Rescission of Rule 14a-8: Anticipating the Potential Evolution of Shareholder Engagement Strategies

Posted by Carmen Lu and Frances Mi, Paul, Weiss, Rifkind, Wharton & Garrison LLP, on
Thursday, September 24, 2026
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Carmen X. Lu and Frances F. Mi are Partners at Paul, Weiss, Rifkind, Wharton & Garrison LLP. This post is based on their Paul Weiss memorandum.

As anticipated, the U.S. Securities and Exchange Commission (the “SEC”) has proposed to rescind Rule 14a-8 under the Securities Exchange Act of 1934. The SEC has also proposed to close the Rule 14a-4(c) “loophole,” which has inadvertently allowed shareholders who file their own proxy materials to add multiple shareholder proposals to a company’s proxy card. The rescission of Rule 14a-8 and the closure of the Rule 14a-4(c) loophole would mean that shareholders would need to turn to a company’s governing documents to propose business at an annual meeting. With the exception of Texas, which last year adopted ownership and solicitation requirements for shareholder proposals, no other state has enacted legislation governing shareholder proposals.

Rule 14a-8 will likely remain effective for most if not all of the 2026-27 proxy season, and the proposed rescission could be challenged in the courts. However, the SEC has already discontinued responding to all no-action requests related to Rule
14a-8, although companies are still required to notify the SEC of their decision and basis for excluding a shareholder proposal. With the SEC no longer substantively adjudicating shareholder proposal exclusions for the second year running, companies will need to continue making an independent judgment as to whether there is a reasonable basis to exclude a proposal. Last year, shareholder proponents filed six lawsuits contesting the exclusion of their proposals. Those lawsuits resulted in three settlements that led to the inclusion of the proposal in the company’s proxy statement and one successful preliminary injunction.

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Dodiya v. Franklin and the Emerging Rules of the DGCL’s Section 144 Safe Harbors

Posted by John Butler, Adam Cromie, David Grubman, Sidley Austin LLP, on
Thursday, September 24, 2026
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John Butler, Adam Cromie, David Grubman are Partners at Sidley Austin LLP. This post is based a Sidley memorandum by Mr. Butler, Mr. Cromie, Mr. Grubman, Courtney Hauck, Arthur Adler, all at Sidley, and is part of the Delaware Law Series; links to other posts in the series are available here.

On August 26, 2026, the Court of Chancery issued Dodiya v. Franklin, C.A. No. 2025-0932-LWW (Del. Ch. Aug. 26, 2026), concluding that the “striking breakdown in corporate governance” detailed in the complaint made the “predictable path to safe harbor” under amended Section 144 of the Delaware General Corporation Law (DGCL) unavailable at the pleading stage. Dodiya’s message for boards is simple: the safe harbors deliver powerful protection, particularly by virtue of the presumption of disinterestedness afforded to directors determined to be independent for listing standard purposes, but only to boards that (i) run a process that is not grossly negligent and (ii) provide materially accurate disclosure to stockholders.

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The CEO Decision: How PE Investors Select and Reassess Leaders from Entry to Exit

Posted by Emily Taylor, Heather Hammond, and Courtney Byrne, Russell Reynolds Associates, on
Wednesday, September 23, 2026
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Emily Taylor and Heather Hammond are Consultants, and Courtney Byrne is an Associate at Russell Reynolds Associates. This post is based on their Russell Reynolds memorandum.

For much of the past decade, private equity (PE) performance has benefited from favorable market conditions. Cheap financing, easy multiple expansion and relatively short hold periods meant that even subpar execution could produce attractive returns. [1] These conditions peaked in 2021 and early 2022, when abundant capital, intense competition for assets and supportive financing markets drove deal activity and valuations to record levels. Many sponsors moved quickly to acquire companies at elevated entry multiples and underwrote ambitious growth plans.

Since then, the operating environment has become far more challenging. Higher interest rates, more volatile financing conditions and uncertain exit markets have coincided with geopolitical uncertainty, tariffs and supply chain disruption, and rapid advances in AI. Together, these forces have altered many of the assumptions underpinning investment theses developed at the height of the market.

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SEC Proposes to Rescind Rule 14a-8

Posted by Jennifer Zepralka, Ali Perry, and Liz Walsh, Mayer Brown LLP, on
Wednesday, September 23, 2026
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Jennifer Zepralka is a Partner, and Ali Perry and Liz Walsh are Counsels at Mayer Brown LLP. This post is based on a Mayer Brown memorandum by Ms. Zepralka, Ms. Perry, Ms. Walsh, and Christopher Nickas.

In an awaited but not surprising proposing release, on September 16, 2026, the Securities and Exchange Commission (the “SEC” or the “Commission”) proposed rescinding Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which governs the processes under which a shareholder may include a proposal in a public company’s proxy materials. The SEC also proposed to amend Rule 14a-4(c) to expand the circumstances under which a company may exercise, with respect to proxies it receives, discretionary voting authority on proposals that will be presented at a shareholder meeting but not included in the company’s proxy materials. This proposal (the “Rule 14a-8 Rescission Release”) marks a significant change in the Commission’s view of the federal government’s role in interactions between companies and their shareholders.

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Compensation Clawbacks – Surveying the Disclosures to Date

Posted by Mark Borges, Hannah Orowitz, and Brigid Rosati, Compensia, on
Tuesday, September 22, 2026
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Mark Borges and Hannah Orowitz are Principals and Brigid Rosati is a Senior Consultant at Compensia. This post is based on their Compensia memorandum.

As we approach the third anniversary of the date when incentive compensation “received” is subject to clawback, we have taken a closer look at the disclosures companies have made since implementation.

This Thoughtful Pay Alert summarizes our findings from reviewing publicly available disclosures of “recovery analyses” conducted between January 1, 2024 and June 30, 2026.

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FDA and SEC Open a New Information-Sharing Channel: Implications for Public Life Sciences Companies

Posted by Paul Rubin, Paul Rodel, and Melissa Runsten, Debevoise & Plimpton LLP, on
Tuesday, September 22, 2026
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Paul Rubin and Paul Rodel are Parterns, and Melissa Runsten is a Counsel at Debevoise & Plimpton LLP. This post is based on their Debevoise memorandum.

Key Takeaways:

  • The U.S. Food and Drug Administration and Securities and Exchange Commission recently announced a new three-year Memorandum of Understanding (“MOU”) establishing a formal framework for the agencies to exchange nonpublic information concerning FDA-regulated products, activities and companies.
  • For pharmaceutical, biotechnology and medical-device companies that are publicly traded or otherwise are SEC-reporting companies, the MOU could have significant implications for disclosures concerning clinical trials, FDA interactions, product approvals, manufacturing and inspection developments, and other regulatory matters that may be material to investors.
  • Although the MOU does not change the securities-law disclosure standard, it likely makes it easier for SEC staff to test a company’s account of an FDA interaction against FDA’s own contemporaneous record.

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2026 U.S. Compensation Post Season Review: Strong Investor Support Despite Resurgence of One-Time Grants

Posted by Subodh Mishra, ISS STOXX, on
Monday, September 21, 2026
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Subodh Mishra is the Global Head of Communications at ISS STOXX. This post is based on an ISS STOXX by Pranav Pradeep, Compensation & Governance Advisor; Tim Sessing, Compensation & Governance Advisor; & Chris Sayo, Data Analytics, at ISS-Corporate.

Key Takeaways

  • CEO pay continued to climb to record levels in fiscal 2025, with median S&P 500 CEO compensation reaching $17.5 million, while median pay among Russell 3000 companies (excluding the S&P 500) remained relatively stable;

  • Equity compensation remained the primary driver of CEO pay growth, as companies increased long-term incentive award values and expanded both the prevalence and magnitude of one-time equity grants;

  • The prevalence of CEO security perquisites in the S&P 500 continued to increase sharply, and the Russell 3000 has followed suit;

  • Say-on-Pay (SOP) support climbed to five-year highs across both the S&P 500 and Russell 3000, while SOP failures reached multi-year lows;

  • Potential changes in SEC rulings may fundamentally alter compensation disclosure and voting in years to come.

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A Breakout Year for CVRs: 2025 and First-Half 2026 Trends in Life Sciences Public M&A

Posted by Sally Wagner Partin and Sharon Flanagan, Sidley Austin LLP, on
Monday, September 21, 2026
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Sally Wagner Partin and Sharon R. Flanagan are Partners at Sidley Austin LLP. This post is based on their Sidley Austin memorandum.

Three years after our first survey documented the reemergence of contingent value rights (“CVRs”) in public life sciences M&A, 2025 marked their biggest year yet. A record 28 of 59 announced public life sciences transactions (approximately 47%) included a CVR, the highest ever annual count and share. The concentration was even greater in biopharma, where over half of announced public biopharma transactions included a CVR. CVRs also moved upmarket and carried more of the potential deal value. More than a third (approximately 37%) of the $1 billion-plus life sciences CVR deals in our full dataset (going back to 2008) were announced in 2025 and the first half of 2026. Moreover, nearly half of all life sciences CVR deals above $3 billion were announced in 2025 and the first half of 2026, with two additional CVR deals over $3 billion announced since June 30, 2026. In addition, 2025 produced more CVRs with maximum potential payouts exceeding 100% of the upfront consideration than any other year surveyed.

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The Risks of Designated Directorships—Current Guidance for Directors and Those Who Appoint Them

Posted by Brian Massengill, Craig Frame, and Andrew Noreuil, Mayer Brown LLP, on
Sunday, September 20, 2026
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Brian Massengill, Craig Frame, and Andrew Noreuil are Partners at Mayer Brown LLP. This post is based on a Mayer Brown memorandum by Mr. Massengill, Mr. Frame, Mr. Noreuil, and Andrew Stanger, and is part of the Delaware Law Series; links to other posts in the series are available here.

Significant stockholders of Delaware corporations may negotiate for the right to designate one or more directors of their choosing to the board. While such a designation right may be extremely valuable, several recent Delaware Chancery Court opinions highlight the risks of personal liability for the designated directors and the stockholders who appoint them. This Legal Update provides guidance on how designated directors and stockholders can navigate these risks, particularly in light of the 2025 amendments to Delaware General Corporation Law (DGCL) §144.

Background and Key Principles

Fiduciary Duties of Designated Directors: Directors appointed by a specific stockholder or a class of stockholders are often referred to as “constituency directors,” “designated directors,” or “blockholder directors,” among other terms. The right to appoint such directors might appear in the certificate of incorporation or in a separate governance agreement. [1] A company might grant director designation rights to its venture capital, private equity, or strategic investors, as well as to stockholders as part of a shareholder activist proxy contest settlement. Often, the designated directors are principals, officers, or employees of the appointing stockholder; however, they can also be individuals independent of both the corporation and the appointing stockholder.

Holders of designation rights might hold the mistaken belief that a designated director is intended to serve as their representative, who in addition to providing information and monitoring corporate developments, should vote in their interests. In reality, Delaware courts have long held that a designated director owes fiduciary duties of care and loyalty to the corporation and all the stockholders and not to any subset of stockholders, including the stockholders that appointed the director. Specifically, directors owe fiduciary duties to “the stockholders in the aggregate in their capacity as residual claimants, which means the undifferentiated equity as a collective, without regard to any special rights.” [2] In other words, a director’s duties run to “the entity and the entire body of stockholders generally rather than to individual stockholders or stockholder subgroups.”[3]

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Forced CEO Departures

Posted by Matteo Tonello, The Conference Board, on
Saturday, September 19, 2026
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Matteo Tonello is the Head of Data Benchmarking and Analytics at The Conference Board, Inc. This post is based on a report developed by The Conference Board in partnership with ESGAUGE, Russell Reynolds Associates, and Rutgers Law School’s Center for Corporate Law and Governance, and authored by Ariane Marchis-Mouren, Senior Researcher, Corporate Governance and Keil Lapore, Program Manager, Corporate Governance at The Conference Board.

This report examines forced CEO departures in the Russell 3000 and S&P 500 from 2024 through August 2026, focusing on differences by index, business sector, company size, and the circumstances driving board-initiated leadership changes.

Trusted Insights for What’s Ahead®

  • Roughly 1 in 7 CEO succession cases were forced in both 2024 and 2025. The Russell 3000 recorded 49 forced departures in 2024 and 55 in 2025, while the S&P 500 increased from seven to 10; in 2026 so far, forced departures account for a smaller share of CEO succession cases than the prior two years.
  • While there is no single industry profile for forced CEO turnover, health care accounts for the largest share so far in 2026. The sector represents 35% of all Russell 3000 forced departures year to date, after consumer discretionary recorded the highest number of forced departures in 2025.
  • Company size was not a consistent predictor of forced CEO turnover. Elevated rates appeared across the revenue spectrum, suggesting succession risk is driven more by company-specific performance and strategic circumstances than by scale alone.
  • Underperformance became a more prominent driver of forced departures in 2025. It rose from 31% of Russell 3000 forced departures in 2024 to 44% in 2025 and remains the largest reason category through August 2026.
  • Activist pressure was a notable factor among S&P 500 forced departures. It accounted for eight of 19 departures across the period, reinforcing the importance of boards independently testing strategy, capital allocation, and leadership effectiveness before external pressure forces the issue.
  • Successfully navigating potential forced departures requires proactive management. Boards can focus on establishing the criteria for when underperformance becomes a leadership issue, regular maintenance of their succession plan, and reaching out to shareholders to keep abreast of possible concerns or issues.

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