Yearly Archives: 2025

AI Readiness: The Four Steps CEOs Need to Take to Build AI-Powered Organizations

Tristan Jervis is a Managing Director at Russell Reynolds Associates. This post is based on his Russell Reynolds memorandum.

In an era where artificial intelligence is redefining the foundations of business and society, leadership itself must transform. We stand at the precipice of the most significant technological revolution in modern history—one that will separate organizations that thrive from those that survive.

The stakes are clear: our research found that 54% of leaders rate technological change as a top five threat to organizational health in the next 12-18 months. Senior executives recognize the urgency and necessity of AI transformation. But, only 45% feel confident in their organization’s ability to effectively transform.

The fundamental misconception many leaders harbor is that AI transformation is only a technological challenge. It’s not. At its core, it’s a leadership challenge—one that demands new capabilities, mindsets, and approaches. This is not about incremental change. This is about fundamental transformation.

We know that committing and implementing large-scale transformation isn’t easy—it’s a huge undertaking. We share the four actions CEOs need to address to supercharge AI transformation at their organization, including ensuring you have the right leaders today, as well as in the wings, who are able to shift their ways of working and adopt AI at scale.

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Is Your Board Asking the Really Tough Questions about Risk?

Mark Sexton is a Senior Managing Director and Paul Feldman is a Senior Director at FTI Consulting. This post is based on their FTI Consulting memorandum.

Senior management has borne the brunt of criticism in recent memory in high-profile cases involving risk management and internal control failures. While management failures often are at the root cause of losses, penalties and reputational damage, boards of directors are increasingly being cited for significant risk governance failures. Substantial investments have been made in risk functions, including standing up dedicated risk committees (“RiskCos”), developing risk appetite statements, improving reporting and requiring board members to undergo mandatory risk-specific training. The financial services sector has long been a leader in this area, but comparable practices are emerging in other industries.

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Weekly Roundup: April 11-17, 2025


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This roundup contains a collection of the posts published on the Forum during the week of April 11-17, 2025

Redefining the CEO’s Role for the Next Generation


Regulatory Shifts in ESG: What Comes Next for Companies?


How Boards Can Effectively Oversee AI to Drive Value and Responsible Use


Chancery Finds Two 2-Year Non-Competes Unenforceable in Business Sale and Investment


Private Equity and Stockholder Agreements: Empirical Insights for the Moelis Debate



Controller’s Breach of Fiduciary Duties Leads To Novel Remedy


Staggered Board Shenanigans at Phillips 66


From Opposition to Action: S&P 500 Company Responses to Unfavorable ISS Say on Pay Recommendations


Court Upholds Legality of Poison Pills for Closed-End Funds but Limits Successive Plans



Remarks by Commissioner Crenshaw at the 44th Annual SEC Small Business Forum


Chancery Orders Discovery Sanctions for COO-Director Over Personal Email Auto-Delete—Facebook


Stakeholder Orientation and Accounting Conservatism: Evidence from State-Level Constituency Statutes


Dueling DEI Proposals Put Boeing Between a Rock and a Hard Place


Dueling DEI Proposals Put Boeing Between a Rock and a Hard Place

Dimitri Zagoroff is a Senior Editor at Glass, Lewis & Co. This post is based on a Glass Lewis memorandum by Mr. Zagoroff and Courteney Keatinge.

Intense scrutiny regarding the role of environmental, social and governance (ESG) issues in proxy voting has only intensified in the wake of the Trump Administration’s executive orders on diversity, equity and inclusion (DEI). Meanwhile, a late shift in SEC guidance has injected uncertainty into the shareholder proposal exclusion process.

Boeing’s upcoming annual meeting serves to illustrate the complex landscape that companies and their investors are being asked to navigate this proxy season. The agenda features two DEI-focused shareholder proposals with similar language but starkly different goals. Whereas Proposal 4 calls for additional reporting on the company’s approach to DEI and associated risks, Proposal 5 calls for a third-party civil rights audit to identify risks relating to the removal of DEI policies.

In this post, we discuss Boeing’s DEI predicament and the shareholder proposals on its AGM ballot, along with Glass Lewis’ approach to helping our investor clients assess them.

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Stakeholder Orientation and Accounting Conservatism: Evidence from State-Level Constituency Statutes

Suresh Radhakrishnan is a Professor of Accounting at The University of Texas at Dallas, Ke Wang is an Associate Professor of Accounting at University of Alberta, and Zheng Wang is a Professor of Accounting at City University of Hong Kong. This post is based on their recent article forthcoming in the Journal of Accounting and Public Policy

Key takeaways

  •  Adopting state-level constituency statutes is related to a significant decrease in accounting conservatism, especially for firms with greater agency conflicts between shareholders (represented by directors and managers) and nonfinancial stakeholders such as employees, customers, and suppliers.
  • The state-level constituency statutes allow directors and managers to adopt direct mechanisms to protect stakeholder interests in business decisions without breaching the fiduciary duty owed to shareholders. The direct protection mechanisms reduce nonfinancial stakeholders’ demand for the indirect protection mechanism of accounting conservatism. The evidence in this study is consistent with the view that nonfinancial stakeholders demand conservative accounting policy as protection for their relationship-specific investments.
  • The findings suggest that stakeholder-oriented legislative changes effectively increase corporate attention to stakeholder interests.

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Chancery Orders Discovery Sanctions for COO-Director Over Personal Email Auto-Delete—Facebook

Gail Weinstein is a Senior Counsel, Philip Richter is a Partner, and Steven Epstein is the Managing Partner, at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, Steven J. Steinman, Michael P. Sternheim, and Maxwell Yim, and is part of the Delaware law series; links to other posts in the series are available here.

In In re Facebook, Inc. (Jan. 21, 2025), the Court of Chancery ordered sanctions against a Facebook Inc. director for discovery violations in connection with derivative litigation relating to the so-called Cambridge Analytica Sandal. (The scandal involved claims that Facebook had deceived its users by telling them that their information on Facebook could be kept private but then allowing the information to be shared with third parties and making the information public). When the scandal first surfaced, Facebook issued a broad “legal hold,” instructing its executives and others to preserve and not destroy potential evidence. Shortly after the litigation was filed in 2018, the company sent a reminder to the recipients of the legal hold and had discussion with them about document preservation and collection.

In 2023, litigation discovery commenced. Discovery was extensive—with the defendants producing over 8.9 million pages from over 1.7 million documents. During the discovery process, the plaintiffs learned that the company’s COO-director and an outside director both had a practice of at least sometimes using their personal email accounts for Facebook business matters relevant to the lawsuit, and that their email accounts had auto-deleted all emails older than 30 days (for the COO) or 180 days (for the other director). The defendants undertook an extensive investigation to see if the emails could be obtained from other sources, but determined that they could not.

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Remarks by Commissioner Crenshaw at the 44th Annual SEC Small Business Forum

Caroline A. Crenshaw is a Commissioner at the U.S. Securities and Exchange Commission. This post is based on her recent remarks. The views expressed in this post are those of Commissioner Crenshaw and do not necessarily reflect those of the Securities and Exchange Commission or its staff.

Good afternoon. It’s a pleasure to be here today. And it’s hard to imagine a more important week to focus on small businesses.

It has never been easy to be a small business owner. But, after the whipsawing market events of last week, you could perhaps say there are few times in recent memory when it has been more stressful to be a small business. Even with a reprieve, uncertainty and unpredictability are generally bad for business.

Given current circumstances, it is more important than ever that the Commission is mindful of our mission’s directive to facilitate capital formation – particularly for small business owners who usually bear the brunt of adverse market developments. Small businesses already wobbled more due to the recent market volatility than their larger counterparts. Over the course of the last week, the Russell 2000 index, composed of smaller companies, weathered greater losses than other major indices with larger company constituents.

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AI, Identity-Driven Shareholder Activism, and the Future of Corporate Governance

Pierluigi Matera is Professor of Comparative Law at Link Campus University of Rome. This post is based on his recent article forthcoming in the Boston University Journal of Science & Technology Law.

Artificial intelligence (AI) is rapidly transforming corporate governance. While much attention has focused on AI’s impact on operations, compliance, and risk management, its influence on shareholder activism deserves equal scrutiny—particularly as younger, technologically fluent investors bring their generational values to bear on corporate decision-making.

This evolution signals the potential emergence of identity-driven activism: a form of shareholder engagement that reflects priorities beyond short-term returns, such as climate action, diversity, and long-term social accountability—or any other cause, whatever it may be, to the extent that it creates common ground. Millennials and Gen Z investors, armed with AI-enabled tools, are increasingly capable of identifying causes they care about, crafting targeted proposals, and coordinating collective action with remarkable precision and speed.

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Court Upholds Legality of Poison Pills for Closed-End Funds but Limits Successive Plans

Eben P. ColbyKevin T. Hardy, and Elizabeth R. Gonzalez-Sussman are Partners at Skadden, Arps, Slate, Meagher & Flom LLP. This post is based on a Skadden memorandum by Mr. Colby, Mr. Hardy, Ms. Gonzalez-Sussman, Scott D. MusoffMarley Ann Brumme, and Cameron Jordan.

On March 28, 2025, the U.S. District Court for the Southern District of New York (SDNY) held that it was legal under the Investment Company Act of 1940 (1940 Act) for a closed-end fund to use a shareholder rights plan (colloquially known as a “poison pill”) to fend off a hedge fund seeking to take control of the fund. However, the court disapproved of the use of successive plans if substantively the same, for the same purpose and adopted while a prior plan was still in effect.

The case, initiated by hedge fund Saba Capital Master Fund, Ltd. (Saba) in January 2024, challenged the adoption of a series of poison pills under Sections 18(d) and 23(b) of the 1940 Act. Skadden represented the target of Saba’s suit, ASA Gold and Precious Metals Ltd. (ASA), in the implementation of the rights plan and briefing its legality under the 1940 Act. [1]

The decision represents a significant development in the ongoing legal battle between closed-end funds and hedge funds, and validates the use of an important defense that can be employed by closed-end funds targeted by activists.

The court was clear that a shareholder rights plan, in and of itself, does not violate the 1940 Act, and endorsed the long-accepted principle that shareholder rights plans serve a “legitimate role” of providing a board with “an opportunity to consider alternatives” when faced with a hostile tender offer, creeping control or similar threat.

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From Opposition to Action: S&P 500 Company Responses to Unfavorable ISS Say on Pay Recommendations

Linda Pappas is a Principal and Perla Cuevas and Olivia Wright are Consultants at Pay Governance LLC. This post is based on their Pay Governance memorandum.

In our previous Viewpoint, “Recap of the 2024 Say on Pay Season,” [1] we discussed the historically low rate of Institutional Shareholder Services (ISS) opposition to Say on Pay (SOP) proposals at S&P 500 companies in 2024. In our follow-up Viewpoint, “Record Low ISS S&P 500 Say on Pay Opposition: The Trends Behind the Decline,” [2] we reported that the general reduction of outlier CEO pay and improvement in compensation committee responsiveness to shareholder concerns likely contributed to reduced ISS SOP opposition. In continuation of our 2024 SOP Viewpoint series, we explore actions S&P 500 companies took in response to ISS SOP opposition and how these actions were received by ISS and shareholders. We also summarize key themes on which we anticipate proxy advisors and investors will focus in the 2025 SOP season.

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