Yearly Archives: 2017

A Synthesized Paradigm for Corporate Governance, Investor Stewardship, and Engagement

Posted by Martin Lipton, Wachtell, Lipton, Rosen & Katz, on

Monday, April 17, 2017

Martin Lipton is a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy. This post is based on a Wachtell Lipton publication by Mr. Lipton, Steven A. Rosenblum, Karessa L. Cain, Sabastian V. Niles, Sara J. Lewis, and Anna Shifflet. Additional posts by Martin Lipton on short-termism and corporate governance are available here.

In September 2016, the International Business Council of the World Economic Forum published The New Paradigm: A Roadmap for an Implicit Corporate Governance Partnership Between Corporations and Investors to Achieve Sustainable Long-Term Investment and Growth. The New Paradigm conceives of corporate governance as a collaboration among corporations, shareholders and other stakeholders working together to achieve long-term value and resist short-termism. Around the same time, other groups of business leaders, corporate executives and investors published similar frameworks for long-term oriented governance, including the Commonsense Principles of Corporate Governance, the Business Roundtable’s Principles of Corporate Governance and the Investor Stewardship Group’s Stewardship Principles and Corporate Governance Principles.

From Boardroom to C-Suite: Why Would a Company Pick a Current Director as CEO?

Posted by David F. Larcker & Brian Tayan, Stanford University, on

Monday, April 17, 2017

Board monitoring, Boards of Directors, Executive performance, Executive turnover, Firm performance, Management, Market reaction, Succession
More from: Brian Tayan, David Larcker

David Larcker is Professor of Accounting at Stanford Graduate School of Business. This post is based on a paper authored by Professor Larcker and Brian Tayan, Researcher with the Corporate Governance Research Initiative at Stanford Graduate School of Business.

We recently published a paper on SSRN (From Boardroom to C-Suite: Why Would a Company Pick a Current Director as Its CEO?) that explores situations in which companies appoint a non-executive director from the board as CEO.

Many observers consider the most important responsibility of the board of directors its responsibility to hire and fire the CEO. To this end, an interesting situation arises when a CEO resigns and the board chooses neither an internal nor external candidate, but a current board member as successor.

Do Independent Directors Curb Financial Fraud? The Evidence and Proposals for Further Reform

Posted by Cindy A. Schipani, University of Michigan, on

Sunday, April 16, 2017

Cindy A. Schipani is Merwin H. Waterman Collegiate Professor of Business Administration and Professor of Business law at the University of Michigan Ross School of Business. This post is based on a recent article, forthcoming in the Indiana Law Journal, by Professor Schipani; H. Nejat Seyhun, Jerome B. & Eilene M. York Professor of Business Administration and Professor of Finance at University of Michigan Ross School of Business; and Sureyya Burcu Avci, University of Michigan Ross School of Business.

Around the turn of the millennium, a slew of corporate scandals involving outright fraud, including those at Enron, WorldCom, Global Crossing, and Adelphia Communications, among others, [1] plagued capital markets and shook investor confidence to the core. Faced with this runaway corporate malfeasance by managers of large firms around the turn of the millennium, Congress decided to discipline the managers by increasing the supervisory role of the board of directors. The Sarbanes-Oxley Act of 2002 (“SOX” or the “Act”), [2] was passed by Congress in an effort “[t]o protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes.” [3]

Lowering the Bar on Bad Faith Claims in MLP Transactions? Brinckerhoff v. Enbridge Energy

Posted by Gail Weinstein & Warren S. de Wied, Fried, Frank, Harris, Shriver & Jacobson LLP, on

Saturday, April 15, 2017

Conflicts of interest, Delaware cases, Delaware law, Fairness review, Fiduciary duties, Liability standards, Mergers & acquisitions, Partnerships, Repurchases, Safe harbor
More from: Gail Weinstein, Warren de Wied, Fried Frank

Gail Weinstein is Senior Counsel and Warren S. de Wied is a Partner at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank publication by Ms. Weinstein, Mr. de Wied, Philip Richter, Steven Epstein, Robert C. Schwenkel, and Scott B. Luftglass. This post is part of the Delaware law series; links to other posts in the series are available here.

In Brinckerhoff v. Enbridge Energy Company, Inc., the plaintiff, an investor in the Enbridge Energy Delaware master limited partnership (the “MLP”), challenged a $1.2 billion transaction between the MLP and the controlling parent corporation (“Parent”) of the MLP’s general partner (the “GP”). The factual context was the repurchase by the MLP of an asset it had previously sold to Parent—with the repurchase at a significantly higher price, despite strong indications that the value of the asset had declined, and without the GP or its banker having considered the earlier sale as a comparable transaction. The Delaware Supreme Court, in an opinion written by Justice Seitz (March 20, 2017), reversed the Court of Chancery’s dismissal of the case.

The Conflict Minerals Rule—Litigation Is Over, But the Drama Continues

Posted by Michael R. Littenberg, Ropes & Gray LLP, on

Friday, April 14, 2017

Accounting, Compliance & ethics, Compliance and disclosure interpretation, Conflict minerals, Corporate Social Responsibility, Disclosure, Dodd-Frank Act, International governance, SEC, SEC rulemaking, Securities regulation, U.S. federal courts
More from: Emily Burke, Julia Chen, Michael Littenberg, Ropes & Gray

Michael R. Littenberg is a partner at Ropes & Gray LLP. This post is based on two Ropes & Gray publications by Mr. Littenberg, Julia L. Chen, and Emily K. Burke.

After 1,627 days and enough law firm memos to deforest a small country, the litigation relating to the Conflict Minerals Rule came to an end [April 3, 2017]. In this post, we discuss what this means for calendar year 2016 compliance, as well as the many other moving pieces relating to the Rule.

The Court’s Final Judgment

[April 3, 2017], Judge Ketanji Brown Jackson, a District Court Judge in the District of Columbia, entered a final judgment in the Conflict Minerals Rule case. In a short three paragraph opinion, the District Court (1) declared that Section 1502 of Dodd-Frank, Rule 13p-1 thereunder and Form SD violate the First Amendment to the extent that the statute and the rule require companies to report to the SEC and state on their websites that any of their products “have not been found to be ‘DRC conflict free,’” (2) held unlawful and set aside the Rule to the extent that it requires companies to report to the SEC and state on their websites that any of their products “have not been found to be ‘DRC conflict free’” and (3) remands to the SEC, to take action in furtherance of the Court’s decision.

The Law and Brexit XI

Posted by Thomas J. Reid, Davis Polk & Wardwell LLP, on

Friday, April 14, 2017

Banks, Brexit, Corporate forms, Cross-border transactions, EU, Europe, Financial institutions, Financial regulation, International governance, Jurisdiction, Mergers & acquisitions, Securities regulation, UK
More from: Thomas Reid, Davis Polk

Thomas J. Reid is Managing Partner of Davis Polk & Wardwell LLP. This post is based on a Davis Polk memorandum. Additional posts on the legal and financial impact of Brexit are available here.

On March 29th, 2017, the UK delivered a letter from the UK Prime Minister to the President of the European Council, Donald Tusk, which gave notice of the UK’s intention to withdraw from the European Union (“EU”) in accordance with Article 50 of the Treaty on European Union. Thus the starting gun has been fired on two years of negotiation in which both sides will attempt to agree the terms of exit for the UK and a framework for a future trading relationship. The task before the two sides is complex, with sensitive discussions anticipated on a possible transition deal, obligations of the UK to contribute to the EU budget, the status of UK and EU citizens post-Brexit and the legal jurisdiction of the EU courts.

Weekly Roundup: April 7–13, 2017

Posted by HLS Forum on Corporate Governance and Financial Regulation, on

Friday, April 14, 2017

Weekly Roundup
More from:

This roundup contains a collection of the posts published on the Forum during the week of April 7–13, 2017.

Director Appointments—Is It “Who You Know”?

Posted by Ralph A. Walkling, Drexel University, on Friday, April 7, 2017

Tags: Agency costs, Agency model, Board composition, Boards of Directors, Director qualifications, Diversity, Market reaction, Outside directors, Shareholder voting, Social capital, Social networks

Delaware Supreme Court Affirmation of Merger Termination Based on Failure to Satisfy Tax Covenant

Posted by Scott Barshay and Ross Fieldston, Paul, Weiss, Rifkind, Wharton & Garrison LLP, on Friday, April 7, 2017

Tags: Acquisition agreements, Covenants, Delaware cases, Delaware law, Internal Revenue Code, Merger litigation, Mergers & acquisitions, Taxation, Termination

Supreme Court Certiorari on Non-Disclosure of “Known Trends or Uncertainties” in SEC Filings

Posted by David M.J. Rein and Hao Tschang, Sullivan & Cromwell LLP, on Saturday, April 8, 2017

Tags: Accounting, Class actions, Disclosure, Filings, Liability standards, Management, Regulation S-K, Rule 10b-5, SEC, SEC enforcement, Section 10(b), Securities enforcement, Securities fraud, Securities regulation, Supreme Court, U.S. federal courts

Cayman Merger Take-Privates from NYSE and NASDAQ—2016 Year in Review

Posted by Gary Smith and Ramona Tudorancea, Loeb Smith, on Sunday, April 9, 2017

Tags: Acquisition agreements, Cayman Islands, Going private, International governance, IPOs, Mergers & acquisitions, NASDAQ, NYSE

Voluntary Corporate Governance, Proportionate Regulation, and Small Firms: Evidence from Venture Issuers

Posted by Anita Anand, University of Toronto, on Monday, April 10, 2017

Tags: Accounting standards, Audit committee, Boards of Directors, Canada, Capital formation, Compliance & ethics, Disclosure, International governance, Oversight, Reporting regulation, Small firms, SOX, Venture capital firms

Should Executive Pay Be More “Long-Term”?

Posted by Joseph E. Bachelder, McCarter & English LLP, on Monday, April 10, 2017

Tags: Bonuses, Clawbacks, Earnouts, Equity-based compensation, Executive Compensation, Incentives, Long-Term value, Management, Pay for performance, Stock options

Dealmakers Expect a “Trump Bump” on M&A

Posted by Steven Lipin, Brunswick Group LLP, on Monday, April 10, 2017

Tags: Antitrust, Cross-border transactions, Donald Trump, Mergers & acquisitions, Proxy fights, Securities regulation, Settlements, Shareholder activism, Surveys, Taxation

A Legal Theory of Shareholder Primacy

Posted by Robert J. Rhee, University of Florida, on Tuesday, April 11, 2017

Tags: Agency model, Fiduciary duties, Incentives, Institutional Investors, Legal systems, Management, Market efficiency, Shareholder rights, Shareholder value

Earnouts: Devil in the Details

Posted by Daniel E. Wolf, Kirkland & Ellis LLP, on Tuesday, April 11, 2017

Tags: Acquisition agreements, Contracts, Delaware cases, Delaware law, Earnouts, Firm valuation, Merger litigation, Mergers & acquisitions

On Regulatory Reform, Better Process Means Better Progress

Posted by Mark J. Costa, Eastman Chemical Co. and Business Roundtable, on Tuesday, April 11, 2017

Tags: Accountability, Business Roundtable, Disclosure, Dodd-Frank Act, Donald Trump, Financial regulation, Management, Market efficiency, Public interest, SEC rulemaking, Securities regulation, Taxation, Transparency

Equity Suppliers in Bank Regulation

Posted by Yesha Yadav, Vanderbilt Law School, on Wednesday, April 12, 2017

Tags: Asset management, Bailouts, Banks, Blockholders, Capital formation, Dodd-Frank Act, Federal Reserve, Financial crisis, Financial institutions, Financial regulation, Fund managers, Institutional Investors, Mutual funds, Oversight, Pension funds, Risk-taking, Skin in the game, Systemic risk, Too big to fail

Tread Lightly When Tweaking Sarbanes-Oxley

Posted by Michael W. Peregrine, McDermott Will & Emery LLP, on Wednesday, April 12, 2017

Tags: Accounting, Corporate fraud, Disclosure, Dodd-Frank Act, Donald Trump, External auditors, Financial regulation, Financial reporting, Investor protection, Oversight, Sarbanes–Oxley Act, Securities regulation, SOX, SOX Section 404, Transparency

Corporations and Human Life

Posted by Frank Partnoy, University of San Diego, on Thursday, April 13, 2017

Tags: Accountability, Boards of Directors, Compliance & ethics, Corporate governance, Corporate liability, Liability standards, Oversight, Public interest, Risk, Risk management

Is Executive Pay Broken?

Posted by Rupal Patel and David Ellis, EY, on Thursday, April 13, 2017

Tags: Bonuses, Compensation committees, Equity-based compensation, Executive Compensation, Executive performance, Firm performance, Incentives, Management, Pay for performance, Say on pay, Stakeholders

Is Executive Pay Broken?

Posted by Rupal Patel and David Ellis, EY, on

Thursday, April 13, 2017

Bonuses, Compensation committees, Equity-based compensation, Executive Compensation, Executive performance, Firm performance, Incentives, Management, Pay for performance, Say on pay, Stakeholders
More from: David Ellis, Rupal Patel, EY

Rupal Patel and David Ellis are partners at EY. This post is based on an EY publication by Ms. Patel and Mr. Ellis. Related research from the Program on Corporate Governance about CEO pay includes Paying for Long-Term Performance (discussed on the Forum here) and the book Pay without Performance: The Unfulfilled Promise of Executive Compensation, both by Lucian Bebchuk and Jesse Fried.

In recent months executive pay has received an unprecedented level of attention from a wide range of stakeholders. While Remuneration Committees, executives and investors in many businesses may feel that current pay structures are working well and fit for purpose, the intensity of noise we are experiencing tells us that it is no longer reasonable for any organisation to assume that there is nothing it needs to be concerned about.

First indications from the 2017 AGM season show that in many cases the noise in the system is now turning into real opposition. Many would seek to explain away this opposition as being specific to a business, or focussed on a discrete issue. We at EY believe that this is now wishful thinking.

Corporations and Human Life

Posted by Frank Partnoy, University of San Diego, on

Thursday, April 13, 2017

Accountability, Boards of Directors, Compliance & ethics, Corporate governance, Corporate liability, Liability standards, Oversight, Public interest, Risk, Risk management
More from: Frank Partnoy

Frank Partnoy is George E. Barrett Professor of Law and Finance and Director of the Center for Corporate and Securities Law at University of San Diego School of Law. This post is based on his recent article, forthcoming in the Seattle University Law Review.

Here is a surprisingly difficult yet largely unexamined capital budgeting problem: imagine a corporate decision that will generate $5 million of profit today but result in the loss of one human life in ten years. This example is not abstract: corporations in a range of businesses engage in decisions and oversight that affect risk to human life: consider autonomous cars, airbags, pharmaceuticals, medical devices, and many categories of consumer products. Historically, regulation and tort liability have addressed corporate liability for the loss of human life, but the corporate governance literature, and corporate law, have had little to say.

Tread Lightly When Tweaking Sarbanes-Oxley

Posted by Michael W. Peregrine, McDermott Will & Emery LLP, on

Wednesday, April 12, 2017

Accounting, Corporate fraud, Disclosure, Dodd-Frank Act, Donald Trump, External auditors, Financial regulation, Financial reporting, Investor protection, Oversight, Sarbanes–Oxley Act, Securities regulation, SOX, SOX Section 404, Transparency
More from: Michael Peregrine, Thomas Murphy, McDermott Will & Emery

Michael W. Peregrine is a partner at McDermott Will & Emery LLP. This post is based on an article by Mr. Peregrine; his views do not necessarily reflect the views of McDermott Will & Emery or its clients. Thomas J. Murphy assisted in the preparation of this post.

Nascent discussions about repealing discrete sections of the Sarbanes Oxley Act should be monitored closely by proponents of effective corporate governance. As the federal regulatory pendulum swings hard to an extreme, even the most limited proposals to amend the Act could conceivably invite unintended consequences. This is particularly the case if caught in the tailwind of efforts to amend or repeal Dodd-Frank and other financial regulations. If unchecked, such actions could severely undermine the culture of corporate responsibility that has been a crucial legacy of Sarbanes.

Page 59 of 83

« Previous 1 … 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 … 83 Next »

Yearly Archives: 2017

A Synthesized Paradigm for Corporate Governance, Investor Stewardship, and Engagement

From Boardroom to C-Suite: Why Would a Company Pick a Current Director as CEO?

Do Independent Directors Curb Financial Fraud? The Evidence and Proposals for Further Reform

Lowering the Bar on Bad Faith Claims in MLP Transactions? Brinckerhoff v. Enbridge Energy

The Law and Brexit XI

Weekly Roundup: April 7–13, 2017

Director Appointments—Is It “Who You Know”?

Delaware Supreme Court Affirmation of Merger Termination Based on Failure to Satisfy Tax Covenant

Supreme Court Certiorari on Non-Disclosure of “Known Trends or Uncertainties” in SEC Filings

Cayman Merger Take-Privates from NYSE and NASDAQ—2016 Year in Review

Voluntary Corporate Governance, Proportionate Regulation, and Small Firms: Evidence from Venture Issuers

Should Executive Pay Be More “Long-Term”?

Dealmakers Expect a “Trump Bump” on M&A

A Legal Theory of Shareholder Primacy

Earnouts: Devil in the Details

On Regulatory Reform, Better Process Means Better Progress

Equity Suppliers in Bank Regulation

Tread Lightly When Tweaking Sarbanes-Oxley

Corporations and Human Life

Is Executive Pay Broken?

Is Executive Pay Broken?

Tread Lightly When Tweaking Sarbanes-Oxley

Subscribe or Follow

Program on Corporate Governance Advisory Board

HLS Faculty & Senior Fellows