Yearly Archives: 2025

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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Frank J. Favia Jr. and Jonathan A. Dhanawade are Partners, and Andrew J. Stanger is a Knowledge Counsel, at Mayer Brown LLP. This post is based on their Mayer Brown memorandum, and is part of the Delaware law series; links to other posts in the series are available here.

At A Glance

The Delaware Chancery Court has issued a notable opinion that confirms Delaware’s position as a pro-sandbagging jurisdiction and clarifies when damages may be computed using a transaction multiple. We examine the background and implications of the case in this Legal Update.

The Delaware Chancery Court has issued a notable opinion that confirms Delaware’s position as a pro-sandbagging jurisdiction and clarifies when damages may be computed using a transaction multiple. These are important points for parties to take into account when negotiating and drafting acquisition agreements.

In re Dura Medic Holdings, Inc. Consolidated Litigation [1] involved a private equity firm’s acquisition of a medical equipment supplier through a reverse triangular merger. As explained in more detail below, the buyer sought indemnification from the sellers for breaches of certain representations and warranties in the merger agreement.

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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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David Bell, Marie Bafus, and Dean Kristy are Partners at Fenwick & West LLP. This post is based on a Fenwick memorandum by Mr. Bell, Ms. Bafus, Mr. Kristy, and Wendy Grasso, and is part of the Delaware law series; links to other posts in the series are available here.

What You Need To Know

  • Delaware has adopted significant, much anticipated amendments to §§ 144 and 220 of the Delaware General Corporation Law, which are aimed at providing greater clarity and predictability to corporate fiduciaries in light of certain recent controversial decisions from the Delaware Court of Chancery. Those decisions have resulted in a number of high-profile companies reincorporating (or considering reincorporation) into other states and has formation-stage founders questioning the state for initial incorporation.
  • The amendments to § 144 provide safe harbor protections for related-party (interested) transactions with directors, officers, controlling stockholders, and members of a control group, including providing specific processes for approval of such transactions and a path for ratification by stockholders after the fact in some circumstances. They also lower the requirements for approving these acts and transactions.
  • The amendments to § 220 provide more clarity with respect to the scope and requirements for a stockholder inspection of books and records, providing an exclusive list of items that may be requested (narrowing the universe awarded in some § 220 cases), raising the procedural requirements for such demands, and allowing corporations to impose confidentiality restrictions.
  • The amendments, which were first introduced on February 17, 2025, are immediately effective and apply to all prior and future acts and transactions, but do not apply to court proceedings that were pending or completed on or before February 17, 2025, or to stockholder demands to inspect books and records made on or prior to that date.

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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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Patricia Volhard is a Partner, John Young is a Counsel, and Ulysses Smith is an ESG Senior Advisor at Debevoise & Plimpton LLP. This post is based on a Debevoise memorandum by Ms. Volhard, Mr. Young, Mr. Smith, and Alfie Scott.

Key Takeaways:

  • Asset managers frequently commit to collect and report on the greenhouse gas (“GHG”) emissions generated by their portfolio companies, often referred to as “portfolio” or “financed” emissions. An asset manager’s underlying investors may request this data, or the asset manager may be required to collect this data by law or as part of its membership of a voluntary industry initiative.
  • This In Depth considers the frameworks under which an asset manager commonly collects and reports on its portfolio emissions. In particular, asset managers should familiarize themselves with the methodologies for measuring GHG emissions under the PCAF standard when measuring and reporting on their portfolio emissions.
  • It also considers some of the practical issues that arise and possible solutions. For example, asset managers may choose to adopt a phased-in approach to reporting their portfolio emissions, prioritizing data collection and reporting for particular sectors where data is relatively easy to obtain or where emissions are relatively high.

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Equity Grant Disclosure Insights

Posted by Neil McCarthy, James Palmiter, and G. Michael Weiksner, DragonGC, on
Friday, April 4, 2025
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Neil McCarthy is Co-Founder and Chief Product Officer, James Palmiter is CEO and Co-Founder, and G. Michael Weiksner is Co-Founder and Chief Technology Officer at DragonGC. This post is based on a DragonGC memorandum by Mr. McCarthy, Mr. Palmiter, Mr. Weiksner, Jennifer Carberry, and Nicholas Sasso.

What’s Inside

This report offers exclusive insights into how early filers are navigating the SEC’s new disclosure mandates for equity grant awards. Our expert analysis highlights emerging trends and best practices, equipping your team with the knowledge to refine your approach this proxy season.

Key Highlights

  • Timing of Equity Grants: Explore how early filers are addressing disclosure requirements related to timing policies, including grant practices around material nonpublic information (MNPI).
  • Clarity and Transparency: See examples of how companies are enhancing disclosure language to align with regulatory expectations while maintaining simplicity.
  • Trends to Watch: Gain a preview of the most common strategies companies are employing to comply with the new rules.

Why This Matters

Early movers in disclosure often set the tone for the broader market. By understanding their approaches, you can benchmark your own practices and make informed decisions as filing deadlines approach.

This report is the first in DragonGC’s exclusive Proxy Season Series, designed to keep you informed with timely updates and actionable insights throughout the season.

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Weekly Roundup: March 28-April 3, 2025

Posted by the Harvard Law School Forum on Corporate Governance, on
Friday, April 4, 2025

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This roundup contains a collection of the posts published on the Forum during the week of March 28-April 3, 2025

Statement by Commissioner Crenshaw Regarding Climate-Related Disclosures Rule Litigation

Posted by Caroline A. Crenshaw, U.S. Securities and Exchange Commission, on Friday, March 28, 2025
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“Under Pressure”: Walking the Fine Line of Section 13(d) Passive Investor Status

Posted by Maia Gez, Scott Levi, and Michelle Rutta, White & Case LLP, on Saturday, March 29, 2025
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Understanding and Managing Legal Risk in Corporate DEI

Posted by Matteo Tonello, The Conference Board, Inc., on Sunday, March 30, 2025
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Responding to Stealth Dual-Class Stock

Posted by James Crowe, Council of Institutional Investors, on Monday, March 31, 2025
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The Lessons of Michael C. Jensen

Posted by René M. Stulz (Ohio State University), on Monday, March 31, 2025
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2025 Proxy Season Preview: A New Paradigm for Investment Stewardship

Posted by Ray Garcia, Matt DiGuiseppe, and Ariel Smilowitz, PricewaterhouseCoopers LLP, on Monday, March 31, 2025
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Delaware Enacts Important Corporate Law Reforms

Posted by Matthew A. Schwartz, William S.L. Weinberg, and Brian T. Frawley, Sullivan & Cromwell LLP, on Tuesday, April 1, 2025
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The Real and Financial Effects of Internal Liquidity: Evidence From the Tax Cuts and Jobs Act

Posted by James F. Albertus (Carnegie Mellon University), Brent Glover (Carnegie Mellon University), and Oliver Levine (Wisconsin School of Business), on Tuesday, April 1, 2025
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Navigating 11th Hour Guidance on Board DE&I

Posted by Deb Lifshey, Pearl Meyer & Partners, LLC, on Tuesday, April 1, 2025
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Navigating the 2025 Proxy Season: Six Key Developments to Watch

Posted by Scott A. Barshay, Chelsea N. Darnell, and Carmen X. Lu, Paul, Weiss, Rifkind, Wharton & Garrison LLP, on Wednesday, April 2, 2025
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Are There Too Few Publicly Listed Firms in the US?

Posted by René M. Stulz (Ohio State University), on Wednesday, April 2, 2025
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AI in Focus in 2025: Boards and Shareholders Set Their Sights on AI

Posted by Subodh Mishra, ISS STOXX, on Wednesday, April 2, 2025
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How Does Settling With an Activist Impact Shareholder Returns?

Posted by Marco Castellani, Patrick Ryan, and Lex Suvanto, Edelman Smithfield, on Thursday, April 3, 2025
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Deconstructing the “Anglo-American” Corporate Model

Posted by Brian R. Cheffins (University of Cambridge) and Bobby V. Reddy (University of Cambridge), on Thursday, April 3, 2025
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Sustainability Without the SDGs: US Policy Shifts and Corporate ESG

Posted by Matteo Tonello, The Conference Board, Inc., on Thursday, April 3, 2025
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Sustainability Without the SDGs: US Policy Shifts and Corporate ESG

Posted by Matteo Tonello, The Conference Board, Inc., on
Thursday, April 3, 2025
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Matteo Tonello is Head of Benchmarking and Analytics at The Conference Board, Inc. This post is based on a Conference Board memorandum by Andrew Jones, Senior Researcher, ESG Center at The Conference Board, Inc. 

In March 2025, the US formally rejected the UN Sustainable Development Goals (SDGs)—a set of 17 global objectives to address economic, social, environmental challenges. The US decision marks a significant departure from previous bipartisan support for multilateral sustainability frameworks. This report examines this policy shift and its potential implications for corporate sustainability efforts and the environment, social & governance (ESG) landscape.

Key Insights

  • The US withdrawal of support for the SDGs reflects a broader shift toward a sovereignty-first, transactional foreign policy, weakening global momentum for multilateral development efforts at a time when SDG progress remains off track.
  • As many US companies align with the SDGs, the impact of the US federal pullback on ESG strategies may be limited. Corporate sustainability efforts are driven more by business strategy, market forces, and stakeholder expectations than by voluntary global frameworks.
  • The US withdrawal from the SDGs may accelerate the fragmentation and politicization of the global sustainability landscape, underscoring the need for companies to anchor their ESG efforts in business value, legal defensibility, and region-specific regulatory realities.

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Deconstructing the “Anglo-American” Corporate Model

Posted by Brian R. Cheffins (University of Cambridge) and Bobby V. Reddy (University of Cambridge), on
Thursday, April 3, 2025
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Brian Cheffins is the S. J. Berwin Professor of Corporate Law at the University of Cambridge, and Bobby V. Reddy is the Professor of Corporate Law and Governance at the University of Cambridge. This post is based on their recent article forthcoming in the Harvard Business Law Review.

In the mid-1950s, L.C.B. Gower, a pre-eminent U.K. corporate law academic, was a visiting professor at Harvard Law School.  An intriguing by-product was a 1956 Harvard Law Review article where he compared and contrasted numerous aspects of U.S. and U.K. company law.  Similar multi-topic comparisons of these jurisdictions have been largely unknown since.  Instead, combining salient features of American and British corporate governance and corporate law into a single “Anglo-American” model to contrast that model with arrangements elsewhere has been the predominant approach. 

In a recent working paper we deconstruct the Anglo-American corporate model by undertaking the first thorough comparison of U.S. and U.K. corporate law in decades.  We show that there are significant doctrinal corporate law differences between the two jurisdictions, which means referring to an “Anglo-American” model in the corporate context can be misleading.  Still, due to an additional key finding — substantial similarities exist between the U.S. and the U.K. from a practical perspective — the notion of an Anglo-American corporate model cannot be dismissed out-of-hand.  A distinction between what Roscoe Pound referred to in the early 20th century as “law in books” (substantive legal doctrine) and “law in action” (enforcement and compliance) is crucial in this regard. 

In our paper, we focus on arrangements affecting publicly traded companies rather than all corporations.  Also, with the United States, to make our analysis of state corporate law tractable, we only discuss the position in Delaware, the most popular U.S. state for public company incorporations.  Our analysis of U.S. and U.K. corporate law nevertheless remains distinctively multi-faceted.  Topics we discuss include boards, directors’ duties, selection of directors, shareholder “decision” rights, shareholder litigation and corporate takeovers, with some of the key facets that illustrate the distinction between “law in books” and “law in action” when deconstructing the Anglo-American corporate model summarized below.

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How Does Settling With an Activist Impact Shareholder Returns?

Posted by Marco Castellani, Patrick Ryan, and Lex Suvanto, Edelman Smithfield, on
Thursday, April 3, 2025
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Marco Castellani is the Senior Vice President, Patrick Ryan is the Executive Vice President, and Lex Suvanto is the CEO at Edelman Smithfield. This post is based on their Edelman memorandum.

An examination of post-settlement stock price and M&A outcomes, as well as other implications

Agreeing to a settlement ranks among one of the most consequential decisions a board can face. Settlements typically involve the addition of activist-supported directors, who often bring their own priorities into the boardroom. Increasingly, settlement agreements also call for the creation of special board committees with specific mandates, for example, to oversee a strategic review.

Despite the high stakes, settlements between activist investors and the companies they target appear to be occurring at an ever faster pace. This reflects several factors, including an eagerness on the part of boards and management teams to avoid a distracting and costly public fight. The implementation of the Universal Proxy Card, which many perceive as increasing reputational risk for individual directors facing contested votes, may also be a contributing factor. Activists are similarly motivated to reach quick settlements to minimize costs and the risk of alienating shareholders. Importantly, a settlement often allows activists to move from the negotiation table to the decision table (i.e., the boardroom) and exert influence from the inside.

A fundamental question for directors considering a settlement is how the proposed agreement is likely to impact shareholder value. To answer this question, we analyzed 634 settlements entered between U.S.-listed companies and activists from 2010 through the end of 2024. Specifically, we examined stock price performance during the three-year period following the settlement, also taking into consideration whether the company was eventually acquired or remained public.

The results of this analysis offer valuable quantitative insights to help boards more effectively evaluate the potential outcomes of entering into a settlement agreement with an activist.

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AI in Focus in 2025: Boards and Shareholders Set Their Sights on AI

Posted by Subodh Mishra, ISS STOXX, on
Wednesday, April 2, 2025
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Subodh Mishra is Global Head of Communications at ISS STOXX. This post is based on an ISS-Corporate memorandum by Danielle Rizak, Associate, Compensation & Governance Advisory, & Alyce Lomax, Associate Vice President, Compensation & Governance Advisory, at ISS-Corporate.

KEY TAKEAWAYS

  • In 2024, public companies and shareholders increased their focus on artificial intelligence (AI), in terms of both board level oversight and shareholder proposals.
  • The percentage of companies providing some disclosure of board oversight increased by more than 84% year over year and more than 150% since 2022. The increases were seen across all industries.
  • Shareholder proposals related to AI more than quadrupled compared with 2023, mostly focused on calls for reports providing greater analysis and disclosure of impacts
  • Scrutiny of AI is expected to intensify further in 2025, due to increasing urgency around issues including the balance between transparency, responsibility, and return on investment.

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Are There Too Few Publicly Listed Firms in the US?

Posted by René M. Stulz (Ohio State University), on
Wednesday, April 2, 2025
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René M. Stulz is the Everett D. Reese Chair of Banking and Monetary Economics at the Fisher College of Business at The Ohio State University. This post is based on a recent paper by Professor Stulz, Professor Craig Doidge, Professor George Andrew Karolyi, and Kris Shen.

The number of publicly listed firms in the US peaked in 1996 at more than 8,000 firms. Doidge, Karolyi, and Stulz (2017, DKS) find that the number of listed firms in 2012 was about half of what it was in 1996. Using an econometric model that relates a country’s listings to various country characteristics, they conclude that US has a listing gap – that is, it has fewer listings than expected. That 2017 study concludes the US has too few publicly listed firms.

In our new paper, “Are there too few publicly listed firms in the US?”, we extend the analysis of DKS to 2023 and examine the evolution of the listing gap since 2012. This research makes it possible to assess whether the listing gap was a temporary phenomenon. We find that the listing gap increased by 32% from 2012 to 2023, so that at the end of 2023 the US listing gap is greater than ever. Though the listing gap keeps getting wider, it is doing so at a slower pace than it did in the first ten years after the listing peak.

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