Guests at the Table? Independent Directors in Family-Influenced Public Companies‪.‬

I. INTRODUCTION Companies within the sphere of public capital markets in the United States that retain characteristics of family firms pose a series of intriguing questions about corporate governance that warrant examination in light of the surprising incidence and size of such firms. In particular, a family-influenced or family-controlled firm with nonfamily equity investors is an environment in which directors' roles and duties require careful assessment. Although in many reported cases--some well-known for other reasons--directors' performance within family-controlled companies appears to have ranged in quality from exemplary to deplorable, the underlying issues surrounding directors remain unexplored in legal scholarship. Moreover, questions concerning the governance of such companies regularly surface in highly visible ways. For example, in 2006 directors of the Ford Motor Company confronted the difficult question of whether a descendant of the firm's founder, one bearing the last name "Ford," should continue serving as the company's CEO. (1) More recently, directors of Dow Jones & Co.--62% of its voting power represented by shares held by trusts on behalf of the Bancroft family--assessed the company's response to a financially generous offer for its shares made by News Corporation (News Corp.), while the Bancrofts and their trustees determined their responses as Dow Jones's controlling shareholders. (2) News Corp. itself, originally Australian but since reincorporated in Delaware, (3) is controlled by Rupert Murdoch and, through a trust, the Murdoch family controls around 30% of News Corp.'s shares. (4) The past and possibly future roles for Mr. Murdoch's own children within News Corp. bear on the company's future, as do allegiances and disaffections internal to the family. (5) On a darker note, members of the Rigas family, who founded and controlled the large telecommunications company Adelphia, were convicted of federal felonies grounded in their apparent disregard of common sense and legal boundaries between the company's assets and their own entitlements, compounded by federal securities fraud. (6)