Michael W. Peregrine is a partner at McDermott Will & Emery LLP. This post is based on his McDermott Will & Emery memorandum.
The latest revelations in baseball’s sign-stealing scandal confirm more explicitly than ever its relevance to corporate governance across industry sectors, particularly the board’s critical obligation to preserve a culture of compliance within the organization.
Moreover, the new revelations serve to refocus attention on compliance and ethics at a time when organizational interest and budgetary support for these functions may be waning. The documented conduct of the Houston Astros provides a unique, if unlikely, connection between America’s pastime and corporate ethics, to which an exceptionally broad audience may relate. This is an opportunity for board compliance committees to strengthen leadership and organizational awareness of ethical expectations.
The Fiduciary Duty
Fiduciary obligations relating to the oversight of an organizational culture of compliance have long been embodied in corporate law, enforcement guidelines, governance principles and other standards. They are grounded in part by the seminal Delaware Chancery decision in in re Caremark Derivative Action and its progeny. [1] Another foundational piece is the description in the Federal Sentencing Guidelines of the elements of an “Effective Compliance Program.” This description requires boards to (i) be knowledgeable about the content and operation of the compliance and ethics program and (ii) exercise reasonable oversight with respect to the implementation and effectiveness of that program (i.e., to promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law). [2]
CII Comment Letter on Proposed Proxy Rules for Proxy Voting Advice
More from: Jeffrey Mahoney, Ken Bertsch, Council of Institutional Investors
Kenneth A. Bertsch is Executive Director and Jeffrey P. Mahoney is General Counsel at the Council of Institutional Investors. This post is based on a CII letter to the SEC in response to request for comments on the proposed rule regarding proxy advisors (discussed in posts here and here).
The Council of Institutional Investors (CII), appreciates the opportunity to provide comments to the United States (U.S.) Securities and Exchange Commission (SEC or Commission) in response to proposed amendments to the federal proxy rules published on December 4, 2019, in SEC Release No. 34–87457, Amendments to Exemptions From the Proxy Rules for Proxy Voting Advice (Release).
CII is a nonprofit, nonpartisan association of U.S. public, corporate and union employee benefit funds, other employee benefit plans, state and local entities charged with investing public assets, and foundations and endowments with combined assets under management of approximately $4 trillion. Our member funds include major long-term shareowners with a duty to protect the retirement savings of millions of workers and their families, including public pension funds with more than 15 million participants—true “Main Street” investors through their pension funds. Our associate members include non-U.S. asset owners with about $4 trillion in assets, and a range of asset managers with more than $35 trillion in assets under management.
CII strongly opposes the Release in its entirety. We present a general summary of key issues in the Release, and then responses to the specific questions the SEC poses in the Release (page 6 of the complete letter).
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