Hastings Business Law Journal


Scott H. Mollet


Changes in government policy significantly affect the value of investments, and in some circumstances, the government may have to provide compensation for losses in investment value. Discussions on whether these losses should be compensated have failed to investigate whether changes to corporate governance policy are similar to the standard model against compensation for policy change. Acorporation combines a variety of economic interests and decisionmakers that permits opportunistic behavior in ways not considered in the compensation debate. This Articlequestions whether the presumption against compensation sufficiently addresses this risk of opportunism due to changes in corporate policy. This Article identifies the potential for opportunistic behavior within a corporation and proposes a scheme of redistributive compensation to mitigate such behavior. Requiring an equitable distribution of gains created by policy change can reduce the potential for opportunism under a market approach and substantially improve the quality of corporate decisions.