Monthly Archives: November 2018

Weekly Roundup: October 26-November 1, 2018

Posted by the Harvard Law School Forum on Corporate Governance & Financial Regulation, on

Friday, November 2, 2018

This roundup contains a collection of the posts published on the Forum during the week of October 26–November 1, 2018.

Effective Board Evaluation

Posted by Steve Klemash, Rani Doyle, and Jamie C. Smith, EY Center for Board Matters, on Friday, October 26, 2018

Tags: Board evaluation, Board monitoring, Board oversight, Board performance, Boards of Directors, Long-Term value, Oversight

2018 CPA-Zicklin Index

Posted by Bruce F. Freed, Karl Sandstrom, Dan Carroll, and Caitlin Moniz, Center for Political Accountability, on Friday, October 26, 2018

Tags: Accountability, Boards of Directors, Charitable spending, Corporate Social Responsibility, Disclosure, Engagement, Political spending, Securities regulation, Transparency

Silicon Valley and S&P 100: A Comparison of 2018 Proxy Season Results

Posted by David Bell, Fenwick & West LLP, on Saturday, October 27, 2018

Tags: Boards of Directors, ESG, Executive Compensation, Peer groups, Proxy access, Proxy season, Proxy voting, Say on pay, Shareholder elections, Shareholder proposals, Shareholder voting, Surveys, Tech companies

CEO and Executive Compensation Practices: 2018 Edition

Posted by Matteo Tonello, Paul Hodgson, and James Reda, The Conference Board, Inc., on Saturday, October 27, 2018

Tags: Compensation disclosure, Compensation ratios, Equity-based compensation, Executive Compensation, Incentives, Long-Term value, Management, Pay for performance, Stock options

2018 Canadian Proxy Season Review

Posted by Wes Hall, Amy Freedman, and Ian Robertson, Kingsdale Advisors, on Sunday, October 28, 2018

Tags: Board composition, Boards of Directors, Canada, Diversity, ESG, Institutional Investors, International governance, Poison pills, Proxy access, Proxy advisors, Proxy contests, Takeover defenses

Amended NASDAQ Rules for Shareholder Approval

Posted by Ade Heyliger and Andrew Holt, Weil, Gotshal & Manges LLP, on Monday, October 29, 2018

Tags: Equity offerings, Exchange Act, Fair values, Investor protection, NASDAQ, Securities regulation, Shareholder rights, Shareholder voting, Stock mispricing

Public or Private Venture Capital?

Posted by Darian M. Ibrahim (William & Mary), on Monday, October 29, 2018

Tags: Agency costs, Crowdfunding, Disclosure, Information asymmetries, Information environment, International governance, Investor protection, JOBS Act, Private ordering, Securities regulation, Venture capital firms

Lessons from the CBS-NAI Dispute, Part IV: A Temporary Restraining Order Against the Controlling Stockholder?

Posted by Meredith E. Kotler & Mark E. McDonald, Cleary Gottlieb Steen & Hamilton LLP, on Monday, October 29, 2018

Tags: Boards of Directors, Charter & bylaws, Controlling shareholders, Delaware cases, Delaware law, DGCL Section 228, Dividends, Dual-class stock, Merger litigation, Mergers & acquisitions, Securities litigation

Commonsense Principles 2.0: A Blueprint for U.S. Corporate Governance?

Posted by Aabha Sharma and Howard Dicker, Weil, Gotshal & Manges LLP, on Tuesday, October 30, 2018

Tags: Accountability, Board composition, Board leadership, Board oversight, Boards of Directors, Disclosure, Engagement, Financial reporting, Institutional Investors, Long-Term value, Proxy voting, Shareholder proposals, Shareholder rights, Shareholder voting

Public Sentiment and the Price of Corporate Sustainability

Posted by George Serafeim (Harvard Business School), on Tuesday, October 30, 2018

Tags: Corporate Social Responsibility, Disclosure, Environmental disclosure, ESG, Information environment, Public perception, Social capital, Sustainability

New Ruling on the Fujifilm-Xerox Transaction

Posted by Andrew Stern and Kai Haakon E. Liekefett, Sidley Austin LLP, on Tuesday, October 30, 2018

Tags: Boards of Directors, Business judgment rule, Conflicts of interest, Merger litigation, Mergers & acquisitions, New York, Shareholder activism

The ISS Equity Plan Scorecard

Posted by Edward A. Hauder, Exequity, LLP, on Wednesday, October 31, 2018

Tags: Equity-based compensation, Executive Compensation, Institutional Investors, ISS, Proxy advisors, Shareholder value, Shareholder voting

Cracking the Corwin Conundrum and Other Mysteries Regarding Shareholder Approval of Mergers and Acquisitions

Posted by Franklin A. Gevurtz (University of the Pacific), on Wednesday, October 31, 2018

Tags: Controlling shareholders, Corwin, Delaware articles, Delaware cases, Delaware law, Merger litigation, Mergers & acquisitions, Shareholder suits, Shareholder voting

Materiality and Efforts Qualifiers—Some Distinctions, Some Without Differences

Posted by Daniel E. Wolf and Eric L. Schiele, Kirkland & Ellis LLP, on Wednesday, October 31, 2018

Tags: Acquisition agreements, Delaware cases, Delaware law, Materiality, Merger litigation, Mergers & acquisitions

A Fully Operational Token Platform

Posted by Rob Rosenblum and Amy Caiazza, Wilson Sonsini Goodrich & Rosati, on Thursday, November 1, 2018

Tags: Capital formation, Cryptocurrency, Equity offerings, Howey test, Regulation A, Retail investors, SEC, Securities Act, Securities regulation

Do an Insider’s Wealth and Income Matter in the Decision to Engage in Insider Trading?

Posted by Juha-Pekka Kallunki (University of Oulu), on Thursday, November 1, 2018

Tags: Behavioral finance, Cost-benefit analysis, Firm performance, Incentives, Information asymmetries, Information environment, Inside information, Insider trading, International governance, Reputation, Risk-taking, Securities enforcement, Sweden

Leveling the Hunting Field

Posted by Lizanne Thomas, Jones Day, on Thursday, November 1, 2018

Tags: Disclosure, Hedge funds, Pershing Square, Schedule 13D, SEC, Securities regulation, Shareholder activism

Leveling the Hunting Field

Posted by Lizanne Thomas, Jones Day, on

Thursday, November 1, 2018

Disclosure, Hedge funds, Pershing Square, Schedule 13D, SEC, Securities regulation, Shareholder activism
More from: Lizanne Thomas, Jones Day

Lizanne Thomas is partner at Jones Day. This post is based on a Jones Day memorandum by Ms. Thomas. Related research from the Program on Corporate Governance includes Pre-Disclosure Accumulations by Activist Investors: Evidence and Policy by Lucian Bebchuk, Alon Brav, Robert J. Jackson Jr., and Wei Jiang, and The Law and Economics of Blockholder Disclosure by Lucian Bebchuk and Robert J. Jackson Jr. (discussed on the Forum here).

Like any predator, a wolf must carefully time its strike when pursuing prey. Certain species of shareholder activists operate under a similar imperative. Flawed disclosure rules in the United States give them an unfair advantage.

A few years ago, hedge fund Pershing Square—which popped up on Oct. 9 with a 1.1 percent stake in coffee company Starbucks—went after retailer J.C. Penney. Along with its ally Vornado Realty, Pershing accumulated 11.6 million shares in August 2010, putting the fund just below a 5 percent effective ownership stake. That is the threshold that requires mandatory reporting to the Securities and Exchange Commission. Once crossed, the buyer must publicly disclose its stake within a leisurely 10-day window.

Do an Insider’s Wealth and Income Matter in the Decision to Engage in Insider Trading?

Posted by Juha-Pekka Kallunki (University of Oulu), on

Thursday, November 1, 2018

Behavioral finance, Cost-benefit analysis, Firm performance, Incentives, Information asymmetries, Information environment, Inside information, Insider trading, International governance, Reputation, Risk-taking, Securities enforcement, Sweden
More from: Henrik Nilsson, Jenni Kallunki, Juha-Pekka Kallunki, Mikko Puhakka

Juha-Pekka Kallunki is Professor at the Oulu Business School at the University of Oulu and Visiting Professor at Stockholm School of Economics and the Aalto University School of Business. This post is based on an article recently published in the Journal of Financial Economics, authored by Professor Kallunki; Jenni Kallunki, Oulu Business School at the University of Oulu; Henrik Nilsson, Professor at Stockholm School of Economics; and Mikko Puhakka, Professor at the Oulu Business School at the University of Oulu. Related research from the Program on Corporate Governance includes Insider Trading Via the Corporation by Jesse Fried (discussed on the Forum here).

A body of literature shows that corporate insiders’ trades predict future abnormal returns, suggesting that insiders generally exploit their information advantage about firm prospects to make trading decisions (e.g., Seyhun, 1986; Lakonishok and Lee, 2001; and Cohen et al., 2012). However, the abnormal returns that insiders have been reported to earn are, on average, surprisingly small to justify them engaging in informed trading, given the potential costs involved. In particular, the general public and regulatory authorities monitor insiders’ trading and impose costs on insiders when trading is perceived to be opportunistic and self-serving. These costs comprise both the potential reputational losses imposed by outside investors and the media and the potential legal sanctions taken by the regulator.

A Fully Operational Token Platform

Posted by Rob Rosenblum and Amy Caiazza, Wilson Sonsini Goodrich & Rosati, on

Thursday, November 1, 2018

Capital formation, Cryptocurrency, Equity offerings, Howey test, Regulation A, Retail investors, SEC, Securities Act, Securities regulation
More from: Aaron Friedman, Ajani Husbands, Amy Caiazza, Julie Krosnicki, Rob Rosenblum, Tyler Kirk, Wilson Sonsini Goodrich & Rosati

Robert Rosenblum is partner and Amy Caiazza is an associate at Wilson Sonsini Goodrich & Rosati. This post is based on a Wilson Sonsini memorandum by Mr. Rosenblum, Ms. Caiazza, Julie Krosnicki, Aaron Friedman, Tyler Kirk, and Ajani Husbands.

Too often, token issuers have been asking the wrong legal and regulatory questions, and sadly, they have too often been receiving bad answers to those questions. In the frothy environment for tokens that (may have) recently cooled off, questions that token issuers often asked were, “How quickly can I do my token offering?”, or sometimes, “How quickly can I do a legally compliant token offering?” The question that token issuers should have been asking, we believe, is, “How do I finance and deploy a fully operational and legally compliant token platform as quickly and efficiently as possible?” That is the question we will try to answer in this post.

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Monthly Archives: November 2018

Weekly Roundup: October 26-November 1, 2018

Effective Board Evaluation

2018 CPA-Zicklin Index

Silicon Valley and S&P 100: A Comparison of 2018 Proxy Season Results

CEO and Executive Compensation Practices: 2018 Edition

2018 Canadian Proxy Season Review

Amended NASDAQ Rules for Shareholder Approval

Public or Private Venture Capital?

Lessons from the CBS-NAI Dispute, Part IV: A Temporary Restraining Order Against the Controlling Stockholder?

Commonsense Principles 2.0: A Blueprint for U.S. Corporate Governance?

Public Sentiment and the Price of Corporate Sustainability

New Ruling on the Fujifilm-Xerox Transaction

The ISS Equity Plan Scorecard

Cracking the Corwin Conundrum and Other Mysteries Regarding Shareholder Approval of Mergers and Acquisitions

Materiality and Efforts Qualifiers—Some Distinctions, Some Without Differences

A Fully Operational Token Platform

Do an Insider’s Wealth and Income Matter in the Decision to Engage in Insider Trading?

Leveling the Hunting Field

Leveling the Hunting Field

Do an Insider’s Wealth and Income Matter in the Decision to Engage in Insider Trading?

A Fully Operational Token Platform

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