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Page 23 21 Health Matrix 189, * associated. Professor Bainbridge considers this power of the "reputational" community to be an important reason why corporate law requires firms to be managed by a "board" and not by the fiat of a single individual. n86 Bainbridge wants this power to be deployed in advance of shareholder primacy, "9 but it can also help enable a loyal, capable multi- stakeholder corporate governance regime. Another important member of the corporate reputational community is the Delaware Court of Chancery. A number of scholars have emphasized the role that the Chancery Court plays in exposing, condemning, and shaming directorial misconduct, even where the court restrains itself from imposing actual liability or damages for the mis p2151 conduct it identifies. nm) The world of corporate directors is a fairly small one. In it, reputation and honor often matter more than pecuniary rewards, which most directors of large publicly traded corporations already have before joining the world of corporate directorships. In this culture what Delaware judges say matters as much or more than what judges do. Formally expanding the fiduciary relationship to multiple stakeholders would provide judges the occasion to celebrate or condemn corporate conduct as it relates to workers, consumers and other stakeholders, even where the Chancery Court is reluctant to formally find directors liable for damages in connection with unworthy conduct. The canonical account of corporate law is already committed to the view that reputational dynamics can serve an important part in bonding corporate directors to their principals. In fact, in the canonical account the competence of board members to police each other and keep each other true (enough) to the corporate mission serves as a crucial justification for corporate law's embrace of near total directorial discretion over the corporation's affairs, even to the extent that it allows directors to stymie the market for corporate control with structural defenses (e.g., "poison pills," etc.) that essentially allow the board to "just say no" to hostile takeovers. n" The acid bath of the market is kept lidded, while corporate law puts its faith in the fidelity of the board. This faith and this power, driven by speech acts operating under fiduciary discourse norms, can be put to use in service of a broader set of directorial commitments. Of course, people's ability to fulfill commitments degenerates when multiple commitments present conflicts. Lisa Fairfax argues that corporations actively concerned with multiple stakeholders may need to resolve this problem by limiting the number of groups to which they make commitments, or else to be clear about their hierarchy of commitments. nu Yet to respond to this conundrum as Fairfax suggests p2161 would leave us again with shareholder primacy in firm governance, an approach which leaves non-shareholding stakeholders vulnerable to corporate overreaching. The inevitable conflict involved in multiple commitments has been one of the main arguments that advocates of shareholder primacy have used to reject the plausibility of multi-stakeholder corporate governance. This is sometimes referred to as the "two masters" problem: "A manager told to serve two masters (a little for the equity holders, a little for the community) has been freed from both and is answerable to neither." nn But the "two masters" argument proves too much. Under the prevailing shareholder-primacy model of corporate governance, directors are already charged with managing conflicts between many different masters. For example, shareholders with a large portion of their wealth invested in one firm would prefer the firm to adopt a risk-averse business strategy, but For internal use only CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0075624 CONFIDENTIAL SDNY_GM_00221808 EFTA01378445