Special Equity Awards: Making the Case to Shareholders

Posted by Dan Pliskin, Jim Barnett, and Rachel Harrison, Aon plc, on
Thursday, November 12, 2026
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Dan Pliskin is a Partner, Jim Barnett is an Associate Partner, and Rachael Harrison is a Director at Aon plc. This post is based on their Aon plc memorandum.

A Roadmap for Compensation Committees and Management Teams

A special equity award reflects a board’s judgment that circumstances warrant a separate opportunity to address a particular business need that the regular compensation program cannot adequately address. This exercise of judgment requires the board to demonstrate that the decision was well considered and in shareholders’ interests.

The 2026 proxy season showed why that matters. Say on pay results were strong across the market, yet one time awards were a key factor among companies that received weak or failed support. This memorandum summarizes what proxy advisors and investors expect of these awards and sets out a five step roadmap for compensation committees and management teams, from initial design through the say on pay vote.

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Informed Short Selling Is Not Concentrated in Family Firms

Posted by Ferhat Akbas (University of Illinois Chicago), Minjie Huang (University of Louisville, and Felix Meschke (University of Kansas), on
Thursday, November 12, 2026
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Ferhat Akbas is the Constantin Mihas Chair and Professor of Finance at the University of Illinois Chicago (UIC), Minjie Huang is Associate Professor of Finance at the University of Louisville, and Felix Meschke is Associate Professor of Finance at the University of Kansas School of Business. This post is based on their recent article, forthcoming in the Journal of Finance.

Should unusually heavy short selling before disappointing earnings raise greater concern about an information leak at a family firm? An influential study in the Journal of Finance by Ronald Anderson, David Reeb, and Wanli Zhao answered yes. The authors found that short selling predicted returns in family firms but not in nonfamily firms. They also reported almost 17 times more abnormal short selling before negative earnings announcements in family firms than in nonfamily firms and suggested that disputes within controlling families could give short sellers access to private information.

Yet short sellers are skilled at analyzing companies and uncovering problems that other investors miss. That skill should be useful in nonfamily firms, too.

In our recent study in the Journal of Finance, we revisit those findings. Anderson and Reeb made their family-firm data available, allowing us to study the same firms and period using a more comprehensive record of short-selling activity. We find that short selling predicts returns in both family and nonfamily firms. We also find no evidence that pre-announcement short selling is more sensitive to negative earnings news in family firms.

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Preferred Equity’s Growing Role in CFOs

Posted by John Timperio, Chris Duerden, and Eric Zeng, Dechert LLP, on
Thursday, November 12, 2026
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John Timperio and Chris Duerden are Partners, and Eric Zeng is a Counsel at Dechert LLP. This post is based on a Dechert memorandum by Mr. Timperio, Mr. Duerden, Mr. Zeng, Jay Alicandri, Anthony Lombardi, and John McGrath.

I. Introduction

This is the second in our series of follow-up pieces to CFO Market Update 2026, each taking a closer look at a topic we flagged only briefly in that broader overview. Last month, we focused on LP-led CFOs and the particular considerations that arise when a sponsor does not control the underlying fund GPs (LP-Led CFOs: Their Rise and Key Considerations). This installment turns to a different thread from the same overview: the growing use of preferred equity within the CFO equity tranche.

A collateralized fund obligation, or CFO, finances a portfolio of fund interests by issuing tranches of rated debt alongside an equity tranche that absorbs first losses and captures the residual upside once the rated debt has been serviced. As we noted in our July 2026 OnPoint, raising that equity tranche has historically been one of the more significant execution constraints in a CFO transaction, and that constraint has only grown more acute as CFO issuance volumes have risen sharply in recent years. Sponsors have increasingly found it harder to execute a CFO efficiently by funding the entire equity tranche themselves, or by placing it primarily with existing relationship investors on a pure common basis. Preferred equity, sitting between the rated debt and the unrated common equity, has emerged as the market’s answer to that problem. This OnPoint looks at why CFO sponsors are turning to preferred equity, the commercial terms that recur across the deals we see, and the legal considerations that come with layering a preferred position into a rated securitization-style vehicle. We share our own views, informed by our work for CFO sponsors and third-party capital providers on both sides of these transactions.

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Lipp v. Mixedbread AI Addresses How a Company Can End an Advancement Obligation

Posted by Elizabeth Y. Austin and Ryan D. Fane, Sidley Austin LLP, on
Wednesday, November 11, 2026
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Elizabeth Y. Austin is a Partner and Ryan D. Fane is an Associate at Sidley Austin LLP. This post is based on their Sidley memorandum, and is part of the Delaware Law Series; links to other posts in the series are available here.

Advancement obligations can arise when a company asserts affirmative defenses or counterclaims in litigation with former officers and directors. In an August 10, 2026 report in Lipp v. Mixedbread AI, Inc. (which remains subject to final ruling from the Court of Chancery), Magistrate in Chancery David Hume IV considered whether a company can avoid those obligations by changing course after a former officer demands advancement. The report concluded that Mixedbread’s verified interrogatory responses, reinforced by representations in the advancement proceeding, ended advancement for three defenses even without a timely pleading amendment. Advancement was not terminated for a fourth defense because Mixedbread continued to rely on the former officer’s alleged failure to perform his chief technology officer role.

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2026 Annual Corporate Directors Survey: Governing What’s Next

Posted by Ray Garcia, Paul DeNicola, and Ariel Smilowitz, PricewaterhouseCoopers LLP, on
Tuesday, November 10, 2026
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Ray Garcia is a Partner, Paul DeNicola is a Principal, and Ariel Smilowitz is a Director at PricewaterhouseCoopers LLP. This post is based on their PwC memorandum.

Key takeaways:

  • Boards recognize growing capability gaps, but recruitment priorities still favor cultural fit. Among directors who believe a colleague should be replaced, 39% cite insufficient expertise, up from 21% last year. Yet just 27% rate specialized expertise as very important when evaluating new directors, compared with 81% for alignment with the board’s culture and ways of working. The gap is especially relevant as boards face rapidly changing capability needs, including AI.
  • Core board processes are not consistently delivering the candor and information directors need. Nearly three-quarters (73%) say board assessments could be improved, almost half (49%) say they are not sufficiently candid, and 82% see opportunities to improve board materials. The findings point to a need for more honest evaluation, sharper information, and stronger follow-through.
  • Directors see substantial room to strengthen strategy oversight. More than four in five (81%) say their boards can challenge management more effectively on strategy. Directors point to clearer metrics, alternative strategic options and trade-offs, scenario analysis, and peer benchmarking as ways to deepen that challenge and build greater confidence in strategic decisions.

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Treasury Proposes Outbound Investment Regulations Under the COINS Act

Posted by Sam Kleiner, Keith Shomig, and Quinn Dang, Paul Hastings LLP, on
Tuesday, November 10, 2026
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Sam Kleiner and Keith Shomig are Partners and Quinn Dang is an Of Counsel at Paul Hastings LLP. This post is based on their Paul Hastings memorandum.

On October 22, 2026, the U.S. Department of the Treasury (Treasury) released a notice of proposed rulemaking (the Proposed Rule) to implement the Comprehensive Outbound Investment National Security Act of 2025 (the COINS Act), together with a Fact Sheet and FAQs.[1] The Proposed Rule effectively builds on the Outbound Investment Security Program (the Existing Rule), which prohibits U.S. persons from making certain technology related investments with respect to China. In particular, the Proposed Rule would expand the program’s technological and geographic scope. Secretary of the Treasury Scott Bessent stated that the Proposed Rule “would strengthen the existing Outbound Investment Security Program to prevent our adversaries from using U.S. investment to develop critical technologies that threaten U.S. national security.”[2] Comments are due December 7, 2026, and the Existing Rule remains in effect until a final rule takes effect.[3]

The most notable aspects of the Proposed Rule are with respect to artificial intelligence (AI) and biotechnology. The Existing Rule treats certain investments in AI as prohibited and others as subject to notification. The Proposed Rule would eliminate the notification category, effectively prohibiting all covered investments (i.e., those involving covered foreign persons) in companies that develop AI systems. The Proposed Rule would also add biotechnology as a prohibited sector, even though the COINS Act does not name that sector.

In this client alert, we discuss the key provisions of the Proposed Rule and offer important takeaways for multinational companies and investors.

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Shareholder Engagement: State of Play — Key Takeaways From Recent Panel

Posted by Merel Spierings (Society for Corporate Governance), Shaun Mathew (Kirkland & Ellis LLP), and Sophia Hudson (Kirkland & Ellis LLP), on
Monday, November 9, 2026
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Merel Spierings is Vice President, Programming & Content, at the Society for Corporate Governance, and Shaun Mathew and Sophia Hudson are Partners at Kirkland & Ellis LLP. This post is based on a Society for Corporate Governance and Kirkland & Ellis panel discussion by Ms. Spierings, Mr. Mathew, Ms. Hudson, Randi Morrison, General Counsel and Chief Knowledge Officer, and Mannat Mehta, Manager, Programming & Content, both at the Society for Corporate Governance.

The Society for Corporate Governance, in collaboration with Kirkland & Ellis LLP, convened a hybrid panel discussion on Shareholder Engagement: State of Play on September 17, 2026. The discussion highlighted, among other things, that uncertainty around the future of the shareholder proposal process, together with greater fragmentation in voting and investor perspectives—both within major institutional investors and across the broader shareholder base—makes it more important than ever for companies to know their shareholders, understand the different considerations that drive their investment and voting decisions, and identify and cultivate relationships with investors who understand and support the company’s strategy and can serve as credible advocates when needed.

Below are the key takeaways from the session.

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Does Company Culture Deserve a Seat at the Deal Table?

Posted by Lucy Carruthers, Severin Pretzel, and Laura Llangozi, Freshfields Bruckhaus Deringer LLP, on
Sunday, November 8, 2026
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Lucy Carruthers is a Senior Associate, Severin Pretzel is a Principal Associate, and Laura Llangozi is a Senior Knowledge Lawyer at Freshfields Bruckhaus Deringer LLP. This post is based on a Freshfields memorandum by Ms. Carruthers, Mr. Severin, Ms. Llangozi, and Tuna Tanik.

The global M&A landscape is becoming more complex, with both buyers and sellers operating in less stable and more dynamic business environment. 

Modern M&A requires boards to consider transactions holistically, taking into account the value case not only from a pricing perspective but also from a cultural, operational and reputational perspective. Unlocking the full potential of a transaction relies just as much on bringing people together as it does on financial modeling and rigorous contract review. 

Today, there is a clear shift underway: deal teams are increasingly assessing organisational culture, complementing traditional diligence processes with deliberate, structured insights into key management and how teams collaborate.

By taking a proactive approach to cultural integration early in the deal lifecycle, buyers are better positioned to protect value, accelerate integration, and build a unified platform for growth, whereas sellers are better positioned to negotiate transitional arrangements, negotiate appropriate management incentivization structures and take steps to protect deal certainty.

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Proposed SEC Rule on Rescinding Shareholder Proposal Rule 14a-8: A Comment from the National Association of Manufacturers

Posted by Ted Allen and Jake Kuhns, National Association of Manufacturers, on
Saturday, November 7, 2026
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Ted Allen is a Senior Director and Jake Kuhns is a Vice President at National Association of Manufacturers. This post is based on a comment letter by the National Association of Manufacturers submitted to the U.S. Securities and Exchange Commission regarding the proposed rescission of Rule 14a-8 governing shareholder proposals and amendments to Rule 14a-4.

This post is based on a comment letter submitted to the SEC regarding the SEC’s proposal on Rescinding Shareholder Proposal Rule 14a-8, by the National Association of Manufacturers. Below is the text of the letter with minor adjustments to eliminate the correspondence-related parts.

On behalf of the 13 million people who make things in America, the National Association of Manufacturers (“NAM”) is writing in response to the Commission’s proposed rescission of Rule 14a-8 to offer suggestions to facilitate a smoother transition to state oversight of shareholder proposals.

As the largest manufacturing association in the U.S., the NAM’s membership includes businesses of all sizes, across all industrial sectors, and in all 50 states. Manufacturers collectively contribute $2.94 trillion to the U.S. economy, and right sized, commonsense governance laws and regulations are critical to sustaining the manufacturing strength that underpins our nation’s prosperity.

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SEC Sets 2027 Exam Priorities with Focus on Conflicts, Complex Products, and Technology

Posted by Chuck Daly, Ranah Esmaili, and Lara Mehraban, Sidley Austin LLP, on
Saturday, November 7, 2026
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Chuck Daly, Ranah Esmaili, and Lara Mehraban are Partners at Sidley Austin LLP. This post is based on a Sidley memorandum by Mr. Daly, Ms. Esmaili, Ms. Mehraban, Kathryn Alessi, Hardy Callcott, and Kenyon Hall.

On October 23, 2026, the U.S. Securities and Exchange Commission (SEC) Division of Examinations (EXAMS) published its annual examination priorities (2027 Priorities)[1] , outlining areas of perceived risk and topics on which EXAMS will focus in the new fiscal year.

Substantively, many core themes from last year’s priorities carry over. The 2027 Priorities again underscore the importance of registrants’ standards of care, information security, and operational resiliency as well as the risks presented by alternative and complex products and investment strategies. The 2027 Priorities also (i) reflect an increased focus on artificial intelligence (AI), which the report refers to as “super intelligence” or SI and (ii) introduce certain new areas of focus, such as advisers’ reliance on proxy advisory firms and compliance with new rules or amendments to existing rules. This Sidley Update summarizes the examination focus areas across investment advisers, investment companies, broker-dealers, and other market participants, and it notes where the 2027 Priorities depart from the prior year’s.[2]

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