Corporate Redomiciliation to Texas Continues Despite Proxy Advisor Scrutiny

Chris Brindisi is a Partner and Ryan Peterson is a Consultant at Pay Governance LLC. This post is based on their Pay Governance memorandum.

KEY TAKEAWAYS

  • Redomiciliation to Texas was on the rise in 2026. Recent Texas legal reforms and business court infrastructure have made the state an attractive alternative to Delaware for corporate domiciles.
  • Proxy advisors remain skeptical of domicile moves to Texas. ISS and Glass Lewis have focused on concerns about loss of shareholder leverage, an untested legal framework, potential dilution of shareholder rights, and the lack of clear company-specific rationale when opposing proposals to move domicile to Texas.
  • Major institutional investors have been receptive to Texas redomiciliation. BlackRock, State Street, and Vanguard supported most of the proposals to redomicile in Texas during the 2026 proxy season.
  • Texas redomiciliation proposals have generally passed but not overwhelmingly. Approximately 80% of 2026 Texas redomiciliation proposals have passed to date despite proxy advisor opposition, with support levels varying meaningfully across companies.
  • Company-specific context matters. Outlier results suggest that domicile history, controlled company status, vote thresholds, and prior shareholder dissatisfaction—particularly around executive compensation—can impact outcomes.
  • Compensation committees should be prepared for heightened governance scrutiny following domicile moves outside of Delaware. Strong pay-for-performance alignment, clear disclosure, and credible governance messaging may become more consequential when a redomiciliation is viewed as enhancing board discretion and lessening shareholder remedies.

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Weekly Roundup: September 25 – October 1, 2026


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This roundup contains a collection of the posts published on the Forum during the week of September 25 – October 1, 2026.

SEC Issues “Innovation Exemption” for Tokenized Securities


2026 Say on Pay Recap: Strong Results and Evolving Voting Dynamics


Staying the Course: The State of 2026 U.S. Sustainability Reports


SEC Proposes to Modernize Proxy Solicitation Rules


Primer on Corporate Political Activity: The Risks Companies Face from Political Spending, and How to Manage Them


M&A, Activism and Corporate Governance



Court of Chancery Enforces Earnout Procedural Protections


2026 U.S. Board Index Highlights


Merger Agreements in the Verisk Ruling


Statement by Chairman Atkins on Expanding Retail Access to Private Markets


Statement by Chairman Atkins on Expanding Retail Access to Private Markets

Paul S. Atkins is the Chairman of the U.S. Securities and Exchange Commission. This post is based on his recent statement. The views expressed in the post are those of Chairman Atkins and do not necessarily reflect those of the Securities and Exchange Commission or its staff.

Good morning, ladies and gentlemen. And thank you for joining us today for this public  meeting of the Securities and Exchange Commission under the Government in the Sunshine Act.

We have three items on today’s agenda. First, the Commission will consider whether to issue a release proposing rule amendments expanding the circumstances under which a registered investment adviser may receive performance-based compensation.  Second, we will consider whether to issue a release proposing amendments to the rule that allows regulated closed-end funds to make repurchase offers to shareholders at net asset value at periodic intervals.  Finally, we will consider whether to issue five notices that the Commission is considering regarding whether to designate by order certain certifications, designations, or credentials as qualifying natural persons for accredited investor status.

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Merger Agreements in the Verisk Ruling

Polina Demina is a Special Counsel, and Rishab Kumar and Miguel Vega are Partners at Cooley LLP. This post is based on their Cooley memorandum and is part of the Delaware law series; links to other posts in the series are available here.

The Delaware Court of Chancery’s recent decision in Verisk Analytics, Inc. v. ExactLogix, Inc. d/b/a AccuLynx.com sheds light on how the Delaware courts will interpret contractual language, balance equities and grant specific performance. The outcome of this case should move the specific performance provision out of the merger agreement’s “boilerplate” section and into the boardroom.

Vice Chancellor Bonnie W. David held that Verisk could not terminate its $2.35 billion agreement to acquire AccuLynx after a Federal Trade Commission (FTC) second request pushed the transaction beyond its outside date. The court determined that, under the language of the negotiated contract, Verisk’s willful conduct was the primary cause of the delay in obtaining antitrust approval and, as such, ruled that Verisk’s termination was not valid, and ordered Verisk to continue using commercially reasonable efforts to obtain Hart-Scott-Rodino (HSR) Act clearance and close the transaction if the FTC approves it.

The striking part is what the court did not find. This was not a classic buyer’s-remorse case where the purported termination was a way to get out of a deal that the buyer regretted post-signing. The court found virtually no evidence that Verisk intended to scuttle the acquisition. Verisk met with the FTC nearly 30 times, hired experienced advisers and lobbyists, and spent almost $8 million responding to the agency.

Verisk lost anyway. Under the language the parties negotiated in the merger agreement, an intentional business decision terminating negotiation of an enhanced integration with a competitor of AccuLynx, was enough to eliminate Verisk’s right to validly terminate the merger agreement if that decision was the “primary cause” of the failed closing condition. This was so, even if that decision was not made in bad faith, not an action constituting a breach of the agreement and not undertaken as a deliberate effort to kill the deal.

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2026 U.S. Board Index Highlights

George Anderson and Rebecca Thornton are both Partners and Co-Leaders of the Board practice at Spencer Stuart. This post is based on a Spencer Stuart memorandum by Mr. Anderson, Ms. Thornton, and Ann Yerger, all at Spencer Stuart.

Board turnover and refreshment: What’s changed?

Refreshment continues to evolve gradually. While fewer boards rely on mandatory retirement policies, they are strengthening how they assess board effectiveness.

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Court of Chancery Enforces Earnout Procedural Protections

David A. Katz, Kevin S. Schwartz, and Jenna E. Levine are Partners at Wachtell Lipton Rosen & Katz. This post is based on a Wachtell Lipton memorandum by Mr. Katz, Mr. Schwartz, Ms. Levine, and Zachary David, all at Wachtell Lipton.

The Delaware Court of Chancery recently ordered a buyer to provide information necessary for sellers to participate in a negotiated earnout process, while rejecting the buyer’s effort to impose unwritten limits on earnout credit. Winton v. The North Highland Co. LLC, C.A. No. 2026-0138-LWW (Del. Ch. Sept. 18, 2026). The decision illustrates how the implied covenant of good faith and fair dealing, though narrowly and carefully applied under Delaware law, can preserve a negotiated earnout procedure without expanding the parties’ substantive written bargain.

North Highland, the buyer, acquired technology consulting firm The Bridge for cash, rolled equity, and an earnout tied in part to profits from new buyer projects. The agreement required the seller representative to notify buyer of potential qualifying projects and the parties to agree on their classification before client proposals were submitted. But it didn’t specify how the representative would obtain the information to do so. After closing, the buyer withheld pricing data and provided curated reports that excluded projects it unilaterally deemed ineligible.

The Court held that the implied covenant of good faith and fair dealing required the buyer to furnish the information necessary to make the agreed process work. The buyer could not insist on compliance with a notification condition while withholding the means to satisfy it. Taking care to confine the remedy, however, the Court held that the seller representative was entitled solely to periodic reports and disclosures before proposal deadlines to ensure its ability to identify and thus benefit from eligible projects, but not unrestricted real-time access to the buyer’s systems. Specific performance was warranted because damages could not reliably compensate for the lost opportunity to participate in the project classification process.

The Court also rejected the buyer’s efforts to exclude projects based on factors outside the agreement, such as where the work was performed, whom it was for, or whether the seller company participated. The requirement that the parties mutually agree on whether a project qualified did not give the buyer a substantive veto; it required them to apply the contractual revenue-based test. Although the buyer retained discretion over which projects to pursue and how to operate the business, it could not deny earnout credit on extra-contractual grounds.

As we have previously written, precise drafting of earnout procedures can help avoid costly litigation. Parties should specify what information must be supplied and when, how disagreements will be resolved, and ensure that those implementing the agreement understand its terms. The implied covenant remains a narrow safeguard, not a substitute for negotiated protections. But buyers should expect Delaware courts to enforce the procedures they agreed to, continuing their tradition of faithfully interpreting contracts as written and only implying terms strictly necessary to give effect to the parties’ explicit contractual bargain.

The 2026 Revision of Japan’s Corporate Governance Code: Toward Sustainable Growth and Medium to Long-Term Corporate Value Enhancement

Haruyuki Yamashita is the Head of Policy Engagement at the Tokyo Stock Exchange New York Office.

Corporate governance codes have been adopted in jurisdictions around the world as frameworks that systematically set out governance disciplines for companies. The United Kingdom, which is generally regarded as having one of the longest histories in this area, developed its framework against the backdrop of a series of financial and corporate scandals in the late 1980s and early 1990s. The 1992 Cadbury Report, which made recommendations concerning the effectiveness and reporting responsibilities of boards and the role of external auditors, marked an important starting point. In 1998, the Financial Reporting Council (FRC) issued the Combined Code as a statement of best practices in corporate governance. The OECD Principles of Corporate Governance followed in 1999 and have since served as practical guidance for policymakers in both OECD member and non-member jurisdictions.

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M&A, Activism and Corporate Governance

Matthew L. Ploszek and Adam M. Sanchez are Partners at Cravath, Swaine & Moore LLP. This post is based on a Cravath memorandum by Mr. Ploszek, Mr. Sanchez, Kimberley S. Drexler, Evan A. Hill, and Margaret T. Segall.

Mergers & Acquisitions

Why Divisive Mergers Are Gaining Popularity and How They Can Be Structured to Mitigate Risk

Although spin-offs and asset sales are the traditional means of separating business lines, divisive mergers provide an attractive option for companies looking to achieve contractual continuity and a clean separation of assets and liabilities. A divisive merger is a statutory mechanism that divides a company’s assets, liabilities and operations among two or more recipient entities, functioning in the reverse direction of a traditional merger. A key advantage is that divisive mergers allow complex businesses to avoid individually assigning each contract and obligation as required in traditional asset sales. However, this flexibility comes with unique risks of fraudulent transfer challenges and remedies.

Certain states, including Texas and Delaware, have statutory schemes that allow for divisive mergers. Texas first codified divisive mergers by broadening its definition of “merger” to include the division of one domestic entity into two or more organizations.[1] Under Texas law, all types of corporate entities (including corporations, partnerships and limited liability companies) may undergo a divisive merger, and the resulting entities may take any corporate form, even one different from that of the original entity.[2] Delaware, by contrast, allows only limited liability companies, limited partnerships and limited liability limited partnerships to effect divisive mergers, and the resulting entities must be of the same form as the original dividing entity.[3] Corporate entities may first undergo a change of corporate form in order to take advantage of the Delaware divisive merger statutes. In both states, divisive mergers are not considered assignments of assets or liabilities, potentially allowing companies to avoid triggering anti-assignment provisions,[4] reduce transaction costs and bypass third-party waivers or consents.

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Primer on Corporate Political Activity: The Risks Companies Face from Political Spending, and How to Manage Them

Bruce F. Freed is president of the Center for Political Accountability; and William S. Laufer is the Julian Aresty Endowed Professor and Director of the Carol at The Wharton School at the University of Pennsylvania. This post is based on their recent memorandum.

The primer was jointly produced by the Center for Political Accountability, an NGO leading the effort to bring transparency and accountability to corporate political spending, and The Impact, Value, and Sustainable Business Initiative at the Wharton School of the University of Pennsylvania (Wharton Impact).

The primer couldn’t be more timely as K Street and corporate America brace for possible post-midterm congressional investigations.  Business leaders and general counsels know that their companies’ political donations will be in the crosshairs.

For companies, the primer comes out as corruption has become a major political issue. A recent Gallup survey found a record-high 89 percent in the U.S. responded that government corruption, of which political spending is a part, is widespread. (Record-High 89% in U.S. Say Government Corruption Widespread)

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SEC Proposes to Modernize Proxy Solicitation Rules

Sebastian Alsheimer is a Partner and Head of the Shareholder Engagement and Activism Defense Practice, J.T. Ho is a Partner, and Julie Rong is an Associate at Cleary Gottlieb Steen & Hamilton LLP. This post is based on a Cleary Gottlieb memorandum by Mr. Alsheimer, Mr. Ho, Ms. Rong, Francesca Odell, Lillian Tsu, and Shuangjun Wang, all at Cleary Gottlieb.

On September 16, 2026, the SEC proposed a package of amendments intended to modernize the federal proxy solicitation rules. The proposal targets several paper-era or otherwise outdated requirements whose original rationale has largely been displaced by EDGAR, electronic communication and other changes in market practice, and would simplify annual meeting and proxy production and create flexibility in transaction and meeting calendars. As Commissioner Mark Uyeda stated, “Eliminating duplicative or outdated requirements reduces unnecessary compliance costs for issuers and intermediaries.”

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