Daily Archives: Thursday, April 18, 2024

An Early Look at CEO Pay Trends From Proxy Season 2024

Posted by Joyce Chen and Courtney Yu, Equilar, Inc., on
Thursday, April 18, 2024
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Joyce Chen is Associate Editor and Courtney Yu is Director of Research at Equilar, Inc. This post was prepared for the Forum by Ms. Chen and Mr. Yu.

The 2024 proxy season is in full swing, as public companies are in the process of submitting their proxy statements (DEF14A) to the Securities and Exchange Commission (SEC) ahead of annual shareholder meetings. The proxy statement features detailed information on pressing matters related to executive compensation and corporate governance. This analysis focuses on 2024 proxy statements submitted by 163 Equilar 500 companies (the 500 largest U.S. public companies based on revenue) through March 15, 2024 and offers early trends in executive compensation and Pay Versus Performance (PvP) disclosures.

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Majority Rules

Posted by Andrew Verstein (UCLA), on
Thursday, April 18, 2024
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Andrew Verstein is a Professor of Law at UCLA School of Law. This post is based on his article forthcoming in the Northwestern University Law Review.

The “disinterested and independent board majority” is one of the most important concepts in corporate law, because it is the fulcrum on which most corporate litigation turns. Where such a majority is present, it is virtually impossible for plaintiff-shareholders to win a lawsuit.

In keeping with its importance, disinterestedness and independence receive ample judicial attention.[1] Scholars likewise ask hard questions about disinterestedness and independence. Can a director be truly impartial when evaluating a merger proposed by the shareholder who appointed her to the board? Can a director fairly decide whether to sue the CEO alongside whom he has worked for years and shares numerous social ties?

Yet something is missing from both the cases and commentary: a majority independence test is a majority independence test.

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Decoding the SEC’s First “AI-Washing” Enforcement Actions

Posted by Amy Jane Longo, Shannon Capone Kirk, and Isaac Sommers, Ropes & Gray LLP, on
Thursday, April 18, 2024
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Amy Jane Longo is a Partner, Shannon Capone Kirk is Managing Principal & Global Head of Advanced E-Discovery and A.I. Strategy, and Isaac Sommers is an Associate at Ropes & Gray LLP. This post is based on their Ropes & Gray memorandum.

Two recent SEC enforcement actions offer a first look at how the agency is approaching the use of artificial intelligence (“AI”) tools by registered firms. Against the backdrop of its pending proposed rules regarding predictive data analytics (“PDA”) and artificial intelligence, the SEC on March 18, 2024 announced settled charges against two investment advisers—Delphia (USA) Inc. (“Delphia”) and Global Predictions, Inc. (“Global Predictions”)—involving allegations that the firms’ promotional materials exaggerated their use of AI or machine learning in their investment services, a practice the SEC has described as “AI-washing.” Finding violations of the Investment Advisers Act rules governing marketing and compliance policies and procedures (Sections 206(2) and 206(4) and Rules 206(4)-1 and 206(4)-7 thereunder), the settled orders imposed civil penalties against Delphia and Global Predictions of $225,000 and $175,000, respectively.

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