Board members for Massachusetts public companies can breathe a little easier — and they have, to some extent, former EMC chief executive Joe Tucci to thank.
Tucci, of course, engineered a $67 billion deal in 2015 to sell off EMC to Dell. But not everyone was happy: Some disgruntled investors sued Tucci and his fellow board members, saying they could have reaped a bigger gain for shareholders if they broke up the EMC federation and sold off its key business lines separately.
That might have been true. There’s no way to know now. But the state Supreme Judicial Court ruled earlier this month that Tucci and his crew were not obligated to focus solely on shareholder interests, and instead should weigh the company’s broader goals and objectives. Their ultimate fiduciary duty is to the corporation, not the investors — a key difference between Massachusetts and Delaware laws.
This brings some important clarity. Lawyers at Nixon Peabody, for example, say they regularly hear from clients involved in M&A decisions who wonder if maximizing shareholder value should be the paramount factor. The SJC now has an answer: not if you’re a widely held Massachusetts corporation.
The ruling’s repercussions could be felt beyond the boardroom. Directors now know that they can prioritize the effects their decisions could have on their workers and on their communities. It’s hard to predict the long-term impact the EMC sale will have here. But this is one unforeseen way that the local economy could benefit.