This principle of director primacy' has been prominently associated with Professor Stephen Bainbridge, the most prolific and articulate proponent * Peter Canisius S.J. Professor of Law, Santa Clara University. Dyosifon@scu.edu. This essay is written for a symposium organized by the Southwestern Law Review in connection with the publication of Michael B. Dorff's Becoming a Public Benefit Corporation (2024). Dorff's book is a terrific resource for scholars immersed in this field, as well as for those seeking entrde into it. It is a rich compendium of information on benefit corporations and gives a thoughtful review of important arguments bearing on the subject. It is a good and easy read and a worthy contribution to a still burgeoning scholarly literature. In what follows, I only indirectly engage Dorf's book. This essay is inspired by Dorff's account, and any value here is a testament to the spur to further inquiry provided by his book. 1. The term director primacy should not be directly contraposed with the term shareholder primacy. Shareholder primacy, as commonly used, refers to the prescribed or desired goal of corporate governance. Director primacy refers to a particular means of pursuing that goal. Director primacy is to be distinguished from a corporate governance system in which some party other the directors has significant control of corporate policy. One could be a critic of the goal of shareholder primacy, insisting that the corporation should pursue more varied interests, while still adhering to the means of director primacy, that is, that the board should have the dominant authority to pursue 155