Carl Tobias, Filling Federal Court Vacancies in a Presidential Election Year, 50 U. Rich. L. Rev. Online 35 (2016)
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FILLING FEDERAL COURT VACANCIES IN A PRESIDENTIAL ELECTION YEAR
Carl Tobias *
+++Scholars and politicians who closely track the federal judicial selection process appreciate that confirmations slow and ultimately halt over presidential election years, a phenomenon which has greater salience in a chief executive’s last administration. That policy comprises numerous strands. Important are the conventions—which have permitted the approval of many superb, uncontroversial district court nominees routinely through the fall of most presidential election years and in certain lame duck sessions—while allowing a number of capable, mainstream appellate nominees to manage consideration until the August Recess. The traditions derive from respect for voters’ preferences expressed in the elections, the incoming chief executive, who should have the opportunity to fill vacant judicial posts, and new senators, who must discharge their constitutional responsibility to provide advice and consent on selections.
+++Nevertheless, GOP members have not always followed these customs and other venerable conventions throughout President Barack Obama’s years. For instance, Republicans automatically hold over Judiciary Committee votes on able, moderate candidates for a week, and the GOP leadership denied talented, centrist appeals court nominees’ final ballots after mid-June 2012. Ever since winning the upper chamber in November 2014, Republicans have incessantly promised to duly effectuate “regular order” again. However, the Senate confirmed merely eleven jurists in 2015, which is the fewest since Dwight Eisenhower was President. Because the United States in fact confronts seventy-one openings (thirty-two “judicial emergencies”), which plainly undermine the delivery of justice, and the GOP will keep stalling and ignoring customs applied over presidential election years, 2016 court appointments merit scrutiny.
+++The first section of this article canvasses selection in Obama’s tenure, ascertaining that Republicans cooperated little and contravened numerous traditions, especially after the party captured a majority. Thus, section two analyzes why the GOP did not collaborate and the consequences. Because that obstruction—which undercuts justice and regard for the coequal branches of government—will actually continue across 2016, the piece surveys devices, which could rectify or ameliorate those critical impacts this presidential election year.
I. Judicial Selection in the Obama Administration
A. The First Six Years
+++Selection proceeded well Obama’s first term and a half when Democrats controlled the Senate, particularly in contrast to 2015. He aggressively consulted home state politicians, seeking their guidance and requesting proposals of fine, mainstream candidates, advice which Obama usually followed. These endeavors promote cooperation, as senators defer to colleagues in jurisdictions with vacancies because of mutual respect, and they can and do halt processing by not returning blue slips—a tradition which permits consideration to advance. Despite solicitous, persistent White House cultivation of all lawmakers, many failed to coordinate, slowly adopting processes or submitting prospects, while some have not even tendered picks.
+++Republicans cooperated with the Democratic majority in swiftly arranging committee hearings at which five nominees testified every three weeks, carefully questioning them in the panel sessions and effectively posing later written queries when indicated. However, the GOP automatically held over discussions and committee votes one week for all choices recommended but fifteen of 350 excellent, moderate nominees.
+++Republicans slowly agreed to most possibilities’ chamber debates, if warranted, and yes or no ballots, requiring exceptional, consensus selections to languish across months until Democrats petitioned for cloture. Republicans also demanded roll call votes and numerous debate minutes yet used virtually none for superior, uncontroversial prospects, many of whom captured appointment without opposition, thereby needlessly consuming precious Senate floor time. Those procedures stalled confirmations and meant openings remained close to ninety for much of the half decade following August 2009, numbers that were unprecedented.
+++In the 2012 presidential election year, these strategies continued and increased. The GOP regularly held over committee discussions and ballots for one week, rejected prompt floor vote concords, and mandated roll call ballots for accomplished, noncontro-versial designees who easily secured confirmation, while final appellate votes ceased in mid-June. With Obama’s re-election, Democrats hoped that Republicans would actually enhance collaboration, but they did not, and this recalcitrance culminated in June 2013 when he proffered three well qualified, mainstream, diverse recommendations for the U.S. Court of Appeals for the District of Columbia Circuit, the nation’s second most important court. The GOP refused each a floor ballot, and frustration with incessant obstruction provoked Democrats to cautiously exercise the “nuclear option,” which limited filibusters. The measure’s November 2013 implementation, which Republicans asserted violated tradition, enabled the 113th Congress to approve 134 jurists, including twenty-seven persons in the 2014 lame duck session. After that mechanism’s explosion, Republicans forced Democrats to invoke cloture on all nominees until 2015.
B. Selection in 2015
+++Once the GOP became the majority, this lack of cooperation persisted and eclipsed that when Republicans were the minority. The leadership has constantly said that it would dutifully restore the world’s greatest deliberative body to regular order. Members duly recited this litany to describe reinstitution of the normal processes which ostensibly governed the chamber before Democrats subverted them. Early in January 2015, Mitch McConnell (R-Ky.), the new Majority Leader, proclaimed: “We need to return to regular order,” and he directly reiterated that phrase over subsequent months. Charles Grassley (R-Iowa), the Judiciary Committee Chair, propounded analogous views. Emblematic was his January 21 statement that the Committee would deploy regular order in assessing judicial nominees. Despite many pledges, the GOP has failed to expeditiously offer suggestions for presidential review, committee hearings and ballots or chamber floor debates, when required, and final votes.
1. The District Court Process
a. The Nomination Process
+++Obama has continued to assiduously consult, seeking proposals from home state officers about well qualified, consensus picks, which he normally used by selecting them, as moderation and competence are Obama district possibilities’ hallmarks. Notwithstanding his insistent cultivation of all legislators, many Republicans have declined to coordinate, slowly establishing procedures or forwarding candidates, and a few have chosen none. Thirty-six in forty-three (eight of nine appeals courts) openings lacking nominees and eighteen in twenty-one vacancies without them—which the U.S. Courts Administrative Office (“AO”) dutifully classifies emergencies—are currently in jurisdictions that at least one GOP senator represents.
+++The clearest example is Texas, which has the most U.S. openings, notwithstanding approval of three excellent, uncontroversial jurists by May 2015. It presently faces two circuit and seven district court vacancies, all lacking nominees with eight comprising emergencies, and for many of which the recommendation process has yet to begin or has stalled. Texas is not alone. Most crucial are Pennsylvania’s two empty Third Circuit seats and Western District openings in three of ten positions without nominees for multiple years, while Georgia had two unfilled Eleventh Circuit slots and the Northern District had a third of posts vacant several years before politicians reached a “deal” with Obama to fill them.
b. The Confirmation Process
i. Judiciary Committee Hearings
+++Similar, but exacerbated, problems infect confirmations. Grassley set the first hearing on January 21, 2015, promising he would analyze strong, mainstream nominees under regular order. The Chair alleged the public should expect no “discernible difference” between how the panel operates with GOP rather than Democratic leadership, suggesting it would provide hearings every few weeks that Congress was in session, a policy ex-Chair Patrick Leahy (D-Vt.) ably instituted the last three Congresses and Grassley, the Ranking Member over the 112th and 113th, helped effectuate. Disparities rapidly materialized, however. For instance, the next hearing occurred seven weeks after the first and the third eight weeks later, while the fourth and fifth came in June and July with the latest on September 30, October 21, and December 9. The March hearing was conducted for a pair of nominees and the summer hearings for three each, in comparison with the five Leahy typically evaluated.
+++In the April 20 debate on a Texas re-nominee, Grassley proclaimed Republicans matched the Democratically led Senate over President George W. Bush’s seventh year, because at the identical juncture, the “committee had held three nominee hearings for a total of 10 judges,” while the panel “already held 4 nomination hearings” [on] 6 judges. Harry Reid (D-Nev.), the Minority Leader, countered that the 2015 panel was “not having any hearings to speak of;” by June 8, 2007, “Democrats confirmed 18 judges, including 3 circuit court judges.”
ii. Judiciary Committee Discussions and Votes
+++Despite Grassley’s pledges, which he repeated at the February 12 meeting, the Chair held over votes from that session until February 26, retaining a practice the GOP used during Obama’s first term and a half. Those delayed were five superb, moderate U.S. Court of Federal Claims re-nominees whom the panel duly reported last year on unopposed voice votes and four superior, consensus district re-nominees, two for emergencies, with powerful support of the Republican party home state panel members: John Cornyn, Ted Cruz, Orrin Hatch, and Mike Lee.
iii. Floor Debates and Votes
+++McConnell concurred on few quick nominee debates and votes when he was the Minority Leader Obama’s initial six years, thus requiring Democrats to pursue cloture on numerous selections and eventually change filibusters. However, McConnell pledged additional cooperation in his new role as Majority Leader, while scheduling nominee floor debates and chamber ballots afforded a constructive opportunity for respecting this promise.
+++Nevertheless, McConnell actually set no fast consideration on the four districts, and the five Claims Court, re-nominees whom the panel approved with February 26 voice votes. A month later, he finally convened a lone district re-nominee’s April 13 floor debate and ballot. This seemingly treated the contention by Leahy, the Ranking Member, that the absence of 2015 nominee votes contravened precedent and contrasted with how Democrats scrutinized Bush picks. He asserted that the Senate’s constitutional responsibility to give “advice and consent” does not end with a presidency’s final two years and carefully urged swift authorization of the Judicial Conference proposal for seventy-three judgeships to provide the bench resources for delivering justice. Leahy responded to Grassley’s idea that eleven nominees appointed in the 2014 lame duck session must “count towards confirmations this year” by arguing that prior “Congresses have always confirmed consensus nominees” ahead of lengthy recesses, maintaining “Democrats were only forced to do so because Republican obstruction had left judicial vacancies close to [ninety across Obama’s] first six years.”
+++McConnell failed to publicly say when the other three district or five Court of Federal Claims aspirants would have votes. Nonetheless, he confirmed one trial level re-nominee on April 20, prompting Leahy’s contention this was only the second appointment, which clearly proved that GOP “delay and obstruction” revealed the earlier Obama years was continuing, and his denunciation of the “slow trickle,” which harms courts and the public. When the Senate Republican leader denied rapid ballots for the last two district re-nominees, Reid compared the pair of jurists the GOP approved the entire year with sixteen over 2007, while he mentioned twenty nominees were pending in committee, emergencies doubled this year, and Republicans’ disregard of their constitutional responsibility was an “injustice to the American people.” These efforts seemingly provoked McConnell to schedule floor consideration near the Memorial Day Recess for the district re-nominees. In their debates, Leahy charged that both persons enjoyed September nominations and January hearings with unanimous February panel reports, yet had languished on the floor for almost three months, contending José Olvera would fill one of six district emergencies in Texas. He alleged Republicans persistently tendered excuses for nominee obstruction and criticized their “delay for delay’s sake” which miss[es] the bigger picture” of the responsibility to fill openings. When the Senate approved a lone nominee in July, Democrats pursued multiple unanimous consent requests on votes that were denied. For example, Charles Schumer (D-N.Y.) aptly contrasted the 2008 appointments results with this year, pleading for three designees’ consideration, but Grassley reiterated his notions about the 2014 lame duck session confirmations, which violated regular order, and how this year was like 2007, urging his colleague to “put that in your pipe and smoke it.”
+++Despite repeated declarations of the regular order mantra by prominent GOP leaders since winning the chamber, from early January until April 12, 2015, they confirmed no district judges, with only four ahead of July. Before June, the committee also granted merely three hearings and one included two nominees; the panel correspondingly allowed four district and five Court of Claims re-nominees’ ballots on February 26 and two more April 23. This desultory record contrasts with Democratic endeavors in Obama’s first six years and even over Bush’s presidency; for instance, the strongest precedents were thirty-four of his fine, uncontroversial recommendations for districts, who realized confirmation in 2007, and Democrats’ systematic consideration of trial jurists before lengthy recesses.
2. The Appellate Court Process
+++Both parties examine appellate nominees very closely because the selections are comparatively fewer, while they articulate more policy, which often has ideological effects. In November 2014, Obama mustered nomination of Kara Farnandez Stoll to the U.S. Court of Appeals for the Federal Circuit and District Judge Luis Felipe Restrepo to the U.S. Court of Appeals for the Third Circuit. He marshaled no other appellate designees, primarily because GOP senators represent most jurisdictions that have present circuit vacancies without nominees, and they have coordinated little. Stoll was an experienced, mainstream Federal Circuit practitioner, and Restrepo is a stellar, centrist jurist, and each is Latina/?o. Neither received Committee hearings in 2014, as Obama proffered both following the 2014 elections.
+++Stoll’s March hearing proceeded smoothly, yet the panel only voted her to the floor on April 23 where she languished for a number of weeks. McConnell neglected to publicly declare when the superior prospect would be considered, but on June 4, he suggested that the GOP would halt final ballots on more Obama appeals court nominees. After press outlets reported this idea, a McConnell staffer proclaimed: “We’re going to continue to do judges. [There’s] not a shutdown. We probably will have a circuit court nominee.”
+++On June 8, Reid accused the Majority Leader with drastic obstruction—namely rejecting chamber ballots for appellate picks, which contravened his duty—by invoking McConnell’s floor speeches that pled for quick votes on all Bush 2008 circuit selections, while Reid alleged the GOP had yet to confirm one appellate possibility—“not even a consensus nominee such as Kara Stoll,” and urged her prompt consideration. As the Senate departed on the July 4 Recess without considering any person since late May, Leahy protested the inactivity, canvassed the dismal 2015 results and demanded expeditious votes for those on the floor, notably Stoll, which might have provoked her 95-0 July 7 ballot. If few circuit aspirants win confirmation, this would flagrantly violate regular order because that would be unprecedented, while the Democratic majority helped approve ten Bush circuit jurists his ending two years.
+++Restrepo’s process tellingly illuminates stalling, as the fine, noncontroversial jurist waited more than 200 days for a hearing. Obama chose Restrepo with the avid endorsement of Pennsylvania Senators Bob Casey (D) and Pat Toomey (R). However, the Committee only set a hearing for June 10, principally because Toomey did not return his blue slip until May 14, although Casey furnished his in November. Both Senators had previously designated Restrepo for the Eastern District bench, and the chamber felicitously approved the selection in a June 2013 voice vote. The legislators promoted his elevation with a strong press release in which Toomey contended he would “make a superb addition to the Third Circuit.” Nevertheless, the aspirant was excluded from a May hearing on four trial level prospects. The day before that session, the press queried Toomey, who claimed he remained supportive and confident about 2015 confirmation. Grassley pledged he would set a hearing once Toomey provided the blue slip. A panel aide said it was evaluating the nominee’s background under “regular order.” On the chamber floor the day the May hearing occurred, Reid deftly repeated Toomey’s laudatory descriptions of Restrepo while asking if Pennsylvanians wonder why the lawmaker failed to explain the talented nominee’s slowing “by his own party.”
+++Toomey later denied he was stalling Restrepo, and declared the committee was analyzing him but would only conduct a hearing after that concluded and promised to return the blue slip then, unless pertinent concerns surfaced. On May 14, Toomey yielded, producing his blue slip, ostensibly due to the inquiry’s end. The June 10 panel hearing was seamless, as Toomey voiced powerful support and Restrepo clearly answered questions. The candidate was held over yet won approval on a July 9 unopposed voice vote. Given how long most 2015 nominees waited coupled with Grassley’s July tirade and McConnell’s cryptic discussion of his June 4 allusion to circuit votes, it is not surprising that Restrepo’s final ballot was not conducted until January 11, 2016.
+++No defensible idea supports Restrepo’s protracted delay, because Obama first made the jurist’s nomination in 2014 for an emergency opening. His lengthy wait contrasts to Stoll, proposed the same day, who had a March hearing and April Committee report. Observers also insistently contended partisanship explained slow processing.
3. Summary of District and Appellate Processes
+++Reid and Leahy continuously and convincingly addressed Grassley’s claims with applicable data on confirmations and hearings. The Chair’s figures were rather persuasive, especially when, for instance, he employed analogous metrics, but in some respects they can lack pertinence, as data support numerous concepts. Essential is assiduously fulfilling the constitutional duty to express advice and consent and place talented, consensus aspirants in many vacancies, specifically emergencies. The most relevant precedent is Democrats’ 2007–08 effort, which confirmed almost seventy Bush court picks. In sum, the 2015 processing record—approving one circuit and ten trial jurists—sharply contrasts to Democrats’ work at a comparable juncture.
II. The Reasons for and Implications of the Problematic Selection Process
+++The explanations for appointments’ problematic condition are complex. Scholars and politicians robustly debate whether selection has always been troubled, but a number trace the modern “confirmation wars” to the pitched fight about Judge Robert Bork’s Supreme Court nomination three decades ago. Writers contend the process is effectively on a downward trajectory summarized by partisanship and serial obstruction in which the parties ratchet down the regime, while both consider any concession unilateral disarmament. For example, the most recent iteration derives from Republican accusations that Democrats stymied confirmations during the ending pair of Bush years and retaliated for that with unprecedented stalling in Obama’s tenure. Democratic frustration eventually provoked the nuclear option’s invocation that spurred Republicans to contend Democrats had abrogated the rules. Mandating cloture on all prospects concomitantly fueled Democrats’ endeavors that rapidly approved numerous jurists over 2014’s lame duck session to which the GOP responded by profoundly delaying 2015 choices. In short, rampant partisanship and many severe paybacks seem to epitomize the process.
+++2015 inaction leaves the courts with seventy-one Article III judgeships empty, while the AO identifies emergencies for thirty-two circuit and district court positions, a statistic which Republicans permitted to double since January, including the vacancy that Restrepo could fill. Open posts were essentially at ninety for much of the five years which commenced in August 2009; the courts were only able to experience the comparatively low figure of seventy-one vacancies after Democrats had unleashed the nuclear option which prevented Republicans from mounting successful filibusters. However, 2015 inactivity can yield one hundred openings and perhaps fifty emergencies next year.
+++Slow confirmations have many deleterious impacts. They require fine, uncontroversial nominees to place lives and careers on hold and dissuade myriad remarkable candidates from entertaining bench service. Protracted Senate assessment deprives tribunals of judicial resources which they critically need, impedes prompt, economical and fair case disposition, imposes substantially greater pressure on already overburdened jurists and compels litigants to wait years on resolution. These detrimental effects have also undermined citizen regard for selection and the government’s coordinate branches. The above propositions suggest that proposals for improving confirmations warrant scrutiny.
III. Suggestions for the Future
+++The appointment of merely eleven court nominees in 2015 and other problematic phenomena show that the process will face serious complications over the 2016 presidential election year. Most important, approvals can gradually slow and come to a halt, and the judiciary could have nearly one hundred unfilled positions, almost half emergencies, were 2015 inaction to continue. Accordingly, Obama, the chamber, and members should now pledge to fulfill the shared constitutional duty for appointments, thus providing the bench sufficient resources to deliver justice, with meaningful cooperation throughout the nomination and confirmation procedures. GOP senators and party leaders ought to effectuate the regular order construct again by carefully deploying multiple ideas used at the close of Bush’s Administration, reinstituting strategies that expedite consideration and formulating new promising concepts, which directly fill the ample vacancies with highly qualified centrists.
+++All selection participants must canvass and implement numerous ways of ending or tempering the “confirmation wars.” Integral will be stopping or ameliorating the vicious cycle of paybacks and strident, counterproductive partisanship which the majority’s rhetoric and corresponding delay exemplify, namely the June suggestion by McConnell that few appellate nominees would receive confirmation and Grassley’s petulant July denial of chamber votes until fall. Strikingly ironic about 2015 GOP conduct was the failure to even match approvals in numbers of recent presidential election years.
A. Selection in Modern Presidential Election Years
+++Because 2016 is one such year, for which peculiar conventions have developed, relatively diverse approaches could enjoy success. A major tradition has been that the nomination and confirmation processes slow, particularly at second terms’ conclusion, and ultimately grind to a halt. This custom is mainly based on respect for voter preferences expressed in the November elections and for incoming chief executives and senators, who deserve the opportunity to proffer candidates and contribute advice and consent.
+++The tradition has allowed consideration of many accomplished, consensus trial level nominees into most autumns but rarely through lame duck sessions. For example, the chamber approved twenty-two Bush pére choices in 1992 after June; seventeen of President Bill Clinton’s over 1996 following June with eight after June 2000; a pair of Bush submissions later than June in 2004 combined with eight recommendations after this month over 2008; and fourteen Obama candidates across 2012. Those data could reveal Democratic Presidents’ nominees fared better, yet many variables such as nomination timing, which party held a chamber majority and the review’s narrow scope, complicate analysis.
+++The tradition concomitantly permits strong, moderate appellate nominees to garner votes past the Memorial Day Recess, but occasionally later. A dramatic illustration was Stephen Breyer whose First Circuit nomination Ted Kennedy (D-Mass.) persuaded Strom Thurmond (R-S.C.) to promote after Ronald Reagan’s 1980 defeat of President Jimmy Carter. More recently, the Senate approved eleven Bush pére circuit aspirants during 1992 (six following June); two of Clinton’s in January 1996 with eight across 2000 (one later than June); while five Bush choices won approval over 2004 and four were confirmed in 2008 (none after that month either year). Five Obama 2012 jurists were appointed, but no candidate after mid-June. These figures show that both parties’ nominees met similar resistance, yet the GOP needs to greatly enhance the pace should it hope to equal the late Bush years’ performance.
+++In short, much consensus attends the conventions that nomination and confirmation processes slow and eventually halt in presidential election years, while circuit appointments conclude sooner, involving fewer approvals. However, considerable disagree-ment remains about the traditions’ exact contours, including when appointments could taper off and stop, while McConnell recently conceded that “there isn’t any particular official or unofficial cutoff date.” Those phenomena explain why the customs apparently have been different over time, honored in the breach and employed to capture partisan advantage.
B. Traditional Selection Measures
+++In this milieu, numerous tools can apply with more or less success. Politicians ought to seriously consider reinstituting a number of traditional measures, which proved efficacious during the last two Bush years, but that achieved checkered 2015 results witnessed by GOP inactivity. General examples abound. The President should continue assiduously consulting and quickly nominating prominent, mainstream candidates whom numerous home state officers diligently propose. Lawmakers must again respect the convention of abundantly deferring to home state colleagues and Obama, who has cultivated the legislators, heeded their preferences and sent a number of people Republicans tendered or whom they favored. Other general customs are the duties to keep moving able, consensus suggestions at a presidency’s close and voting on cohorts of the aspirants near recesses, yet these conventions seem to be honored in the breach, and the 2015 experience in Committee, but particularly on the floor, was unpromising.
+++Many specific notions also could apply. The President should even more insistently consult senators from jurisdictions where open posts surface to accelerate nominations’ pace. Those officials must supplement cooperation by especially promptly submitting numerous accomplished, uncontroversial prospects. Merit selection panels, which canvass, interview and effectively choose applicants for vacant court seats in Pennsylvania, Texas, and other states have provided help, but the commissions and lawmakers whom they advise can act slowly. Thus, politicians need to closely scrutinize diverse, promising models, such as the California and Wisconsin panels that efficiently yielded numerous capable aspirants over Bush’s tenure, while concomitantly fine-tuning initiatives.
+++Senators also could move very expeditiously when judges proffer notice of intent to assume senior status and cautiously anticipate future empty positions by, for instance, respectfully communicating with jurists once they become eligible. Another concept is a mechanism enlisted in states that possess split delegations, notably Pennsylvania, which enables the senator from that party lacking the White House to submit able candidates. Other profitable solutions include presenting Obama multiple submissions and clearly ranking preferences, which enlarge his flexibility and cabin the necessity to start anew when Obama differs on the lone pick sent, a luxury the United States cannot afford in presidential election years.
+++If GOP lawmakers remain unreceptive to White House cultivation by acting slowly or forwarding minuscule possibilities, Obama could designate with no Republican delegation support; however, this proves unproductive. The Administration can also strike compromises about the kind of accomplished, moderate nominees whom Obama prefers. For example, he could rely more upon diversity vis-à-vis (1) age by championing older selections, as with Circuit Judge Andrew Hurwitz, the last 2012 confirmee; (2) ideology or party affiliation, especially Republicans or Independents, namely a few Toomey candidates; (3) experience, such as prosecutors or civil defense lawyers; and (4) confirming administration, specifically Bush, with Circuit Judge Henry Floyd’s elevation. All modern Presidents capitalize on the last tradition. For instance, Obama has aptly nominated some of his lower court appointees, like Judges Gregg Costa and Robert Wilkins, and even certain jurists three predecessors approved, a dynamic gesture of bipartisanship. Obama might correspondingly invoke “trades,” which he apparently employed in filling lengthy Georgia vacancies. Obama can as well use confrontational tools, which hold senators responsible by publishing the status of pre-nomination negotiations or mustering nominations for all open slots, which could dramatize and publicize how chronic vacancies eviscerate justice.
+++Obama should in turn expedite the process before and once home state politicians send choices. Illustrative would be according nominations higher priority or greater resources. Moreover, the chief executive should hasten American Bar Association candidate analyses, Federal Bureau of Investigation background checks, and White House evaluations and nominations of the persons selected. The President also must continue seeing ideology narrowly and emphasizing merit by comprehensively pursuing and naming superb, mainstream nominees. Because most of his prospects have been competent and uncontroversial, Obama should not have to choose between proposing the type of submissions whom he prefers and filling court vacancies at 2016’s commencement, as that salutary custom has governed early in many Presidents’ eighth year, a system which the Bush initiative epitomizes.
+++For its part, the Committee should provide greater numbers of hearings with more nominees while offering faster discussions and ballots. The Committee ought to survey additional productive notions that foster comparatively efficient review. A helpful approach, which Orrin Hatch (R-Utah) practiced when Judiciary Chair during the Bush years, was mounting abbreviated hearings for talented, centrist nominees. One illustration of this measure was the June 10 session for Restrepo and two district nominees, which entailed less than one hour with probing queries and frank, complete responses. Another solution that merits careful investigation would be holding discussions and votes the first time the panel considers nominees, specifically for emergencies, rather than delaying them a week, as happened with more than 350 Obama candidates, in particular Restrepo.
+++The Majority Leader needs to substantially expand floor debates and ballots. For instance, he could reestablish a valuable procedure which Democrats applied over Bush’s concluding years: having final votes regarding every strong, moderate district nominee on the floor before prolonged recesses, as Leahy cogently urged, and maybe clear them near the 2016 Memorial Day, July 4, or August Recesses. McConnell concomitantly ought to illuminate his June discussion of appellate candidates, because appointing very small numbers over a President’s last years would be unprecedented. Should he remain unresponsive, Democrats can attempt protesting with unanimous consent requests to hold expeditious final votes, which succinctly publicize and dramatize obstruction’s harmful impacts, yet Republicans flatly denied two reasonable July 2015 Democratic petitions urging floor ballots on recommendations.
C. Pragmatic Politics
+++Even if the constitutional duty of furnishing advice and consent and the responsibility to a coordinate branch for delivering adequate judicial resources do not persuade the GOP to collaborate more, some pragmatism, self-interest and political realities should dictate compliance with numerous traditional, modest approaches. For example, the party’s sizeable presidential field inspires little confidence that anyone from this group will become the next chief executive, while over 2016 Republicans will defend twice as many chamber seats as the opposition. These prognostications suggest, for instance, that Republicans could prefer a number of the fine, mainstream nominees Obama will marshal at his tenure’s conclusion to submissions whom a new Democratic President might appoint, especially should Republicans not maintain the chamber. If the GOP wins the presidency, the figures above show Democrats will probably capture the Senate, which means the less the Republican party cooperates now the more likely that action will spark Democratic conduct as problematic or worse once 2017 begins.
D. More Dramatic, Controversial Approaches
+++Nevertheless, were GOP senators to resist Democrats’ overtures or reject collaboration, Obama may actually consider additional dramatic, controversial alternatives. He can rely on the bully pulpit to hold GOP legislators accountable for slowly choosing picks, tendering few aspirants or delaying the confirmation regime following nomination or make openings an election issue. The chief executive and lawmakers can agree to drastically revamp the system through inauguration of a bipartisan judiciary whereby the party lacking executive control might designate specific percentages of nominees, a technique several legislators have adopted. Congress may package this idea with bills authorizing seventy-three judgeships, which could take effect over 2017, thus advantaging neither party.
+++If the situation becomes egregious, comparatively radical devices might be indicated. For example, Obama always can recess appoint designees, yet he wisely refrained from capitalizing on that notion because thorny legal and political concerns trouble the solution’s application. Democratic members could also boycott committee nomination hearings and meetings, while the caucus may analogously treat chamber floor activity, thereby confounding attempts to conduct panel and Senate business.
E. The Judiciary
+++Finally, the Constitution assigns the political branches greater responsibility for selection than the courts, but they might apply numerous mechanisms. For instance, Chief Justices William Rehnquist and John Roberts deployed Year-End Reports to explain how openings directly undercut the courts and harm litigants while reprimanding both parties for stalling confirmations. Individual jurists or the bench as a whole, through entities, notably the Judicial Conference, may publicly and dramatically register opposition to delay in selection. For example, particular jurists or institutions have criticized, and should continue emphasizing, the pressures which numbers of vacancies impose and even testify before Congress or lobby it and each legislator on matters like increased judgeships. Nonetheless, certain actions might elicit concerns about separation of powers or judicial independence, specifically over the presidential election year.
+++If minuscule 2015 confirmations—resembling the few approvals seen during presidential election years—represent the new majority’s definition of regular order, this nascent leadership inspires de minimis confidence about 2016 court appointments. Especially ironic has been that the regular order trope suffuses much GOP discourse, even while the party has continued to undermine this order in the approval system. Recalcitrance and not honoring the chamber’s duty have acutely undercut the coordinate judiciary’s attempts to fulfill essential constitutional responsibilities. Thus, during 2016, Obama and senators must again implement regular order derived from traditions used over recent presidential election years, namely district confirmations until autumn and the conventional appointments record compiled across 2007–08. Only then may the courts better deliver justice.
* Williams Chair in Law, University of Richmond. Thanks to Peggy Sanner and Katie Lehnen for fine ideas, Leslee Stone for excellent processing as well as Russell Williams and the Hunton Williams Summer Endowment Fund for generous, continuing support. Remaining errors are mine.
. See infra Part I.B.
. Jennifer Bendery, Congratulations, GOP. You’re Confirming Judges at the Slowest Rate in 60 Years, Huffington Post (Sept. 17, 2015), http://www.huffingtonpost.com /entry/obama-judicial-nominations_55faced7e4b08820d9178a5c.
. Carl Tobias, Senate Gridlock and Federal Judicial Selection, 88 Notre Dame L. Rev. 2233, 2239–40 (2013) [hereinafter Tobias, Senate Gridlock]; see Sheldon Goldman et al., Obama’s First Term Judiciary: Picking Judges in the Minefields of Obstructionism, 97 Judicature 7, 13–16 (2013).
. Goldman et al., supra note 3, at 17; Texas: State of Judicial Emergency, Alliance for Justice, http://www.afj.org/our-work/issues/judicial-selection/texas-epicenter-of-the-judicial-vacancy-crisis (last visited Jan. 4, 2016); see also 161 Cong. Rec. S6151 (daily ed. July 30, 2015) (statement of Sen. Schumer).
. Goldman et al., supra note 3, at 16–17; Tobias, Senate Gridlock, supra note 3, at 2242–43.
. It found most fine. Tobias, Senate Gridlock, supra note 3, at 2242–43. Six of the fifteen were for the Arizona District that was an emergency. Carl Tobias, Filling the District of Arizona Vacancies, 56 Ariz. L. Rev. Syllabus 5, 5–6 (2014) [hereinafter Tobias, Arizona Vacancies].
. Goldman et al., supra note 3, at 26–29; Tobias, Senate Gridlock, supra note 3, at 2243–46.
. Tobias, Senate Gridlock, supra note 3, at 2244; see also Juan Williams, The GOP’s Judicial Logjam, The Hill (July 27, 2015, 6:00 AM), http://thehill.com/opinion/juan-will iams/249196-juan-williams-the-gops-judicial-logjam (discussing Republican obstruction of judicial confirmations).
. U.S. Courts, Archive of Judicial Vacancies (2009–14), http://www.uscourts. gov/judges-judgeships/judicialvacancies/archive-judicial-vacancies; see infra note 44 and accompanying text.
. Tobias, Senate Gridlock, supra note 3, at 2246; supra notes 6–8 and accompanying text; infra note 24 and accompanying text.
. Tobias, Senate Gridlock, supra note 3, at 2252.
. See Carl Tobias, Filling the D.C. Circuit Vacancies, 91 Ind. L.J. 121 (2015); Jeffrey Toobin, The Obama Brief, New Yorker (Oct. 27, 2014), http://www.newyorker.com/mag azine/2014/10/27/obama-brief.
. Paul Kane, Reid, Democrats Trigger ‘Nuclear’ Option; Eliminate Most Filibusters on Nominees, Wash. Post (Nov. 21, 2013), https://www.washingtonpost.com/politics/sen ate-control-at-stake-in-todays-midterm-elections/2014/11/04/e882353e-642c-11e4-bb14-4cf ea1e742d5_story.html.
. U.S. Courts, Archive of Judicial Vacancies (2013–14), http://www.uscourts. gov/judges-judgeships/judicialvacancies/archive-judicial-vacancies.
. 161 Cong. Rec. S3223 (daily ed. May 21, 2015) (statement of Sen. Leahy); Carl Tobias, Judicial Selection in Congress’ Lame Duck Session, 90 Ind. L.J. Supp. 52, 56 (2015) [hereinafter Tobias, Lame Duck Session].
. Jerry Markon et al., Republicans Win Senate Control as Polls Show Dissatisfaction with Obama, Wash. Post (Nov. 4, 2014), https://www.washingtonpost.com/politics/ senate-control-at-stake-in-todays-midterm-elections/2014/11/04/e882353e-642c-11e4-bb14-4cfea1e742d5_story.html; Jonathan Weisman & Ashley Parker, Riding Wave of Discontent, G.O.P. Takes Senate, N.Y. Times (Nov. 4, 2014), http://www.nytimes.com/2014/11/05/ us/politics/midterm-elections.html.
. See, e.g., 160 Cong. Rec. S4679, S4681 (daily ed. July 22, 2014) (statement of Sen. Hatch) (“It is past time to restore the Senate’s rightful place in our constitutional order.”).
. 161 Cong. Rec. S28 (daily ed. Jan. 7, 2015).
. Id. at S155 (daily ed. Jan. 12, 2015); id. at S2767 (daily ed. May 12, 2015). This approach has encountered some criticism from across the aisle. See, e.g., id. at S2949 (daily ed. May 18, 2015) (statement of Sen. Reid); id. at S3223 (statement of Sen. Leahy). Other commentators have noticed the decline in judicial confirmations as well. Jim Manley, Has the Senate Really Turned a Corner?, Wall St. J., (June 24, 2015) http://blogs.wsj.com /washwire/2015/06/24/has-the-senate-really-turned-a-corner/.
. See Hearing on Judicial Nominees Before the S. Comm. on the Judiciary, 114th Cong. (Jan. 21, 2015) (statement of Sen. Chuck Grassley) [hereinafter Jan. 21 Hearing]; David Catanese, Chuck Grassley’s Gavel Year, U.S. News & World Rep. (Jan. 28, 2015), http://www.usnews.com/news/articles/2015/01/28/chuck-grassleys-gavel-year (stating Grassley’s desire to maintain traditional protocol for nominations). But see 161 Cong. Rec. S6151 (daily ed. July 30, 2015) (statement of Sen. Schumer).
. Most Presidents tap able centrists. Goldman et al., supra note 3, at 15–17; Tobias, Senate Gridlock, supra note 3, at 2240.
. Goldman et al., supra note 3, at 17; Alliance for Justice, supra note 4.
. U.S. Courts, Judicial Vacancies: Judicial Emergencies (2015), http:// www.uscourts.gov/judges-judgeships/judicial-vacancies/judicial-emergencies; U.S. Senate, Senators of the 114th Congress (2015), http://www.senate.gov/senators/contact. The AO, the administrative arm of the federal courts, premises emergencies on dockets’ large magnitude and vacancies’ protracted length. Judicial Emergency Definition, U.S. Courts, http://www.uscourts.gov/judges-judgeships/judicialvacancies/archive-judicial-vacancies/jud icial-emergencies/judicial-emergency-definition (last visited Jan. 4, 2016).
. Alliance for Justice, supra note 4; accord, 161 Cong. Rec. S2104 (daily ed. Apr. 13, 2015) (statement of Sen. Leahy). This derives from senators’ slow responses to current vacancies and not foreseeing future ones, slow selection panel scrutiny, differences on picks among Democratic House members and between them and the senators and slow White House action. But see Sylvan Lane, Senate Fills South Texas Judgeship; First Confirmation Since GOP Takeover, Dall. Morning News: Trail Blazers Blog (Apr. 13, 2015, 6:10 PM), http://trailblazersblog.dallasnews.com/2015/04/senate-fills-south-texas-jud geship-first-confirmation-since-gop-takeover.html/.
. U.S. Courts, Judicial Vacancies: Current Judicial Vacancies (2015), http:// www.uscourts.gov/judges-judgeships/judicial-vacancies/current-judicial-vacancies.
. Id. (2011–14); see Tobias, Senate Gridlock, supra note 3, at 2261; Lauren French, Lewis Opposes Boggs Nomination, Politico (May 19, 2014), http://www.politico.com/story/ 2014/05/john-lewis-michael-boggs-oppose-judge-nomination-georgia-106839; Dan Malloy, The Delegation Georgians in D.C.; Woodall Does Balancing Act in House GOP Post, Atlanta J.-Const., July 20, 2014, at 14A.
. See Jennifer Jacobs, Grassley’s Priority Checklist, Des Moines Reg. (Jan. 7, 2015), http://www.desmoinesregister.com/story/news/politics/2015/01/07/grassley-checklist-prior ities-judiciary-committee/21394233.
. Compare Jan. 21, 2015 Hearing, supra note 20, with Hearings on Judicial Nominees Before the S. Comm. on the Judiciary, 113th Cong. (Jan. 23, Feb. 13, 2013, Jan. 8, 28, 2014); see Catanese, supra note 20.
. Hearing on Judicial Nominees Before the S. Comm. on the Judiciary, 114th Cong. (Mar. 11, 2015); id. (May 6, 2015); id. (June 10, 2015); id. (July 22, 2015); id. (Sept. 30, 2015); id. (Oct. 21, 2015; id. (Dec. 9, 2015).
. Compare Hearings on Judicial Nominees Before the S. Comm. on the Judiciary, 114th Cong. (Mar. 11, June 10, July 22, 2015), with Hearings on Judicial Nominees Before the S. Comm. on the Judiciary, 113th Cong. (Jan. 28, Sept. 9, 2014); see supra text accompanying note 24 (noting many senators’ failure to tender picks for judicial nomination).
. 161 Cong. Rec. S2264 (daily ed. Apr. 20, 2015).
. Id. He said four executive nominees, including for Attorney General, testified and that Obama’s nominees had been treated “extremely fairly,” as he named 309 judges versus 273 for Bush. Id. But see supra note 29, infra notes 33, 42, 44, 52.
. 161 Cong. Rec. S3850 (daily ed. June 8, 2015). But see supra notes 28, 31–32 and accompanying text.
. Executive Business Meeting Before the S. Comm. on the Judiciary, 114th. Cong. (Feb. 26, 2015) [hereinafter Feb. 26 Executive Business Meeting]; see also Executive Business Meeting Before the S. Comm. on the Judiciary, 114th. Cong. (Feb. 12, 2015); Josh Voorhees, Procedural Purgatory, Slate (Mar. 29, 2015), http://www.slate.com/articles/ news_and_politics/politics/2015/03/loretta_lynch_confirmation_mitch_mcconnell_and_the_gop_have_delayed_it_but.html; supra text accompanying note 20.
. See, e.g., Executive Business Meeting Before the S. Comm. on the Judiciary, 113th. Cong. (Sept. 11, 2014); Executive Business Meeting Before the S. Comm. on the Judiciary, 114th. Cong. (Nov. 13, 2014); see also supra note 6.
. Executive Business Meeting Before the S. Comm. on the Judiciary, 113th. Cong. (Nov. 20, 2014); see also supra note 24.
. Jan. 21, 2015 Hearing, supra note 20 (showing four District Judge nominees on the agenda); Feb. 26 Executive Business Meeting, supra note 34 (voting on judicial nominees). Grassley eschewed weekly meetings, unlike Leahy. See, e.g., Executive Business Meeting Before the S. Comm. on the Judiciary, 113th Cong. (June 12, 19, 26, 2014) (providing statements from Leahy during weekly meetings).
. 158 Cong. Rec. S8375 (daily ed. Dec. 21, 2012) (statement of Sen. Leahy); see Tobias, Senate Gridlock, supra note 3; Burgess Everett & Seung Min Kim, Judge Not: GOP Blocks Dozens of Obama Court Picks, Politico (July 6, 2015), http://www.politico.com/ story/2015/07/payback-gop-blocks-obama-judge-picks-judiciary-119743.
. 159 Cong. Rec. S8418 (daily ed. Nov. 21, 2013); see Jeffrey Toobin, Reid Changed the Federal Courts, New Yorker (Mar. 27, 2015), http://www.newyorker.com/news/news-desk/how-harry-reid-changed-the-federal-courts; Carl Hulse, Reid to Retire from Senate in 2016, N.Y. Times (Mar. 27, 2015), http://www.nytimes.com/2015/03/28/us/politics/senator-harry-reid-retire.html.
. See Neil Eggleston, Judicial Nominations: Accomplishments and the Work that Lies Ahead, White House Blog (Dec. 17, 2014, 3:39 PM), https://www.whitehouse.gov/ blog/2014/12/17/judicial-nominations-accomplishments-and-work-lies-ahead.
. The delay troubled Leahy, as the GOP proposed all four. See 161 Cong. Rec. S2104–05 (daily ed. Apr. 13, 2015) (statement of Sen. Leahy).
. 161 Cong. Rec. S2029–30 (daily ed. Mar. 26, 2015). They approved sixty-eight jurists during Bush’s last two years and fifteen by the end of March 2007, in contrast to none in 2015. Id.
. 161 Cong. Rec. S2028–30 (daily ed. Mar. 26, 2015); accord, id. at S2264 (daily ed. Apr. 20, 2015); see U.S. Judicial Conf. Proceedings 18 (2015). The courts’ policymaking arm bases proposals on conservative caseload estimates.
. 161 Cong. Rec. S2029–30 (daily ed. Mar. 26, 2015). For consensus nominees’ approval, see Goldman et al., supra note 3, at 13–14; Michael Shenkman, Decoupling District from Circuit Judge Nominations: A Proposal to Put Trial Bench Nominations on Track, 65 Ark. L. Rev. 217, 292 (2012). For the ninety vacancies idea, see Archive of Judicial Vacancies, supra note 9; Goldman et al., supra note 3, at 13.
. 161 Cong. Rec. S2263–64 (daily ed. Apr. 20, 2015). Grassley said approving eleven judges in the 2014 lameduck session violated “standard practice.” When they are included, 2015 is like 2007. 161 Cong. Rec. S2264 (daily ed. Apr. 20, 2015).
. 161 Cong. Rec. S2659 (daily ed. May 6, 2015). Continuing GOP inaction led Reid to repeat the earlier concerns and focus on Texas’s seven emergencies. Id. at S2949 (daily ed. May 18, 2015).
. Id. at S3223 (daily ed. May 21, 2015).
. It had eight openings at that time. 161 Cong. Rec. S3223 (daily ed. May 21, 2015).
. 161 Cong. Rec. S3223 (daily ed. May 21, 2015). He refuted Grassley’s claim that only eighteen judges were confirmed in 2007, as they were held over from 2006, by urging he failed to say nine judges “were not . . . left pending” on the floor at 2006’s end. Id. at S3223 (emphasis added); see supra text accompanying notes 43–44; Editorial: Grassley Joins Race to Bottom, Des Moines Reg. (Aug. 1, 2015), http://www.desmoinesregister.com/ story/opinion/editorials/2015/07/31/grassley-joins-race-bottom-political-rhetoric/30963785/.
. 161 Cong. Rec. S3223 (daily ed. May 21, 2015). After much home-state politician praise, both nominees had 100-0 votes. Id. at S3223–24.
. See 161 Cong. Rec. S4678 (confirming the nomination of Kara Stoll).
. 161 Cong. Rec. S6151–52 (daily ed. July 30, 2015); see id. at S6999–7000 (daily ed. Sept. 29, 2015) (Sen. Leahy summarizing dismal 2015 record, contrasted to 2007); id. at S5047–48 (daily ed. July 14, 2015) (statement of Sen. Coons) (requesting unanimous consent). But see id. at S5048–49 (statement of Sen. Cotton) (objecting).
. Archive of Judicial Vacancies (2009–14), supra note 9.
. See supra notes 30, 36, 38 and accompanying text (discussing delayed voting by the judiciary committee in late 2014 and hearings conducted for nominees in March and the summer of 2015); infra note 52 and accompanying text (noting that voting on nominees was again stalled in March 2015).
. U.S. Courts, Archive of Judicial Vacancies (2007), http://www.uscourts. gov/judges-judgeships/judicialvacancies/archive-judicial-vacancies; 161 Cong. Rec. S2029-30 (daily ed. Mar. 26, 2015) (statement of Sen. Leahy). Democrats’ acts, such as using the nuclear option, seemed to extend the “confirmation wars.” See source cited supra notes 3, 12.
. White House, Office of the Press Sec’y, President Obama Nominates Two to Serve on the U.S. Courts of Appeals (Nov. 12, 2014); see U.S. Courts, Judicial Vacancies: Current Judicial Vacancies (2015), http://www.uscourts.gov/judges-judge ships/judicial-vacancies (noting Luis Felipe Restrepo as unconfirmed nominee to the Third Circuit); U.S. Courts, Judicial Vacancies: Confirmation Listing (2015), http://www. uscourts.gov/judges-judgeships/judicial-vacancies/confirmation-listing (noting Kara Farnandez Stoll as confirmed appointee to the Federal Circuit); White House, Office of the Press Sec’y, Presidential Nominations Sent to the Senate (Jan. 7, 2015).
. Russell Wheeler, With Senate Control, Will the GOP Stop Confirming Circuit Judges?, Brookings: FixGov Blog (Nov. 16, 2015, 1:51 PM), http://www.brookings.edu/ blogs/fixgov/posts/2015/06/10-circuit-court-confirmations-wheeler; see Toobin, supra note 39; supra notes 22–26 and accompanying text.
. See sources cited supra note 56.
. Hearing on Judicial Nominees Before the S. Comm. on the Judiciary, 114th Cong. (Mar. 11, 2015).
. Executive Business Meeting Before the S. Comm. on the Judiciary, 114th Cong. (Apr. 23, 2015).
. See Steve Benen, McConnell’s Silent Governing Failure, MSNBC (June 5, 2015), http://www.msnbc.com/rachel-maddow-show/mcconnells-silent-governing-failure; Nick Gass, McConnell Vows to Slow Judicial Nominees, Politico (June 5, 2015), http:// www. politico.com/story/2015/06/mitch-mcconnell-judicial-nominations-118674.
. Alexander Bolton, McConnell Backs Away from Shutdown Talk, The Hill (June 6, 2015), http://thehill.com/homenews/senate/244196-mcconnell-backs-away-from-judicial-shutdown-talk.
. 161 Cong. Rec. S3849–50 (daily ed. June 8, 2015).
. 161 Cong. Rec. S4591 (daily ed. June 24, 2015). Leahy reiterated much data and the GOP duty. Id.; see supra notes 42–44, 50 and accompanying text; see also id. at S4678 (daily ed. July 7, 2015) (Stoll vote).
. See supra notes 42, 46, 63–64 and accompanying text.
. Benched! History Shows “Regular Order” Means Appellate Court Confirmations, Alliance for Justice, http://www.afj.org/blog/benched-history-shows-regular-order-mea ns-appellate-court-confirmations (last visited Jan. 4, 2016).
. Press Release, Office of Robert P. Casey, Jr., Casey, Toomey Applaud Nomination of Judge Luis Felipe Restrepo to U.S. Court of Appeals for the Third Circuit (Nov. 12, 2014), http://www.casey.senate.gov/newsroom/releases/casey-toomey-applaud-nomination-of-judge-luis-felipe-restrepo-to-us-court-of-appeals-for-the-third-circuit.
. See 161 Cong. Rec. S6369 (daily ed. Aug. 5, 2015). Saranac Spencer, Toomey Submits Blue Slip, But Will Restrepo Get a Hearing?, Legal Intelligencer (May 19, 2015), http://www.thelegalintelligencer.com/printerfriendly/id=1202726785818#; Jonathan Tamari, A Judicial Nominee Waits; Toomey Gets Blamed, Phila. Inquirer (May 9, 2015), http://articles.philly.com/2015-05-09/news/61952388_1_toomey-luis-felipe-restrepo-president-obama.
. 159 Cong. Rec. S4516 (daily ed. June 17, 2013); Spencer, supra note 68. He was then a magistrate judge of this district. All modern Presidents elevate judges from lower courts. Tobias, Senate Gridlock, supra note 3, at 2258.
. See Press Release, Office of Robert P. Casey, Jr., supra note 67.
. No nominee was picked before him. Hearings on Judicial Nominees Before the S. Comm. on the Judiciary, 114th Cong. (May 6, 2015).
. Jennifer Bendery, Pat Toomey Is Blocking His Own Judicial Nominee, for Some Reason, Huffington Post (May 5, 2015) [hereinafter Bendery, Pat Toomey Is Blocking], http://www.huffingtonpost.com/2015/05/05/pat-toomey-luis-restrepo_n_7214790.html; Tracie Mauriello, Confirmation Vote on Pennsylvania Jurist Awaits ‘Blue Slip’ From Toomey, Pittsburgh Post-Gazette (May 7, 2015), http://www.post-gazette.com/local/20 15/05/06/Toomey-holding-up-confirmation-of-Pennsylvania-jurist-he-supports/stories/2015 05060171; Saranac Spencer, Political Maneuvers Hold up Nominee for Third Circuit, Legal Intelligencer (May 6, 2015), http://www.thelegalintelligencer.com/id=120272559 0790?keywords=Spencer+%22Political+maneuvers%22&publication=The+Legal+Intellig encer.
. Bendery, Pat Toomey Is Blocking, supra note 72; Mauriello, supra note 72. Grassley’s pledge and failure to broach an ongoing inquiry undercut Toomey’s excuse for waiting six months.
. Spencer, supra note 72 (emphasis added). She said members may hold blue slips until vetting ends, as questions can arise in that process. Mauriello, supra note 72; accord Jennifer Bendery, Pat Toomey Insists He’s Not Holding up a Judicial Nominee He’s Holding up, Huffington Post (May 13, 2015), http://www.huffingtonpost.com/2015/05/13/pat-toomey-judge-restrepo_n_7277332.html.
. 161 Cong. Rec. S2660 (daily ed. May 6, 2015); see Hearings on Judicial Nominees Before the S. Comm. on the Judiciary, 114th Cong. (May 6, 2015) (statement of Sen. Grassley).
. Pat Toomey, I Am Not Delaying Judge L. Felipe Restrepo, Pitt. Post-Gazette (May 18, 2015), http://www.post-gazette.com/opinion/letters/2015/05/13/I-am-not-delaying-Judge-L-Felipe-Restrepo-s-3rd-Circuit-nomination/stories/201505130068; see Tamari, supra note 68; see also supra notes 72–74 and accompanying text (discussing Toomey’s claims that he remained supportive of Restrepo, despite his failure to return the blue slip).
. Hearings on Judicial Nominees Before the S. Comm. on the Judiciary, 114th Cong. (June 10, 2015); Tracie Mauriello, Toomey Signs Off On Nominee for Federal Appeals Court, Pitt. Post-Gazette (May 14, 2015), http://www.post-gazette.com/local/region/20 15/05/14/Toomey-signs-off-on-nominee-for-federal-appeals-court/stories/201505140325; Williams, The GOP’s Judicial Logjam, supra note 8 (reiterating criticism of GOP for delay).
. Senators posing queries seemed satisfied. Hearings on Judicial Nominees Before the S. Comm. on the Judiciary,114th Cong. (June 10, 2015); Hearing Examining the Federal Regulatory System to Improve Accountability, Transparency, and Integrity Before the S. Comm. on the Judiciary, 114th Cong. (June 10, 2015) (statement of Sen. Grassley urging 2015 circuit hearings and approvals to mirror 2007); Tracie Mauriello, After Hearing, Philadelphia Judge Close to Third Circuit Confirmation, Pitt. Post-Gazette (June 11, 2015), http://www.post-gazette.com/news/politics-nation/2015/06/11/After-hearing-Philadel phia-judge-close-to-3rd-Circuit-confirmation/stories/201506110112.
. Executive Business Meeting Before the S. Comm. on the Judiciary, 114th Cong. (June 25, July 9, 2015); see Executive Business Meeting Before the S. Comm. on the Judiciary, 114th Cong. (Apr. 23, 2015); Executive Business Meeting Before the S. Comm. on the Judiciary, 114th Cong. (Mar. 11, 2015).
. 161 Cong. Rec. S8443 (daily ed. Dec. 7, 2015) (confirmation vote, but not Restrepo’s); see John Tamari, Senate Schedules Vote on Long-Delayed Pa. Nominee Restrepo, Phila. Inquirer (Dec. 9, 2015, 9:22 PM), http://www.philly.com/philly/blogs/capitolinq/Sen ate-schedules-vote-on-long-delayed-PA-nominee-Restrepo.html (confirming the agreement on scheduling the January 11 vote); supra notes 59–64 (Stoll’s wait); supra notes 44–50 (re-nominees with much GOP support took ninety days from panel to final votes).
. See supra text accompanying notes 44–45, 50. She lacked his prior full inquiry, leaving unclear why he took 6 months, especially with his full 2013 canvass and later district court service.
. Merely four district judges won 2015 approval in contrast to Democrats’ helping confirm three circuit and fifteen district judges by April 2007. See 161 Cong. Rec. S2104 (daily ed. Apr. 13, 2015) (statement of Sen. Leahy); Bendery, supra note 74.
. See supra notes 33, 42–50 and accompanying text.
. See Russell Wheeler, Confirming Federal Judges During the Final Two Years of the Obama Administration: Vacancies up, Nominees down, Brookings: FixGov Blog (Aug. 18, 2015, 8:00 AM), http://www.brookings.edu/blogs/fixgov/posts/2015/08/18-obama-federal-judges-confirmation-wheeler.
. See supra notes 43, 46, 49, 63 and accompanying text. GOP senators proposed many nominees. See 161 Cong. Rec. S2104–05 (daily ed. Apr. 13, 2015) (statement of Sen. Leahy).
. Ten were circuit picks. See supra text accompanying note 42.
. Michael Gerhardt & Michael Ashley Stein, The Politics of Early Justice: Federal Judicial Selection, 1789-1861, 100 Iowa L. Rev. 551, 553 (2015); Orrin Hatch, The Constitution as the Playbook for Judicial Selection, 32 Harv. J. L. & Pub. Pol’y 1035, 1038–39 (2009); Jed Handelsman Shugerman, The Golden or Bronze Age of Judicial Selection?, 100 Iowa L. Rev. Bulletin 69, 70 (2015), http://ilr.law.uiowa.edu/files/ilr.law.uiowa.edu/files/ILRB_100_Shugerman. pdf.
. See generally Ethan Bronner, Battle for Justice: How the Bork Nomination Shook America (1989) (explaining that Robert Bork’s nominations was contentious); Mark Gitenstein, Matters of Principle: An Insider’s Account of America’s Rejection of Robert Bork’s Nomination to the Supreme Court (1992) (discussing the epic struggle that took place between senators, the press, staff, and civil liberty organizations over Robert Bork’s nomination).
. Doug Kendall, The Bench in Purgatory: The New Republican Obstructionism on Obama’s Judicial Nominees, Slate (Oct. 26, 2009), http://www.slate.com/articles/news_ and_politics/jurisprudence/2009/10/the_bench_in_purgatory.html.
. See supra notes 6–10 and accompanying text.
. See supra notes 12–14 and accompanying text.
. See supra notes 14–83 and accompanying text.
. Federal Judicial Vacancies (2015), supra note 56; 161 Cong. Rec. S2029-30 (daily ed. Mar. 26, 2015) (statement of Sen. Leahy); see Joe Palazzolo, In Federal Courts, the Civil Cases Pile up, Wall St. J. (Mar. 6, 2015), http://www.wsj.com/articles/in-federal-courts-civil-cases-pile-up-1428343746.
. See sources cited supra notes 12–14, 39, 44.
. See Senate Gridlock, supra note 3, at 2253; 161 Cong. Rec. S3223 (daily ed. May 21, 2015) (statement of Sen. Leahy).
. Kendall, supra note 89; Todd Ruger, Nominees Are Living on Hold, Nat’l L. J. (Dec. 17, 2012), http://www.nationallawjournal.com/id=1202581557603/Nominees-are-liv ing-on-hold?slreturn=20151106194656/; see Andrew Cohen, In Pennsylvania, the Human Costs of Judicial Confirmation Delays, The Atlantic (Sept. 9, 2012), http://www.theatlan tic.com/politics/archive/2012/09/in-pennsylvania-the-human-costs-of-judicial-confirmation-delays/261862/.
. See U.S. Courts, Year-End Report on the Federal Judiciary 7–8 (2010); id. (1997, 2002); Tobias, Senate Gridlock, supra note 3, at 2253; Jennifer Bendery, Federal Judges Are Burned Out, Overworked and Wondering Where Congress Is, Huffington Post (Sept. 30, 2015), http://www.huffingtonpost.com/entry/judge-federal-courts-vacancies _55d77721e4b0a40aa3aaf14b; Wheeler, supra note 84.
. See Cohen, supra note 96 (explaining the “real-life consequences of delay” due to “justice delayed syndrome”); Palazzolo, supra note 93 (noting citizens’ discontent with civil cases piling up due to slow judicial appointment process); Ruger, supra note 96 (describing judicial appointment delay as having large impact on public).
. For many specific ideas, see Shenkman, supra note 44, at 298–311; Tobias, Senate Gridlock, supra note 3, at 2255–65.
. See 161 Cong. Rec. S3849–50 (daily ed. June 8, 2015) (statement of Sen. Reid); Carl Tobias, Filling Judicial Vacancies in a Presidential Election Year, 46 U. Rich. L. Rev. 985, 996 (2012); Everett & Kim, supra note 38.
. Denis Steven Rutkus & Kevin M. Scott, Cong. Research Serv., Nomination and Confirmation of Lower Federal Court Judges in Presidential Election Years (2008); Russell Wheeler, Judicial Confirmations: What Thurmond Rule?, 45 Brookings 1 (Mar. 2012), http://www.brookings.edu/~/media/research/files/papers/2012/3/judicial-wheel er/03_judicial_wheeler.pdf.
. U.S. Courts, Archive of Judicial Vacancies (1992, 1996, 2000, 2004, 2008, 2012), http://www.uscourts.gov/judges-judgeships/judicialvacancies/archive-judicial-vacan cies; id. (2002, 2010, 2014) (approving 20 Bush, and 19 and 23 Obama, picks in mid-term lame duck sessions); Archive of Judicial Vacancies, supra note 9; Wheeler, supra note 101.
. Wheeler, supra note 101, at 4 (identifying variables); see Rutkus & Scott, supra note 101, at 3–4, 51–53.
. Sheldon Goldman, Picking Federal Judges 261 (1997); Rutkus & Scott, supra note 101, at 7–8.
. U.S. Courts, Archive of Judicial Vacancies (1992, 1996, 2000, 2004, 2008), http://www.uscourts.gov/judges-judgeships/judicialvacancies/archive-judicial-vacancies; Wheeler, supra note 101.
. McConnell agreed on no final votes after June 12, making five able, consensus picks wait until 2013. See Archive of Judicial Vacancies (2012), supra note 9; infra text accompanying note 119.
. Jennifer Bendery, Mitch McConnell Will Finally Let Some Judges Get Confirmed Next Year, Huffington Post (Dec. 15, 2015, 7:45 PM), http://www.huffingtonpost.com/ entry/republicans-obama-judicial-nominees_567055e0e4b0e292150f6690; see Rutkus & Scott, supra note 101, at 3–4, 51–53; Wheeler, supra note 101, at 1.
. The GOP must expedite with more hearings and faster panel and floor votes on consensus nominees. See infra notes 132–36. However, 2015 inaction shows the ideas lack promise for 2016. See supra notes 52, 61.
. Goldman et al., supra note 3, at 16–17; Carl Tobias, Justifying Diversity in the Federal Judiciary, 106 Nw. U. L. Rev. Colloquy 283, 296 (2012). GOP senators who differ with Obama can suggest preferable choices.
. See supra notes 28–54, 57, 60–86, 108 and accompanying text.
. See supra notes 3–4, 21–27 and accompanying text.
. Jessica M. Karmasek, Members of Texas Judicial Evaluation Committee Announced, Legal Newsline (Apr. 17, 2013), http://legalnewsline.com/stories/510515096-members-of-texas-judicial-evaluation-committee-announced; Borys Krawczeniuk, Toomey, Casey Unveil Selection Process for Federal Judges, Standard Speaker (Apr. 27, 2011), http://standardspeaker.com/news/toomey-casey-unveil-selection-process-for-federal-judges-1.1138220; see supra note 24; see also supra notes 66–69 and accompanying text.
. Tobias, Senate Gridlock, supra note 3, at 2256. But see Archive of Judicial Vacancies (2010–15), supra notes 9, 56 (showing Wis. 7th Cir. vacancy open since 2010).
. 28 U.S.C.A. § 371 (2012) (eligible if sixty-five and fifteen years service); see David Stras & Ryan Scott, Are Senior Judges Unconstitutional?, 92 Cornell L. Rev. 453 (2007); Tobias, Senate Gridlock, supra note 3, at 2256.
. Toomey picks one in four whom Casey and he suggest. Pennsylvanians for Modern Courts, Western District May Be Filled in 2015 (Mar. 2015); see supra note 69; sources cited infra note 142.
. GOP senators more often send one. Joseph Morton, Obama Nominates Omaha Attorney Rossiter to Federal Bench in Nebraska, Omaha World Herald (June 12, 2015), http://www.omaha.com/news/crime/obama-nominates-omaha-attorney-rossiter-to-federal-bench-in-nebraska/article_7517dc5c-1084-11e5-9f03-eb447e9aaa07.html. But see Tobias, Senate Gridlock, supra note 3, at 2251.
. See supra notes 4, 22–26 and accompanying text.
. He rarely uses it, as home state GOP members can retain blue slips and end processing. Goldman et al., supra note 3, at 16–18; Tobias, Senate Gridlock, supra note 3, at 2261; see supra notes 65, 71–72, 75–76.
. 158 Cong. Rec. S4108 (daily ed. June 12, 2012) (Hurwitz was sixty-six); 149 Cong. Rec. S12,127 (daily ed. Sept. 29, 2003) (Carlos Bea was sixty-eight when Bush tapped him).
. See, e.g., 158 Cong. Rec. S8380 (daily ed. Dec. 21, 2012) (Judge Matthew Brann); 160 Cong. Rec. S1747 (daily ed. Mar. 26, 2014) (Judge Edward Smith).
. For appointee experiential data, see Alliance for Justice, Broadening the Bench (2015).
. 157 Cong. Rec. S6027 (daily ed. Oct. 3, 2011). Obama elevated Justice Sonia Sotomayor, whom Bush père named to the S.D.N.Y. and Clinton elevated to the Second Circuit. 155 Cong. Rec. S9063 (daily ed. Aug. 6, 2009); 138 Cong. Rec. S12,417 (daily ed. Aug. 11, 1992); 144 Cong. Rec. S11,310 (daily ed. Oct. 2, 1998).
. Tobias, Senate Gridlock, supra note 3, at 2258; see supra notes 68–69, 122 and accompanying text.
. 160 Cong. Rec. S283 (daily ed. Jan. 13, 2014) (Wilkins); id. at S3125 (daily ed. May 20, 2014) (Costa).
. For example, Bush appointed Floyd, and Bush père and Clinton named Sotomayor. See supra note 122.
. That was controversial. See supra note 26; Tobias, Senate Gridlock, supra note 3, at 2251 (nominating from state in a circuit other than one where a vacancy occurs, as this is a custom, not a rule). But see 28 U.S.C.A. § 44(c) (Supp. 2014).
. Shenkman, supra note 44, at 299–300; Tobias, Senate Gridlock, supra note 3, at 2261; supra note 118.
. Goldman et al., supra note 3, at 11–13; see Tobias, Senate Gridlock, supra note 3, at 2250–51.
. A study found the many steps take time. See Gordon Bermant et al., Judicial Vacancies: An Examination of the Problem and Possible Solutions, 14 Miss. C. L. Rev. 319, 332-333 (1994); Tobias, Senate Gridlock, supra note 3, at 2235.
. Tobias, Filling Judicial Vacancies in a Presidential Election Year, supra note 100, at 995.
. See supra notes 9, 44; see also supra text accompanying notes 102, 105.
. See supra notes 27–37 and accompanying text.
. Tobias, Senate Gridlock, supra note 3, at 2263; Neil A. Lewis, Senate Panel Backs Appeals Court Nominee, N.Y. Times (Jan. 30, 2003), http://www.nytimes.com/2003/01/30/ politics/30CND-JUDG.html.
. Hearings on Judicial Nominees Before the S. Comm. on the Judiciary, 114th Cong. (June 10, 2015); supra text accompanying note 29; Shenkman, supra note 44, at 303–05 (urging abolishing hearings that add little substance and changing questionnaires to omit “completeness traps”).
. See supra notes 6, 34–37, 80 and accompanying text.
. See supra notes 44, 46–47.
. He did allow Stoll’s July 7 final vote. See supra notes 61–64 and accompanying text.
. See supra note 52 and accompanying text. If delay persists, Democrats can apply rather dramatic, confrontational notions. Obama may use the bully pulpit to hold the GOP accountable. Senators might protest with panel session boycotts. See supra notes 105, 109; infra note 145 and accompanying text.
. Chris Cillizza, 10 Senate Seats Most Likely to Switch Parties in 2016, Wash. Post (June 7, 2015), https://www.washingtonpost.com/politics/10-senate-races-most-likely-to-sw itch-parties-in-2016-elections/2015/06/07/d9215fbc-0d13-11e5-9726-49d6fa26a8c6_story. html; Heather Haddon, Presidential Battle Fuels Republican Worries over Senate, Wall St. J. (Dec. 23, 2015, 7:41 PM), http://www.wsj.com/articles/presidential-battle-fuels-rep ublican-worries-over-senate-1450917553; James Hohmann & Elise Viebeck, Trump Leads in Polls Because GOP Primary Voters Don’t Value Electability, Wash. Post (Aug. 4, 2015), https://www.washingtonpost.com/news/powerpost/wp/2015/08/04/the-daily-202-trump-lead s-in-polls-because-gop-primary-voters-dont-value-electability/.
. Even if Republicans win the presidency and chamber, Democrats may adopt payback strategies akin to concepts the GOP used in Obama’s first six years. See supra notes 3–83 and accompanying text.
. See David Stras & Ryan Scott, Navigating the New Politics of Judicial Appointments, 102 Nw. U. L. Rev. 1869, 1902–06 (2008) (discussing the benefits of “going public” and using the “bully pulpit” to ensure a smooth path to confirmation for judicial nominees); Tobias, Senate Gridlock, supra note 3, at 2261.
. See Michael Gerhardt, Judicial Selection as War, 36 U.C. Davis L. Rev. 667, 688 (2003); Carl Tobias, Postpartisan Federal Judicial Selection, 51 B.C. L. Rev. 769, 790 (2010); supra text accompanying notes 68, 115.
. Tobias, Filling the D.C. Circuit Vacancies, supra note 12, at 140; supra note 43 and accompanying text. If selection fails to improve, more judgeships will not help.
. Stras & Scott, supra note 141, at 1906; Senate Gridlock, supra note 3, at 2261.
. See supra note 138 and accompanying text. These may slow Obama nominees.
. Year-End Reports, supra note 97.
. See supra notes 44, 97, 143 and accompanying text. Some judges enjoy cordial relations with senators and urge them to fill vacancies. Tobias, Filling Judicial Vacancies in a Presidential Election Year, supra note 100, at 1003.
. Stephen B. Burbank, The Architecture of Judicial Independence, 72 S. Cal. L. Rev. 315, 316–17 (1999); see Tobias, Filling the Judicial Vacancies in a Presidential Election Year, supra note 100, at 1002. Unorthodox ideas, such as changing life tenure or electing judges, can apply but need legislation or constitutional amendment and, thus, are not feasible for 2016. Carl Tobias, Dear President Bush: Leaving a Legacy on the Federal Bench, 42 U. Rich. L. Rev. 1041, 1054 (2008).
Jennifer E. Wuebker, What’s Driving Acquisitions? An In-Depth Analysis of CEO Drivers Determining Modern Firm Acquisition Strategy, 50 U. Rich. L. Rev. Online 9 (2015).
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What’s Driving Acquisitions? An In-Depth Analysis of CEO Drivers Determining Modern Firm Acquisition Strategy
Jennifer E. Wuebker *
+++Firms pursuing growth strategies often perceive mergers and acquisitions as the most efficient means to obtain additional resources and increase firm value. But who decides which firm to acquire and when? And what factors motivate this decision? Preferably, the decision to acquire stems from shareholder value, with strategic decision making confidently rooted in financial justifications projecting a positive return. Opportunistic synergies for the aggregate entity moving forward should further attest to the deal’s value, with the ultimate decision resting in the hands of a capable board. But researchers do not seem convinced. Overwhelming evidence indicates that acquisitions tend to harm acquiring firms more than they help. This article argues certain drivers impact the decision to acquire and examines current drivers in acquisitions. Additionally, this article parses these drivers into two broad categories—value-enhancing drivers and private-interest drivers—and recommends that boards consider these drivers in developing acquisitive strategy. Specifically, drivers should guide board determination of the level of scrutiny to use when evaluating target firms and board implementation of process and payment changes capable of mitigating the potential negative impacts of acquisition drivers.
+++Part I provides an overview of the acquisition landscape, including a brief history of the prevalence and success of acquisitions as well as an analysis of acquisitions today. Part II outlines the acquisition process and highlights the importance and dynamics of decision making, both in principle and in practice. Part III explores two theories of acquisitive strategy driving CEO decision making: value enhancement and private interest. Part IV analyzes the implications of CEO personality and psychological drivers on acquisition strategy and decision making. This article argues that CEO traits are central decision drivers, but that no particular set of traits can predict or determine the viability of an acquisition. Further, current mechanisms aimed at protecting against CEO greed remain insufficient to prevent the consummation of bad deals. The board of directors must understand and systematically consider the impact of specific drivers, facing the acquisition decision with higher scrutiny for CEOs exhibiting multiple drivers or drivers with particular likelihood to impact the acquisition’s return on investment.
I. Acquisitions: The Landscape
+++Successfully integrated acquisitions can significantly increase firm value for both the CEO and shareholders of the acquiring firm. Yet “acquisitions have been found to have a neutral to negative effect on the shareholder wealth of acquiring firms.” A holistic understanding of decision drivers exhibited by CEOs in acquiring firms and board processes in acquisitions today requires an understanding of the evolution of acquisitions.
A. History of Acquisitions
+++Firms have been engaging in acquisitions for decades. The frequency of these deals, however, has rapidly increased since the early 1990s. Firms announced more acquisitions in 1995 than any prior year, and in 2001, approximately 30% of the world’s top organizations were considering a merger or acquisition. In the first half of 2004, the total value of mergers and acquisitions (“M&A”) reached $394.2 billion. Similarly in 2004, firms completed approximately 30,000 acquisitions globally, equating to one such transaction every eighteen minutes, with over $1.9 trillion in total value. “In 2005, worldwide M&A volume surged to more than $2.3 trillion, indicating a new wave of strategic deal making.”
B. Current Acquisition Landscape
+++Despite the downturn of the economy in 2008, firms worldwide announced as many as 64,981 M&A in 2009. 2014 proved to be the “most active mergers and acquisitions market in years,” reinforcing the importance of M&A today. In fact, a study conducted by Ulrike Malmendier and Geoffrey Tate in 2008 noted that “U.S. firms spent more than $3.4 trillion on over 12,000 mergers during the last two decades.” These numbers continue to grow rapidly. The Wall Street Journal recently reported more than $3.4 trillion of M&A deal flow in 2014 alone. “The deal market is on a tear,” with current global takeover activity indicating a 32% increase over last year’s total.
+++Theoretically, this deal flow should result in substantial growth in the value of the acquiring firms. Yet, acquiring shareholders lost over $220 billion as a direct result of the announcement of M&A bids between 1980 and 2001, and acquisitions today may prove to be less fruitful for these shareholders. Despite numerous empirical studies and CEO attestations to the inherent value of acquisitions, the past thirty years tell a different story. Acquisitions have a history of producing negative average returns for the acquiring firm.
+++There is a consensus among empirical studies that acquisitions enhance value for shareholders in target firms only. Conversely, many acquisitions are value-neutral at best, and often unfavorable, for acquiring firms. Richard Roll first formalized this notion and its nexus to the winner’s curse in 1986 by linking a CEO’s propensity for overbidding to the negative returns for shareholders. “The implications of overconfidence for mergers and acquisitions, however, are more subtle than mere overbidding.” More drivers play into the value balance.
+++Furthermore, market response to acquisition announcements reflects the bane of the winner’s curse; the acquirer’s stock is almost always marked down. This creates an initial negative impact on firm value and precipitates long-term devaluation. The “adverse market reaction is reinforced by findings that acquisitions lead to declines in the acquiror’s longer-term profitability and shareholder returns” in the future, suggesting that acquisitions not only create complexities and hobble nimble firms, but also cause lasting financial damage.
II. Acquisition Strategy: Who Decides?
A. Acquisition Process
+++Acquisitions constitute one of the more central strategic decisions made by executives. The process begins “with the emergence of the acquisition idea and the evaluation and selection of the target.” Performance pressures and specialized industry knowledge often make CEOs a common source for inception of the acquisition idea, placing initial control of the process in the CEO’s hands. The board of directors may appoint a committee charged with supervising the acquisition process, including due diligence, negotiating price, managing announcement of the deal, and orchestrating integration. The ultimate decision-making process, however, remains murky.
B. Decision Making in Principle
+++Inappropriate decision making or integration, as well as poor negotiation and pricing of the target firm, “can lead to inferior acquisition outcomes.” As a result, careful, measured decision making remains key. Although no set of particular guidelines apply to acquisition strategy, such decisions are often evaluated based on three principles: (i) the degree to which the board and management engaged in strategic planning; (ii) whether the board and management fulfilled their fiduciary duty to the firm’s shareholders; and (iii) how well the board and management integrate the target and recognize potential synergies. This framework elicits a particular decision-making process. The board should evaluate a proposed target acquisition for its fit within the overall corporate strategy. If the target fits appropriately, the board and management may pursue the target and engage in due diligence.
C. Decision Making in Practice
+++“If shareholders could perfectly monitor and control the investment decisions of managers, acquisitions that reduce shareholder wealth because they deliver managerial benefits would not be allowed,” or at least the advent of such decisions would likely decrease substantially. Managers of large, public firms, however, typically receive only loose scrutiny. The CEO proves instrumental in the acquisition decision because boards give managers considerable leeway in the formation of acquisition strategy. Boards often fail to utilize forms of punishment, such as removal or reduction of pay, as retribution for poor acquisition performance. This perpetuates the often reckless acquisitive strategy of CEOs. This parting from principle occurs for many reasons.
+++First, there remains a vast information gap between the CEO on one hand and the board and shareholders on the other, even at the inception of a proposed acquisition. Most aware of investment or acquisition opportunities, CEOs often control the deal inception. Having seized this control, they often do not relinquish it at any point in the process. This information asymmetry is furthered by specialized industry knowledge and may prove difficult for shareholders to rectify or overcome. Boards seem to give wide deference to CEOs who appear most closely related to target opportunities, relying on the perceived expertise of the CEO to determine the viability of an acquisition.
+++Second, few acquisition plans could survive without first receiving vigorous support and approval from the CEO. “It is virtually inconceivable that terms of a major acquisition could proceed to the board without the CEO’s personal sponsorship.” In fact, the role of CEO disposition may be even greater with respect to acquisition decision making than any other strategic planning or decision-making process. By championing a deal, the CEO may taint the board’s perception. Whether weak, compliant, or involved, the CEO’s endorsement will likely sway the board to accept that the deal is a good one, often without properly reviewing the firm’s due diligence. This can facilitate ineffective or fruitless acquisitions with mediocre to non-existent shareholder returns for the acquiring firm.
III. CEO Deal Drivers
+++The CEO serves as the highest-ranking executive within a firm and ultimately bears responsibility for the success or failure of the firm. As a result, the CEO likely enjoys wide deference in determining acquisition strategy. The CEO considers factors suggesting that an acquisition will increase the value of the CEO’s firm. Part A outlines such factors, but proceeds to caution that these factors may prove illusory.
+++But “[i]ndividual, group, and social factors, not efficient strategic calculation, drive key decisions” in a firm, and the relationship between the board and management can have vast implications in implementing acquisition strategy. Human factors “clearly manifest themselves” in large-firm acquisition strategies, and therefore merit careful consideration in order to understand why firms continue to acquire. Part B identifies and discusses factors that motivate CEO support of acquisitions but are divorced from benefits that might accrue to the firm.
A. Value-Enhancement Drivers
+++One line of reasoning considers acquisitions based on their purported value enhancement. These acquisition drivers share a common notion: the motivation of acquisitive CEOs by the long-term potential of acquisitions and pursuit of acquisitions believed to offer value-enhancing opportunities. Assuming the inherent rationality of CEOs, value-enhancement drivers will only lead a CEO to acquire a target firm when he or she confidently perceives the acquisition holds strong potential for sustainable growth and when he or she possesses the ability to achieve such potential. This type of driver is summarily manifested in four, distinct motivations: private synergies, access to superior information, market-share growth, and CEO hubris.
1. Private Synergies
+++Private synergies reflect a CEO’s notion that something specific and unique about the target firm will mesh particularly well with something inherent in the acquiring firm, creating added value through the acquisition. CEOs will make acquisitions when they obtain specific information indicating the presence of a particular synergistic opportunity capable of creating enhanced value by exploiting complementary resources or capabilities. The decision to acquire a target firm rests on whether that firm presents such synergistic opportunities that will render the aggregate firm more valuable than the sum of the individual firms.
2. Access to Superior Information
+++Another potential driver for CEO acquisition strategy derives from access to superior information. Under this line of thought, the CEO believes that he or she possesses “asymmetric or superior information” that permits the CEO to recognize potential more aptly than others. The CEO believes he or she can capitalize—through the acquisition—on opportunities competitors have not yet realized. This drives the CEO to move forward without properly considering the risk or reward apparent in an acquisition and, perhaps prematurely, without proper vetting of potential targets. Further, this perceived private information may preclude the CEO from rationally considering the input of the board, mistakenly assuming that the board lacks cognizance of the same information. Although the CEO could, and likely should, share the information with the board, the CEO may not feel the board will understand his or her unique take on the deal or may wish to preserve the secrecy to further entrench his or her authority. Opacity of information permits the CEO to start in charge and stay in charge.
3. Market-Share Growth
+++Growth remains one of the most salient corporate goals. Perhaps the quickest way for large firms, in particular, to achieve such growth lies in capturing market share through acquisition. The CEO can simultaneously gain market share and decrease competition through acquiring similar and competing firms. In turn, increased scale permits the firm to explore cost-reduction strategies. The CEO creates shareholder value through increased leverage and decreased production costs, likely increasing profits. Thus, it is no surprise that substantial growth may allure CEOs into supporting more aggressive or risky acquisitions.
+++Economic theory supports this idea by positing that superior firms seek out inferior firms for the value potential; inefficient managers will be forced out by acquirers attempting to extract untapped potential. Although the process of large firms engulfing smaller firms often plays a role in the life cycle of corporations, acquiring firms do not always possess the superior management they envision. In fact, these firms often struggle to integrate their targets. The post-acquisition entity proves too complex to recognize the perceived potential. As a result, the firm becomes more fragmented, inefficient, and difficult to manage. Regardless, the allure of larger market share likely plays a sizable role in acquisitions driven by perceived value.
4. CEO Hubris Distorting Value-Enhancing Drivers
+++While each of the value drivers can contribute to a profitable acquisition, each can prove illusory in a particular case, and the probability that these drivers will constitute only illusions increases with evidence of CEO hubris. Hubris is “exaggerated pride or self-confidence,” often including overconfidence. This overconfidence is intrinsic to the individual and can derive from strong recent firm performance, media hype, or the measure of a CEO’s compensation relative to other directors or managers. “Psychologists suggest that individuals are especially overconfident about outcomes they believe are under their control.” Overconfident CEOs often fall into the trap of predicting greater synergies between the target and acquiring firms than are achievable. “[O]verconfident CEOs are likely to undertake more acquisition[s],” and prove more likely to engage in “value-destroying” projects that dispassionate analysis would reject.
+++Further, CEOs often make acquisitions because they overvalue their own managerial skills and believe their managerial strengths can resurrect a diminishing or fledgling target firm. This hubris encourages CEOs to acquire target firms based on the purported ability of the CEO to successfully integrate the firms and increase value through synergies. CEOs often fall victim to gross overestimation of future value. CEO hubris likely increases the probability that the CEO’s confidence in profit from synergies is unwarranted, thereby increasing the likelihood that the CEO overvalues the information regarding the target firm and overestimates his or her ability to capitalize on that information.
+++These dangers derive from innocent miscalculation driven by arrogance or willful blindness or potential drawbacks. The next set of drivers, however, are more pernicious.
B. Private-Interest Drivers
+++CEOs may be driven to acquire target firms by self-interest. Scholars have begun to recognize that CEOs can derive substantial compensation and personal benefits from acquisitions regardless of the return to shareholders or the measure of success or failure of the acquisition. Although it remains possible for executives to balance the interests of shareholders jointly with their own, the likelihood that “executives may make decisions that satisfy their own interests at the expense of the shareholders” still weighs heavily. As a result, the board should not disregard personal drivers influencing CEO decision making. These personal drivers often surface through greater compensation for the CEO, a desire to engage in empire building, and job security.
1. Greater Compensation
+++Enhanced CEO compensation likely plays a pivotal role in determining acquisition strategy. We know CEO compensation increases following acquisitions, and compensation often surfaces as a prime motivation for driving acquisitions. Professors Shantanu Dutta, Kenneth MacAulay, and Samir Saadi examined incentive compensation in relation to M&A deals in over 1000 completed Canadian M&A mergers and acquisitions. These authors found that M&A bonuses “are positively related to managerial power: managers who have more board power are likely to get substantially higher bonuses, to engage in larger deals, and to have substantially smaller announcement returns.” Perhaps CEOs continue to pursue acquisitions despite a history of net loss, in part, due to the allure of such bonuses.
+++Further, corporate acquisitions are often a crucial factor in determining annual CEO compensation. Annual compensation typically correlates with firm size, creating additional incentive to increase firm size by any means. Because acquisitions induce rapid firm growth, acquisitive CEOs achieve similarly rapidly growing compensation packages; CEOs may prove inclined to make acquisitions to increase total firm size. Recent studies have indicated this increase in compensation post-acquisition occurs irrespective of whether the acquisition created recognizable value for the firm, suggesting CEOs endeavor to acquire target firms to enhance their own managerial compensation rather than increase overall shareholder value.
2. Empire Building
+++Perhaps in tandem with increased compensation lies the fear that CEOs engage in acquisitive corporate strategy for the sake of empire building. Not only do larger firm sizes foster firm—and CEO—recognition and prestige, but increased firm size enhances CEO discretion and bargaining power within the industry and within the firm. “[A] CEO can radically transform the size and profile of the firm, perhaps instantly enabling it to enter the Fortune 500 list,” or break into a new or challenging industry previously barred. Understandably, CEOs may struggle to recognize and differentiate between the social value in growing the size and prestige of the firm versus the financial value of achieving a high return on investment.
+++Firm growth can increase a CEO’s personal autonomy. Not only are acquisitions themselves complex deals, often requiring extensive periods of integration, but the resulting larger firms exhibit increased internal complexity, creating opacity and restricting outside monitoring and regulation. This permits the firm to operate with fewer regulatory constraints so that it can throw its weight around in the industry. It may also further vitiate the board and its ability to properly oversee corporate strategy and play a substantial role in the decision-making process. As a firm becomes more complex, the board may rely more heavily on the CEO’s expertise and insight, diluting the effect of the board as a countermeasure against CEO greed.
3. Job Security
+++Not only does growth of the firm create attractive promotion opportunities for junior managers and industry-wide opportunities for CEOs, but growth has become an expectation of CEO performance. As a result, despite the inherent risk associated with acquisitions, CEOs appear relatively unphased and are not apprehensive about undertaking large deals. This may stem partially from the need to achieve growth in order to meet external and internal growth expectations, thereby improving the CEO’s prospects for remaining at the top.
+++Collectively, these personal drivers pose a potential threat to the success of any acquisition and may prove aggravating factors in tandem with certain value-enhancing drivers. As a result, the board of directors should carefully consider the presence or absence of each driver and how these drivers might interplay to affect the firm’s acquisition strategy and process.
IV. Analysis And Argument
A. CEO Drivers Impact Acquisition Strategy
+++Given the range of decision making under the purview of a CEO, it is fair to say that CEOs impact acquisition strategy. This article argues one step further—that CEO drivers explain and influence acquisition strategies in large firms. The drivers detailed above weigh on CEO decision making, fostering CEO dominance and over-bidding on target firms, which in turn help to explain why acquisitions are consummated despite low or negative returns for shareholders.
1. CEO Dominance
+++CEO dominance signifies “the ability of the CEO to impose his or her overconfident views on the decisions of the firm.” An inherently objective measure, dominance focuses on whether an individual can actually exert his or her influence over another individual or group of individuals. As a result, dominance only has meaning in a social or organizational context, such as in the context of a CEO’s relationship with the firm’s board. “Only a powerful CEO can impose his [or] her decision on a firm” and its board, suggesting weaker boards or firms with weaker corporate governance will have more powerful and dominant CEOs.
+++Dominance carries huge implications in acquisition decision making. Dominant CEOs can manipulate and maneuver the decision-making process, the acquisition committee, and the full board. Dominant CEOs likely focus more on drivers such as compensation, empire building, and diversification of personal assets. Dominant CEOs may also leverage drivers such as private synergies and CEO hubris, believing they can pressure the board to either accept an M&A decision or afford greater deference by adopting a lower level of review.
+++Perhaps the largest harm to the shareholders caused by misguided CEOs remains overbidding. CEOs often make offers significantly above the market value of a target firm. This decreases overall firm value and causes the firm to expend additional capital without achieving any additional gain. According to Richard Roll, managers of bidding firms “infected by hubris” overpay for target firms because they “overestimate their own ability to run them.” To the extent acquisitions serve personal objectives, such as compensation or empire building, managers of bidding firms are willing to pay more than the target firm is worth to further these objectives.
B. Additional Drivers May Effect CEO Decision Making
+++In addition to the drivers discussed above, additional drivers may impact CEO decision making. These factors stem from origins other than value enhancement or personal gain. These drivers, though not of central focus here, warrant review to alert boards of directors of potential mitigating or aggravating factors that may merit consideration in the holistic review process.
+++Age and tenure. The age of the CEO may play a large role in his or her acquisition strategy. Older CEOs may be more prone to selecting strategies with hurdle rates or projected payoffs closely aligned with, and markedly prior to, the CEO’s planned retirement. This gravely affects a firm’s growth rate and direction. Further, CEOs with more tenure may hold entrenched positions within the firm and within the industry, enabling the CEO to pursue personal interests. Experienced executives may have more specific knowledge relating to both the firm and the industry, permitting these executives to navigate acquisition decision making more dexterously and, perhaps, exacerbating the information asymmetry with the board.
+++Ascribed social status. Ascribed social status is assigned to individuals without reference to innate differences or abilities. This driver is bestowed on individuals irrespective of individual traits and often based on some irreversible fact, such as family lineage or gender. CEOs with more ascribed status may prove more elitist and connected, affording greater opportunities but less need to “prove themselves.” This may cause CEOs with such status to evaluate M&A deals more evenly with little attention to job security or compensation. Conversely, ascribed social status may trigger increased hubris or overconfidence, exaggerating overbidding and contributing to the likelihood of a bad deal.
+++Gender. Some authors postulate that women’s more cooperative leadership style may not only prove more productive than men’s competitive nature, but suggests that women are more apt to recognize perceived synergies between target and acquiring firms, thus elevating the probability of successful integration. In general, firms led by female CEOs may outperform matched firms with male executives. These characteristics may stand alone in deal-making strategy or could serve as mitigating factors against certain deal drivers.
+++Achieved social status. Achieved social status derives from individual accomplishments. Psychological research suggests higher status can induce overconfidence directly associated with higher average acquisitiveness. This calls into mind the above analysis regarding overconfidence and suggests that acquisitions may be viewed as an opportunity more for the CEO to grow in status than the firm to grow in size or stature. Additionally, achieved status may contribute to specific drivers, such as CEO hubris, and further complicate the board’s understanding of just what is behind the acquisition.
C. Boards of Directors Do Not Sufficiently Counteract Private CEO Drivers
+++Some research hypothesizes that vigilant monitoring through active institutional ownership, heightened board scrutiny, or proportionally large numbers of independent directors can control private CEO rewards tied to firm acquisitions. For example, one study indicates that “[a] higher proportion of independent directors on the board mitigates the effect of CEO overconfidence and CEO dominance and reduces the probability of the firm deciding to make an acquisition.” Conversely, CEOs can more effectively induce abusive acquisitions and corporate strategy when monitoring proves lax. The fact that acquisitions continue to destroy value so frequently demonstrates that board control and monitoring, to date, has not worked.
D. Equity Ownership Is Insufficient to Curb Private CEO Drivers
+++Scholars have long emphasized the importance of aligning the interests of the CEO with those of the firm and its shareholders. In fact, “[m]anagement ownership of shares may be the most effective deterrent to investments that dissipate market value . . . .” But some forms of equity compensation—particularly options—provide upside potential without symmetrical downside penalties, exacerbating those drivers that encourage CEOs to make M&A deals that are risky to those who hold common stock outright. The board should consider the effect equity compensation may have on CEO decision making and weigh such compensation when considering the impact of deal drivers that may be present.
E. Integrating Personality Analysis in CEO Decision Making
+++It is “incorrect to say that existing monitoring and control devices keep managers from pursuing personal non-value-maximizing objectives.” Acquisition decisions should be viewed in the context of the total payoff structure and relative board power. The board can utilize the drivers discussed in this paper to track potential CEO motivators in acquisition decision making and determine the effect, if any, such drivers should have on board consideration of individual transactions and acquisition development processes.
1. Process Changes: Shaping the Role of the Board
a. Earlier Board Involvement
+++Significant acquisitions necessarily involve the board at the acquiring company. Too often, however, board involvement occurs once the deal has effectively been made. In these instances, a rubber stamp from the board remains the sole barrier between the CEO and effectuation of the deal. This places the board in a position where they must either derail the entire transaction or simply acquiesce to the CEO’s recommendation. To avoid this trap, the board of directors should consider early involvement in acquisition deals by instituting a new step in the acquisition process: approval of leads for acquisition targets.
+++Undoubtedly the CEO is best positioned to initiate leads, as the CEO’s specialized industry knowledge often serendipitously lends itself to identifying acquisition targets. Removing the CEO from this function serves no reasonable purpose. Establishing an additional step of review, however, bolsters not only the accountability of the CEO in determining viable target firms, but also permits the board to act in its purposeful “checks and balances” capacity. The board may perform a balancing test at the outset, determining whether acquisition of the target firm conforms to overall firm strategy and proves financially tenable before a possible deal gathers momentum.
+++Moreover, the board can measure the value of the deal more effectively when considering its purported return, in light of recognized CEO drivers as previously defined, absent the pressure of a seemingly fully consummated deal. The board retains the freedom to make an informed decision before the deal has effectively been made. The more private CEO drivers the board identifies and believes will impact a particular acquisition or acquisitions at the company generally, the greater the probability that early board involvement in the acquisition process will prevent a value-decreasing deal.
2. Higher Board Scrutiny
+++Additionally, the existence of one or multiple private drivers should trigger a higher level of scrutiny in reviewing proposed acquisitions. The board must learn to identify and recognize potential deal drivers from the perspective of the CEO. The existence of any particular drivers does not predispose the deal to failure, rather these drivers serve as key indicators, or red flags, requiring additional review of particular capital investments. For example, noting that an acquisition will increase firm size and thus perhaps double CEO compensation in the future does not alone render the deal harmful or inadvisable. Rather, the board must recognize this as an influencing factor on the CEO and evaluate the deal in light of its possible weight and impact on CEO decision making.
+++The board may utilize key tools to heighten scrutiny and mitigate the effects of aggravating drivers. Such tools may include hiring an independent financial adviser to consult with the board with respect to each proposed target firm. Additionally, the board may choose to set a higher hurdle rate based on the CEO’s past acquisition performance. And, to heighten scrutiny in light of multiple private drivers, a board might require deal review by an acquisition committee populated solely by independent directors.
+++The level of scrutiny cannot, however, hinge on the presence of any one driver, nor should heightened scrutiny require evidence of all drivers. Instead, the board should utilize a totality of the circumstances approach, increasing scrutiny based on the number of drivers present and their potential interplay. The board also needs to weigh the potential implications of each driver and the likelihood of the effects occurring. For example, if the board determines the CEO may be swayed by the increase in firm size, yet knows the firm intends to sell a major division, leaving the firm relatively the same at year-end, the board can conclude that this particular driver is unlikely to impact decision making. The acquisition will cause the firm to grow temporarily, but overall firm size will stay comparable, making annual CEO compensation unlikely to change.
+++Determining the level of scrutiny may prove challenging. The board should track both the various drivers at play in each potential acquisition deal as well as the foreseeable effects of each driver. Many drivers may prove pertinent to the CEO in all acquisitions, while others may be deal specific. If the board ascertains the presence of a particular driver, however, and determines a resulting impact is more than likely to occur, the board should track the driver more closely. A clear documentation of these drivers can facilitate discussion amongst the board regarding the drivers at play and whether current processes are sufficient to allay any potential threat.
b. Payment Changes: Adjusting CEO Compensation Packages
i. Discounting Firm Size
+++In conjunction with process changes, payment changes may prove effective tools in mitigating the potential downside of acquisitions driven predominantly by CEOs’ private interests. For example, firm size drives CEO compensation. Oftentimes, this may persuade a CEO to take on acquisitions for the sake of firm growth, increasing his or her compensation in lock step. Unfortunately, although the firm does in fact grow in size, historically the return on investment proves less than desirable. Desirable increases in compensation perpetuate the cycle of acquisitions for the sake of acquisitions—growth for the sake of compensation.
+++The board of directors should recognize the impact that firm size bears on CEO compensation and diminish the nexus between firm size and compensation by establishing an adjusted measure of firm size when determining annual CEO compensation. For example, suppose that a firm is valued at $1 billion prior to acquisition and $1.2 billion after acquisition, but the acquisition, according to firm metrics, proves wholly unsuccessful. Assuming the firm determines CEO compensation by firm size and comparative compensation at peer companies, the board would likely approve compensation based on firms valued at $1.2 billion. Instead, however, the board should discount the firm size to the original $1 billion given the inflated figure produced by the failed acquisition. Alternatively, the board might choose to give “credit” for the increase in firm size for the purpose of CEO compensation over time with more “credit” given (in terms of the increase in size of peer companies used for compensation analysis) as the acquisition proves itself profitable over several years.
+++Perhaps the clearest method for determining the adjusted firm size would derive from the assigned hurdle rate for a particular acquisition. If the strategy proved fruitless and the acquisition fell short of the hurdle rate by a certain percentage, that particular acquisition would be discounted from the total firm size by the compensation committee.
ii. Instituting Acquisition Clawbacks
+++Lack of direct accountability may permit CEO private drivers to dominate the CEO’s acquisition analysis. As an alternative to adjusting compensation by acquisition performance as an acquisition proves itself, the board might employ a clawback provision. Using this technique, the CEO would be paid his or her bonuses and other compensation components giving full credit for an acquisition. The clawback would then provide the firm with an opportunity to reclaim compensation in the future if it determines that the compensation should not have been awarded because the deal did not enhance firm value. Incorporating clawback provisions in executive compensation contracts may improve managerial decision making. “[E]xecutives appear to be more careful when making acquisition decisions” once a clawback provision is in place, as evidenced by improved M&A announcement returns and a decreased willingness to engage in poor acquisitions. The clawback provision would serve to sever, or at least weaken, the link between growing a firm and growing a paycheck, permitting only successful deals to contribute to the latter.
+++Implementing clawback provisions will encourage CEOs to listen to the market and make more informed acquisition decisions. A study by Professors Anna B. Brown, Paquita Y. Davis-Friday, Lale Guler, and Carol Marquardt indicates that board decision-making may improve after adopting clawback provisions. The authors found that when M&A announcement returns were negative, firms were more likely to adopt clawback provisions. Additionally, firms that adopted clawback provisions experienced more favorable announcement returns after the clawback adoption. The authors hypothesized this “suggest[ed] that [a] clawback adoption significantly improves managerial decision-making” and leads to a higher likelihood of financial success in subsequent acquisitions. This may result from the correlation between adoption of clawback provisions and reductions in information asymmetry. As noted previously, such information asymmetry often obstructs board involvement and may prevent boards from effectively reviewing proposed acquisitions.
+++Despite continued evidence controverting the value of acquisitions, the strategic choice to subsume additional, smaller entities is one that will continue—embedded in the past and future of corporate strategy. This does not mean, however, that boards must accept the continuing negative returns. Instead, boards engaged in acquisitive strategies should recognize and identify the key private drivers listed in this paper, deciphering these impacts on CEO decision making, and analyzing how such drivers might derail returns on acquisitions. By creating a matrix that illuminates the presence of such drivers and estimates the impact each might have on the CEO’s decision making, the board empowers itself to conscientiously adopt a level of scrutiny appropriate for each transaction. Additionally, the board can implement changes to the acquisition process, requiring CEOs to vet potential targets at an initial board review—in essence requiring board approval before the courting phase begins. Further, the compensation committee can adopt clawback provisions and adjust firm size when determining CEO compensation packages. Discounting firm size when setting comparative firms for compensation determination remains a unique mechanism for incentivizing strong acquisitions and eliminating unjust rewards for financially unsuccessful deals. These strategies may work to curb potentially danger-ous drivers and to achieve better decision making and stronger corporate governance in acquisitive firms.
Source: Deal Boom Feeds on Surging Stocks, Wall St. J. (Nov. 17, 2014),
* Law Clerk to the Honorable H. Christopher Mott, United States Bankruptcy Court, Western District of Texas, Austin, Texas. J.D., 2015, University of Richmond School of Law; M.B.A., 2015, University of Richmond Robins School of Business; B.A., 2011, University of Richmond.
. Carol Yeh-Yun Lin & Yu-Chen Wei, The Role of Business Ethics in Merger and Acquisition Success: An Empirical Study, 69 J. Bus. Ethics 95, 97 (2006) (stating that acquisitions present the most efficient way for firms pursuing growth strategies to obtain external human and financial resources as well as expand operational domain).
. See infra Part II.
. See Cynthia E. Devers et al., Do They Walk the Talk? Gauging Acquiring CEO and Director Confidence in the Value Creation Potential of Announced Acquisitions, 56 Acad. Mgmt. J. 1679, 1680 (2013).
. Mathew L.A. Hayward & Donald C. Hambrick, Explaining the Premiums Paid for Large Acquisitions: Evidence of CEO Hubris, 42 Admin. Sci. Q. 103, 103 (1997) (citing Elazar Berkovitch & M.P. Narayanan, Motives for Takeovers: An Empirical Investigation, 28 J. Fin. & Quantitative Analysis 347, 347–62 (1993)). Berkovitch and Narayanan assessed a database of 330 tender offers made between 1963 and 1988. Elazar Berkovitch & M.P. Narcyanan, Motives for Takeovers: An Empirical Investigation, 28 J. Fin. & Quantitative Analysis 347, 349 (1993). The sample was selected based on the following criteria:
(1) the shares of both the acquirer and the target were traded on the New York Stock Exchange or the American Stock Exchange, (2) the price and/or number of shares outstanding is available for each of the six days before the event date, and (3) sufficient daily stock return data is available to estimate the market model.
Id. at 353. The data came from the database of Michael Bradley and the Office of the Economic Analysis of the SEC. Id. at 353 n.5. The authors hypothesized three motivations for acquisitions: synergy, agency, and hubris, and considered the overall net value of acquisitions. Id. at 347. The authors concluded that, on average, takeovers yield positive net values. Id. This positive value is directly correlated with the subset of target firm value, and negatively correlated with the subset of acquiring firm value, indicating the target firm receives value while the acquiring firm actually suffers a net loss. See id. at 349.
. Hayward & Hambrick, supra note 4, at 103.
. Lin & Wei, supra note 1, at 97.
. Aleksey A. Tikhomirov & William D. Spangler, Neo-Charismatic Leadership and the Fate of Mergers and Acquisitions: An Institutional Model of CEO Leadership, 17 J. Leadership & Org. Stud. 44, 45 (2010).
. Susan Cartwright & Richard Schoenberg, Thirty Years of Mergers and Acquisitions Research: Recent Advances and Future Opportunities, 17 Brit. J. Mgmt. S1, S1 (2006).
. Tikhomirov & Spangler, supra note 7, at 45.
. Martin Spraggon & Virginia Bodolica, Post-Acquisition Structuring of CEO Pay Packages: Incentives and Punishments, 9 Strategic Org. 187, 188 (2011) (stating that these transactions were valued at $3.62 trillion).
. Dana Mattioli & Dana Cimilluca, Deal Boom Feeds on Surging Stocks, Wall St. J. (Nov. 17, 2014, 7:33 PM), http://wsj.com/articles/deal-boom-feeds-on-surging-stocks-1416 270817 (stating that “[a]t roughly $3.1 trillion, the current dollar volume of announced deals and offers globally is higher than in any full year since 2007 . . .”). For a graph of U.S. and global trends in mergers and acquisitions, see Appendix A.
. Ulrike Malmendier & Geoffrey Tate, Who Makes Acquisitions? CEO Overconfidence and the Market’s Reaction, 89 J. Fin. Econ. 20, 21 (2008).
. Dana Mattioli & Dana Cimilluca, To Last, M&A Boom Needs to Broaden, Wall St. J. (Jan. 1, 2015), http://www.wsj.com/articles/to-last-m-a-boom-needs-to-broaden-1420 130620 (according to Dealogic, “[t]hat is the most since the height of the last deal boom in 2007, when there was a record $4.3 trillion of transactions”).
. Mattioli & Cimilluca, supra note 11.
. Malmendier & Tate, supra note 12, at 21 (citing Sara B. Moeller et al., Wealth Destruction on a Massive Scale? A Study of Acquiring-Firm Returns in the Recent Merger Wave, 60 J. Fin. 757, 757–58 (2005) (finding that, at the announcement of acquisitions, acquiring-firm shareholders lost an average of $0.12 for every dollar spent for a total loss of $240 billion between 1998 and 2001)).
. See generally G. Alexandridis et al., Gains from Mergers and Acquisitions Around the World: New Evidence, 39 Fin. Mgmt. 1671 (2010).
. See Cartwright & Schoenberg, supra note 8, at S4.
. See id.
. Rayna Brown & Neal Sarma, CEO Overconfidence, CEO Dominance and Corporate Acquisitions, 59 J. Econ. & Bus. 358, 360 (2007) (suggesting that a number of “explanations for this disappointing outcome for acquirers” exist).
. Id. (citing Gregor Andrade et al., New Evidence and Perspectives on Mergers, 15 J. Econ. Persp. 103, 110 (2001) (finding a positive abnormal return of 16% to targets (remarkably consistent over time) and a negative, but insignificant abnormal return to acquirers); Terry Walter & Raymond da Silva Rosa, Australian Mergers and Acquisitions Since the 1980s: What Do We Know and What Remains to Be Done?, 29 Austl. J. Mgmt. (Special Issue) i, iv, ix (2004) (indicating that “the evidence is unequivocal . . . target firm shareholders benefit considerably” whereas significant decreases in acquirer share prices coupled with long-term losses make reconciling acquisitions with the value-enhancing hypotheses difficult)); see also Alexandridis et al., supra note 16.
. See Richard Roll, The Hubris Hypothesis of Corporate Takeovers, 59 J. Bus. 197, 200 (1986). The “winner’s curse” focuses on the psychological effects of bidding environments and the proclivity for overbidding. Id. Because each bidder seeks to win, he or she bids high, often higher than the true value. Id. This behavior is reinforced by the reward: winning. Id. The winner of the auction, however, is in fact the loser because he or she has overpaid, decreasing his or her overall value. Id. The curse assumes bidders focus more on winning and less on rational decision making. Id.
. Malmendier & Tate, supra note 12, at 21 (citing Roll, supra note 21, at 198) (finding that in the process of overbidding, CEOs effectively transfer most of the value generated by the acquisition from the acquiring firm to the target firm).
. Hayward & Hambrick, supra note 4, at 103 (“[I]nvestors mark down the stock of acquirors following takeover announcements.”); see also Brown & Sarma, supra note 19, at 360 (“[A] significant negative abnormal return accrues to bidding firms upon the announcement of a diversifying acquisition.”) (citing Randall Morck et al., Do Managerial Objectives Drive Bad Acquisitions?, 45 J. Fin. 31, 31–48 (1990)).
. Hayward & Hambrick, supra note 4, at 103 (citations omitted).
. See id. at 120.
. Tikhomirov & Spangler, supra note 7, at 45.
. Id. at 46 (stating that the acquisition process “has a notorious aura of secrecy, particularly when the acquisition strategy is early in the making,” creating deeper connections between CEO knowledge and decision making within the acquisition committee and entrenching information asymmetry).
. Id. at 45.
. Cartwright & Schoenberg, supra note 8, at S3.
. Management and the board are bound by the duty of care. See generally Smith v. Van Gorkom, 488 A.2d 858, 873 (Del. 1985) (quoting Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984)) (“[A] director’s duty to exercise an informed business judgment is in the nature of a duty of care, as distinguished from a duty of loyalty. [Where] there are no allegations of fraud, bad faith, or self-dealing, or proof thereof . . . it is presumed that the directors reached their business judgment in good faith. . . . ‘While the Delaware cases use a variety of terms to describe the applicable standard of care, our analysis satisfies us that under the business judgment rule director liability is predicated upon concepts of gross negligence.’”).
. Randall Morck et al., Do Managerial Objectives Drive Bad Acquisitions?, 45 J. Fin. 31, 32 (1990).
. Nina T. Dorata & Steven T. Petra, CEO Duality and Compensation in the Market for Corporate Control, 34 Managerial Fin. 342, 343 (2008).
. Morck et al., supra note 32.
. See Andrei Shleifer & Robert W. Vishny, Value Maximization and the Acquisition Process, 2 J. Econ. Persp. 7, 8 (1988).
. See Morck et al., supra note 32.
. See infra Part III.
. See Yung-I Lou et al., Determinants of Chief Executive Officer Compensation, 7 Int’l J. Bus. & Fin. Res. 29, 32 (2013).
. Hayward & Hambrick, supra note 4, at 107.
. Id. at 120.
. See Ranjay Gulati & James D. Westphal, Cooperative or Controlling? The Effects of CEO-Board Relations and the Content of Interlocks on the Formation of Joint Ventures, 44 Admin. Sci. Q. 473, 473, 480 (suggesting that “CEO-board relationships characterized by independent board control reduce the likelihood of alliance formation by prompting distrust between corporate leaders, while CEO-board cooperation in strategic decision making appears to promote alliance formation by enhancing trust” and that trust in the CEO may influence board decision making).
. Id. at 501.
. Emilia Peni, CEO and Chairperson Characteristics and Firm Performance, 18 J. Mgmt. & Governance 185, 189 (2014).
. Hayward & Hambrick, supra note 4, at 105 (citations omitted).
. Id. at 119.
. Devers et al., supra note 3, at 1682.
. See id.
. Id. at 1681.
. Id.; see also Jeffrey. S. Harrison et al., Mergers and Acquisitions: A Value Creating or Value Destroying Strategy, in The Blackwell Handbook of Strategic Management 384, 384–408 (R. Edward Freeman et al. eds., 2001); Hayward & Hambrick, supra note 4, at 105 (finding that “commonalities or complementaries between the acquiror and target enable the combined value of the firms to exceed their value as two independent entities” and suggesting that synergistic opportunities exist); James M. Mahoney & Joseph T. Mahoney, An Empirical Investigation of the Effect of Corporate Charter Antitakeover Amendments on Stockholder Wealth, 14 Strategic Mgmt. J. 17, 21 (1993).
. Devers et al., supra note 3, at 1681.
. Id. at 1681–82 (citations omitted).
. See, e.g., Satish Shankar et al., How to Win in Emerging Markets, 49 MIT Sloan Mgmt. Rev. 19, 20–21 (2008) (reviewing the decision for Philip Morris to acquire Sampoerna and finding the firm experienced “an enormous success” with a jump in market share of 1.5% to nearly 28%—enabling Philip Morris to become the market leader).
. Devers et al., supra note 3, at 1682.
. Hayward & Hambrick, supra note 4, at 104.
. See, e.g., Don Clark & Tess Stynes, Riverbed Agrees to be Bought Out by Thoma Bravo for $3.6 Billion, Wall St. J. (Dec. 15, 2014), http://www.wsj.com/articles/riverbed-agrees-to-be-bought-out-by-thoma-bravo-for-3-3-billion-1418652793 (reporting that Riverbed suffered financial hardship after a series of acquisitions culminating in apparent “trouble integrating Opnet”—ultimately resulting in the firm’s purchase by private equity firm Thoma Bravo).
. Hayward & Hambrick, supra note 4, at 106 (q uoting Hubris, Webster’s New Collegiate Dictionary (9th ed. 1983)).
. Brown & Sarma, supra note 19, at 363.
. Id. at 361 (utilizing a measure of the difference between compensation of the CEO and compensation of top management as an indicator of CEO over-confidence).
. Malmendier & Tate, supra note 12, at 22 (citing James G. March & Zur Shapira, Managerial Perspectives on Risk and Risk Taking, 33 Mgmt. Sci. 1404, 1404–18 (1987)).
. Brown & Sarma, supra note 19, at 361.
. Shantanu Dutta et al., CEO Power, M&A Decisions, and Market Reactions, 21 J. Multinational Fin. Mgmt. 257, 258 (2011).
. Malmendier & Tate, supra note 12, at 22.
. Devers et al., supra note 3, at 1682; see also Hayward & Hambrick, supra note 4, at 104 (“[A]cquiring managers overestimate their ability to extract value from acquisitions.”).
. Devers et al., supra note 3, at 1682.
. Brown & Sarma, supra note 19, at 362 (finding that a CEO often believes the company’s equity is undervalued in the current market, causing the CEO to overvalue the potential return on the proposed union of the firms).
. Devers et al., supra note 3, at 1683; Hayward & Hambrick, supra note 4, at 105; see also Donald DePamphillis, Mergers, Acquisitions, and Other Restructuring Activities 31 (4th ed. 2007); Cartwright & Schoenberg, supra note 8, at S4 (indicating that in 2000, studies showed 26% of U.S. cross-border acquisitions stemmed from manager instigated deals focused on personal gain rather than shareholder value).
. S. Trevis Certo et al., Board of Directors’ Self Interest: Expanding for Pay in Corporate Acquisitions?, 77 J. Bus. Ethics 219, 221 (2008).
. Id. at 223.
. Dorata & Petra, supra note 34, at 342.
. Dutta et al., supra note 65, at 265 tbl.1. “This study considered all Canadian M&A deals [occurring] between 1997 [and] 2005 and involv[ing] TSX-listed bidding compan[ies].” Id. at 264. Importantly, this timeframe spans two large regulatory changes in Canada impacting Canadian companies, the Dey Report in 1994 and the Toronto Stock Exchange governance guidelines in 1995, as well as the time-period during which the United States implemented Sarbanes-Oxley. Id. The authors required that all deals within the study meet two criteria: (i) the deals were completed and (ii) the acquiring firm was not a member of the financial industry. Id. The study did not eliminate acquiring firms with multiple acquisitions during the period, nor did it discriminate based on the size of the deal. Id.
. Id. at 258 (quoting Yaniv Grinstein & Paul Horibar, CEO Compensation and Incentives: Evidence from M&A Bonuses, 73 J. Fin. Econ. 119, 121 (2004)).
. Dutta et al., supra note 65, at 258 (noting that a CEO can maximize compensation in two ways: (1) increasing the size of the firm or (2) by stealing or expropriation); Detelin Elenkov et al., Acquisition Returns, Increase in Firm Size, and Chief Executive Officer Compensation: The Moderating Role of Monitoring, 45 Acad. Mgmt. J., 599, 599 (2002).
. Kevin F. Hallock, The Relationship Between Company Size and CEO Pay, Work Span (Feb. 2011), https://www.ilr.cornell.edu/sites/ilr.cornell.edu/files/workspan/02-11-Research-for-the-real-world_0.pdf (showing that for a 1% increase in company size, CEO pay goes up by about one-third of 1%—–meaning that for each 10% increase in company size, annual CEO compensation increases by 3%.); see also Certo et al., supra note 71, at 220 (finding that director compensation packages increase following M&As); Dorata & Petra, supra note 34, at 344 (“[F]irm size is a significant influence on CEO rewards of acquiring firms.”); Dutta et al., supra note 65, at 264 (“Extant literature shows that firm size directly influences CEO compensation levels.”).
. See Devers et al., supra note 3, at 1683.
. See Dutta et al., supra note 65, at 258 (noting that maximizing firm size maximizes compensation).
. Devers et al., supra note 3, at 1683 (citing Yaniv Grinstein & Paul Hribar, CEO Compensation and Incentives: Evidence from M&A Bonuses, 73 J. Fin. & Econ. 119, 119–43 (2004)).
. Elenkov et al., supra note 76, at 600.
. Malmendier & Tate, supra note 12, at 22 (“Empire-building, like overconfidence, predicts heightened acquisitiveness to the detriment of shareholders, especially given abundant internal resources.”); see generally Jarrad Harford, Corporate Cash Reserves and Acquisitions, 54 J. Fin. 1969 (1999).
. Devers et al., supra note 3, at 1683 (citing Donald C. Hambrick et al., Executive Job Demands: New Insights for Explaining Strategic Decisions and Leader Behaviors, 30 Acad. Mgmt. Rev. 472, 472–91 (2005)).
. Hayward & Hambrick, supra note 4, at 120.
. See id. at 110.
. Devers et al., supra note 3, at 1683 (citing Matt Bloom & George T. Milkovich, Relationships Among Risk, Incentive Pay, and Organizational Performance, 41 Acad. Mgmt. Rev. 283, 283–97 (1998)).
. See Morck et al., supra note 32, at 33.
. Dutta et al., supra note 65, at 258.
. Brown & Sarma, supra note 19, at 359.
. Id. at 363.
. See id. at 363–64.
. Dutta et al., supra note 65, at 258.
. Id. at 260.
. See Brown & Sarma, supra note 19, at 361 (overbidding based on overconfidence); Dorata & Petra, supra note 34, at 342 (overbidding based on personal benefit).
. Morck et al., supra note 32, at 31 (citing Richard Roll, The Hubris Hypothesis of Corporate Takeovers, 59 J. Bus. 197, 197 (1986)).
. Peni, supra note 45, at 188.
. See id. at 199.
. Michael Dowling et al., CEO Social Status and Acquisitiveness, 5 Qualitative Res. Fin. Mkts. 161, 162 (2013).
. Id. at 163, 166.
. See Peni, supra note 45, at 198.
. Id. at 186. The sample’s empirical analysis consisted exclusively of S&P 500 firms. Id. at 190. The authors omitted observations with insufficient data and proceeded with a final sample consisting of 305 firms and 1525 firm-year observations. Id. The sample period extended from 2006 to 2010. Id. All data on CEO and Chairperson characteristics was hand collected from the AuditAnalytics database. Id. In the case of data availability issues, the executive data was acquired from the firms’ annual reports and press releases. Id. The authors obtained financial statement data from Thomson Reuters Worldscope. Id. The authors analyzed the relationship between CEO or Chairperson characteristics and firm performance with cross-sectional panel regressions. Id. at 194.
. Dowling et al., supra note 100, at 164. See generally Malmendier & Tate, supra note 12 (examining CEO overconfidence in merger decisions).
. Brown & Sarma, supra note 19, at 376.
. Elenkov et al., supra note 76, at 601, 606.
. Devers et al., supra note 3, at 1682.
. Morck et al., supra note 32, at 32 (providing the caveat that large firms recognize this protection less as managers own fewer stocks relative to the size of the firm; the value is somewhat superfluous).
. Dutta et al., supra note 65, at 258.
. See Del. Code Ann. tit. 8, § 141(a) (2015) (“The business and affairs of every corporation organized under this chapter shall be managed by or under the direction of a board of directors . . . .”).
. See supra Part III.A.
. See supra Part III.B.1.
. See supra Part III.B.1.
. Clawback provisions became an important issue in executive compensation in the wake of the 2007–2008 credit crisis. Because the financial results of the lenders were extremely positive in the years leading up to the credit crisis, executives received large bonuses. When, just a short time later, the value of the lenders’ portfolios was written down, the results no longer justified the compensation. Where there were no clawback provisions, executives had an incentive to frontload company earnings, and most managed to hold on to inflated compensation. See Joann S. Lublin & Charles Forelle, Recovering Bonuses Remains Infrequent Despite Emphasis on Corporate Reform, Wall St. J. (Oct. 12, 2004), http://online.wsj.com/news/articles/SB109752837308242257.
. Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires the Securities and Exchange Commission to direct national securities exchanges to prohibit listing any security of a company that does not adopt a clawback policy in compliance with section 954. H.R. 4173, 111th Cong. § 954 (2011). To date, however, only a company restatement triggers this clawback policy. Id. This article argues firms should broaden the application of clawbacks and implement clawback provisions to recapture CEO pay linked with acquisitions, including bonuses.
. Anna Bergman Brown et al., M&A Decisions and US Firms’ Voluntary Adoptions of Clawback Provisions in Executive Compensation Contracts, 42 J. Bus. Fin. & Acct. 237, 268 (2015); see also Yan Liu et al., Corporate Governance, Bank Mergers and Executive Compensation 3, 5, 10, 13 (Henley Bus. Sch., Univ. of Reading, Discussion Paper No. ICM-2014-18, 2014) https://www.henley.ac.uk/files/pdf/research/papers-publications/ICM-2014-18%2 0Liu%20et%20al.pdf (finding that, in a study of 478 U.S. bank mergers from 1995 to 2012, post-merger changes in CEO bonuses were significantly negatively correlated with the strength of corporate governance within the bidding bank, suggesting that bonus compensation is not consistent with optimal contracting and that firms might benefit from new compensation structures).
. Anna Bergman Brown et al., supra note 117, at 268. The sample drew primarily from the Corporate Library 2010 clawback database. Id. at 239. The original sample contained 736 firms of which 98 were coded as not having clawbacks and eliminated, reducing the sample to 638 firms. Id. at 251. The author further eliminated 199 firms that received funding as part of the Troubled Asset Relief Program (TARP). Id. The study included only variables that significantly explained the likelihood of transaction completion and, therefore, would benefit from adoption of clawback provisions. Id. at 246–47. In addition to the Corporate Library clawback sample of 519 firms, the authors also identified 58 firms that mention the word clawback in their proxy statements and adopted provisions by 2010. Id. at 251. They added these hand collected firms to the Corporate Library sample. Id. This yielded an initial voluntary clawback adoption sample of 577 firms with adoption dates ranging from 2001 to 2010. Id.
. Id. at 268.
. Id. at 239.
. Id. at 268; Mai Iskandar-Datta & Yonghong Jia, Valuation Consequences of Clawback Provisions, 88 Acct. Rev. 171, 191 (2013) (“[T]he adoption of clawback policy reduces information asymmetry.”).