Monthly Archives: April 2025

Weekly Roundup: April 4-11, 2025

Posted by the Harvard Law School Forum on Corporate Governance, on
Friday, April 11, 2025

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This roundup contains a collection of the posts published on the Forum during the week of April 4-11, 2025

Equity Grant Disclosure Insights

Posted by Neil McCarthy, James Palmiter, and G. Michael Weiksner, DragonGC, on Friday, April 4, 2025
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Reporting Portfolio Emissions By Asset Managers

Posted by Patricia Volhard, John Young, and Ulysses Smith, Debevoise & Plimpton LLP, on Saturday, April 5, 2025
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Delaware Revamps Its General Corporation Law — Will It Stop Companies from Leaving?

Posted by David Bell, Marie Bafus, and Dean Kristy, Fenwick & West LLP, on Sunday, April 6, 2025
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Chancery Court Clarifies Delaware’s Stance on Sandbagging and Transaction Multiple for Damages

Posted by Frank J. Favia Jr., Jonathan A. Dhanawade, and Andrew J. Stanger, Mayer Brown LLP, on Monday, April 7, 2025
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Fair Is Fair: Reforming Fairness Review

Posted by Jonathan Macey (Yale Law School), on Monday, April 7, 2025
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2025 Shareholders Meeting Agenda: Proactive Board Oversight Amid Significant Uncertainty and Change

Posted by Amy Rojik and Lee Sentnor, BDO, on Monday, April 7, 2025
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Is the SEC Facing a Death by 1,000 Cuts?

Posted by Cydney Posner, Cooley LLP, on Tuesday, April 8, 2025
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The Artificially Intelligent Boardroom

Posted by David F. Larcker (Stanford University), Amit Seru (Stanford University), and Brian Tayan (Stanford University), on Tuesday, April 8, 2025
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Q1 2025 Review of Shareholder Activism

Posted by Jim Rossman, Chris Ludwig and Quinn Pitcher, Barclays, on Tuesday, April 8, 2025
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Will the Tariffs be a Poison Pill for Proxy Contests This Season?

Posted by Kai H. E. Liekefett and Derek Zaba, Sidley Austin LLP, on Wednesday, April 9, 2025
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Disclosures and Share Repurchase: Did SEC Rules Curb Opportunistic Buybacks?

Posted by Brian Bratten (University of Kentucky), on Wednesday, April 9, 2025
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Remarks by Acting Chair Uyeda to the Annual Conference on Federal and State Securities Cooperation

Posted by Mark T. Uyeda, U.S. Securities and Exchange Commission, on Wednesday, April 9, 2025
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Analysis of Lost Premium Damages Provisions Following the Adoption of DGCL Section 261 Amendments

Posted by Thomas W. Christopher and Jennifer Chu, White & Case LLP, on Thursday, April 10, 2025
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How Rigid Corporate Law Hinders Venture Capital Contracting: A Taxonomy of the Impediments

Posted by Luca Enriques (Bocconi University), Casimiro Antonio Nigro (Goethe University), and Tobias H. Troeger (Goethe University), on Thursday, April 10, 2025
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2025 Proxy Season Preview

Posted by Aaron Wendt, Krishna Shah, and Courteney Keatinge, Glass, Lewis & Co., on Thursday, April 10, 2025
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2025 Proxy Season Preview

Posted by Aaron Wendt, Krishna Shah, and Courteney Keatinge, Glass, Lewis & Co., on
Thursday, April 10, 2025
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Aaron Wendt is Director of U.S. Governance Policy, Krishna Shah is a Senior Director of North American Compensation Research, and Courteney Keatinge is a Senior Director of ESG Research at Glass, Lewis & Co. This post is based on a Glass Lewis memorandum by Mr. Wendt, Ms. Shah, Ms. Keatinge, Lisa Marie O’Malley, Sarah Wenger, and Brianna Castro.

Key Trends

Governance

Board Oversight of Technology

The incredible growth of artificial intelligence and related technologies over the last several years has made it increasingly clear that Al-powered technologies will have a significant impact on the way people work and do business. However, as the adoption of and uses for Al-related technologies increase, companies may also face additional risks and ethical considerations. As a result, investor expectations for disclosure of board governance and oversight of Al-technologies continue to increase in tandem.

Companies will need to determine the best structures for this oversight, whether it be at the full board level, a key board committee, or a specialized board committee. In addition, many boards may need to engage in continuing education or seek out director candidates with expertise in this area to keep up with this rapidly evolving topic.

In the upcoming proxy season, we expect that Al governance and Al-related disclosures will be front and center for many issuers and investors as the market looks to gain a firmer grasp on the risks and opportunities that underlie this technological revolution. We anticipate that market best practices for oversight and disclosure will begin to emerge this season.

Additionally, cybersecurity remains top of mind for U.S. and Canadian investors and companies alike, as the consequences of a cyberattack continue to escalate. Considering the increased attention on this topic, and the potentially detrimental consequences for companies that have not prioritized addressing cybersecurity issues, we expect to see continued improvements in the disclosure around the board’s expertise and training regarding cybersecurity risks, as well as the board’s role in the oversight of this key issue.

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How Rigid Corporate Law Hinders Venture Capital Contracting: A Taxonomy of the Impediments

Posted by Luca Enriques (Bocconi University), Casimiro Antonio Nigro (Goethe University), and Tobias H. Troeger (Goethe University), on
Thursday, April 10, 2025
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Luca Enriques is a Professor of Business Law at Bocconi University, Casimiro Antonio Nigro is an Invited Researcher at the Goethe University, and Tobias H. Troeger is a Professor of Law at Goethe University. This post is based on their recent paper, and is part of the Delaware law series; links to other posts in the series are available here.

Venture capital (VC) has been a driving force behind innovation and economic growth since the 1980s and is an established cornerstone of the U.S. economy. The success of the U.S. VC market hinges also on venture capitalists’ and entrepreneurs’ ability to leverage the flexibility of U.S. (Delaware) corporate law. This flexibility enables them to develop sophisticated contractual frameworks that economists consider the most effective real-world solution to market frictions in financing high-tech innovation—a model that has been widely adopted globally.

A key insight from the existing literature is that efficient VC contracting relies heavily on private ordering. A flexible corporate law framework, therefore, facilitates VC contracting, while rigid corporate laws can constrain it. While scholars have emphasized this point over the past two decades, the precise mechanisms by which rigid corporate laws influence the complex contracting dynamics of VC have received far less attention.

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Analysis of Lost Premium Damages Provisions Following the Adoption of DGCL Section 261 Amendments

Posted by Thomas W. Christopher, Jennifer Chu, and Kyra Luck, White & Case LLP, on
Thursday, April 10, 2025
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Thomas W. Christopher is a Partner, and Jennifer Chu and Kyra Luck are Associates, at White & Case LLP. This post is based on their White & Case memorandum and is part of the Delaware law series; links to other posts in the series are available here.

Effective August 1, 2024, Delaware adopted a set of amendments to the Delaware General Corporation Law (the “DGCL”) intended to address, among other things, the Delaware Chancery Court’s 2023 decision in Crispo v. Musk. [1] In the Crispo decision, the Chancery Court stated in dicta that a Delaware target company in a merger could not collect damages from a breaching buyer reflecting any premium or other economic benefits that its stockholders would have been entitled to receive if the merger had been consummated (“lost premium damages”) where the agreement expressly provided that stockholders are not third-party beneficiaries of the agreement for such purposes. The Crispo decision took many Delaware practitioners by surprise as it has been widely assumed that such damages could be provided for in a merger agreement. The Delaware General Assembly and Governor moved swiftly to address the decision.

This article (i) reviews the background to the history of lost premium damages provisions, (ii) addresses the prevalence of lost premium damages provisions following the adoption of the amendments to Section 261 of the DGCL, (iii) discusses the interplay among lost premium damages, other remedies and reverse termination fees, and (iv) identifies some key practice pointers. The analysis contained herein is based on a survey of a selective set of definitive merger agreements executed between August 1, 2024 and December 31, 2024. [2]

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Remarks by Acting Chair Uyeda to the Annual Conference on Federal and State Securities Cooperation

Posted by Mark T. Uyeda, U.S. Securities and Exchange Commission, on
Wednesday, April 9, 2025
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Mark T. Uyeda is the Acting Chair Throughout of the U.S. Securities and Exchange Commission. This post is based on his recent remarks. The views expressed in the post are those of Acting Chair Throughout Uyeda, and do not necessarily reflect those of the Securities and Exchange Commission or the Staff.

Good morning and welcome to the annual conference on federal and state securities cooperation, organized jointly by the North American Securities Administrators Association (“NASAA”) and the U.S. Securities and Exchange Commission (“SEC” or “Commission”). [1]  Inside the SEC, this gathering is often called the “Section 19(d) conference” after a provision of the Securities Act of 1933 (the “Securities Act”).  That provision contains a declared statutory policy calling for greater federal and state cooperation in securities matters, including maximum effectiveness of regulation, maximum uniformity in regulatory standards, and minimum interference with the business of capital formation.  However, we do not need a statute to tell us what the SEC and state securities regulators have long recognized — that we have shared goals and a common purpose to protect investors and strengthen our capital markets.

For the past two-and-a-half months, I have had the privilege of serving as the Chairman of the Securities and Exchange Commission on an acting basis.  As we wait for the pending Senate confirmation of the SEC’s incoming chairman, I would like to take a few moments to pay tribute to the first commissioner under whom I served.  In the many challenges that I have faced in leading the SEC, whether it was dealing with personnel, organizational change, the media, interagency coordination, the executive branch, or the legislature, it would be his guidance, wisdom, and decision-making that I witnessed back then that I have repeatedly drawn upon now in my role as Acting Chairman.

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Disclosures and Share Repurchase: Did SEC Rules Curb Opportunistic Buybacks?

Posted by Brian Bratten (University of Kentucky), on
Wednesday, April 9, 2025
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Brian Bratten is the Carol Martin Gatton Endowed Chaired Professor of Accountancy at the University of Kentucky. This post is based on an article forthcoming in the Journal of Accounting and Economics by Professor Bratten, Professor Meng Huang, Professor Nicole Thorne Jenkins, and Professor Hong Xie. 

Share repurchases have been a controversial way to return cash to shareholders for decades. Prior to the SEC enactment of Rule 10b-18 in 1982, which provided a “safe harbor,” open market share repurchases were judged to be a form of market manipulation due to their ability to increase stock price and were deemed to be illegal. Since Rule 10b-18 was enacted, repurchases have surged, surpassing dividends paid annually. Nonetheless, many critics argue that repurchases are still used to opportunistically manipulate earnings, and prior research has shown that when firms engage in opportunistic repurchases, this leads to negative consequences such as reduced employment and investment. In 2002, the Securities and Exchange Commission (SEC) proposed an amendment to Rule 10b-18 which required firms to increase their disclosures about repurchases. In our paper, “Mandatory Disclosures and Opportunism: Evidence from Repurchases,” we study whether the disclosures required by the SEC improved the detectability of opportunistic repurchases, reduced the frequency of opportunistic repurchases, and mitigated the negative consequences that accompanied opportunistic repurchases.

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Will the Tariffs be a Poison Pill for Proxy Contests This Season?

Posted by Kai H. E. Liekefett and Derek Zaba, Sidley Austin LLP, on
Wednesday, April 9, 2025
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Kai H. E. Liekefett and Derek Zaba are Co-Chairs of the Shareholder Activism & Corporate Defense Practice at Sidley Austin LLP. This post is based on their Sidley memorandum.

On April 2, the announced tariffs on certain imported products into the U.S. are expected to go into effect.  While it remains to be seen whether they will be beneficial for the U.S. economy in the long term, tariffs have already begun to impact the national and global economy. Will they also impact the 2025 proxy season?

The vast majority of public companies in the U.S. hold their annual shareholder meeting between April and June. Most of these companies require in the bylaws advance notice of director nominations by shareholders. These nomination deadlines are typically between January and April. In other words, now is the time of the year when activists are forced to “put up or shut up.”  However, both companies and activists face the potential impact of tariffs on a wide array of businesses, as well as the current volatility in the stock market driven, at least in part, by the tariffs.

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Q1 2025 Review of Shareholder Activism

Posted by Jim Rossman, Chris Ludwig and Quinn Pitcher, Barclays, on
Tuesday, April 8, 2025
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Jim Rossman is Global Head of Shareholder Advisory, Chris Ludwig is Managing Director, and Quinn Pitcher is Vice President- M&A and Shareholder Advisory at Barclays. This post is based on a Barclays memorandum by Mr. Rossman, Mr. Ludwig, Mr. Pitcher, James Potts, Joshua Jacobs, and Dominic Pinion.

Observations on the Global Activism Environment in Q1 2025

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The Artificially Intelligent Boardroom

Posted by David F. Larcker (Stanford University), Amit Seru (Stanford University), and Brian Tayan (Stanford University), on
Tuesday, April 8, 2025
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David F. Larcker is the James Irvin Miller Professor of Accounting at the Stanford Graduate School of Business, Amit Seru is the Steven and Roberta Denning Professor of Finance at the Stanford Graduate School of Business, and Brian Tayan is a Researcher at the Stanford Graduate School of Business. This post is based on a recent paper by Professor Larcker, Professor Seru, Mr. Tayan, and Laurie Yoler.

We recently published a paper on SSRN (“The Artificially Intelligent Boardroom”) that examines how artificial intelligence can impact board processes, practices, and dynamics.

Artificial intelligence has the potential to significantly transform many aspects of corporate activity, including decision making, productivity, customer experience, and content creation. The impact on boardrooms is likely to be significant—but perhaps in different ways than is commonly recognized.

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Is the SEC Facing a Death by 1,000 Cuts?

Posted by Cydney Posner, Cooley LLP, on
Tuesday, April 8, 2025
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Cydney Posner is a Special Counsel at Cooley LLP. This post is based on her Cooley memorandum.

Bloomberg reports that staff from the Department of Government Efficiency is currently at the SEC, according to communications to SEC staff, who were “instructed to treat them as internal employees.” Bloomberg also reports that the “SEC has designated an internal team to work with DOGE,”  including “the offices of the chief operating officer, the general counsel, human resources and enforcement.” According to the article, about 10% of the SEC’s workforce (arounds 500 staff members) have already ”accepted the government-wide buyout and deferred-resignation offers. The agency also intends to eliminate the leases for its offices in Los Angeles and Philadelphia, and the General Services Administration has also explored ending the Chicago office’s lease. The most-senior positions at regional offices have also been cut, though the individuals in those roles aren’t being forced out.” The Shadow SEC fear that they are “watching the SEC face a death by 1,000 cuts.”

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