Monthly Archives: February 2026

Board Governance in 2026

Posted by Christine Davine and Caroline Schoenecker, Deloitte LLP, on
Wednesday, February 11, 2026
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Christine Davine is a Managing Partner and Caroline Schoenecker is a Managing Director at Deloitte LLP. This post is based on a Deloitte memorandum by Ms. Davine, Ms. Schoenecker, Krista Parsons, Maureen Bujno, and Jamie McCall.

Redefining board leadership to meet modern challenges

Looking toward 2026, the responsibilities and expectations placed on corporate boards continue to evolve at an accelerating pace. Today’s directors are navigating a business environment shaped by a broader range of risks, fresh opportunities, and new approaches to leadership and oversight. The start of a new year represents an inflection point for board directors to consider how they can respond with informed action to embrace change.

The role of the modern board is expanding. Boards are expected to look beyond compliance and traditional oversight, stepping into roles as strategic oversight leaders and stewards of enduring value. Directors are increasingly pivotal in guiding organizations through uncertainty to help foster growth and resilience amid disruptions such as economic and geopolitical shifts, digital transformation, and regulatory developments. Effective boards are often those that keep pace with these shifts, regularly evaluating not only what they oversee but how they do so. READ MORE »

Delaware Case Applying Indemnification Materiality Scrape Creates Risks for the Unwary

Posted by Andrew J. Noreuil and Andrew Stanger, Mayer Brown LLP, on
Wednesday, February 11, 2026
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Andrew J. Noreuil is a Partner 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.

In a recent post-trial opinion, the Delaware Superior Court, applying a representations and warranties materiality scrape under an M&A purchase agreement indemnification provision, held that the seller breached its absence of changes representation that no event had occurred that had or reasonably could have an “adverse effect” (as opposed to a material adverse effect) on the acquisition target. In addition, the Court considered the buyer’s claims for fraud and willful misconduct for the representations that were determined to have been breached after applying the materiality scrape. This Legal Update examines in detail the Court’s analysis of the purchase agreement and its application of the materiality scrape and discusses considerations for parties when negotiating materiality scrape provisions.

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Board of Director Compensation Practices in the Russell 3000 and S&P 500

Posted by Matteo Tonello, The Conference Board, Inc., on
Tuesday, February 10, 2026
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Matteo Tonello is the Head of Benchmarking and Analytics at The Conference Board, Inc. This post is based on a Conference Board report by Paul Hodgson, Senior Advisor, ESGAUGE, Ariane Marchis-Mouren, Senior Researcher, Corporate Governance at The Conference Board, and Andrew Jones, Principal Researcher, Governance & Sustainability Center at The Conference Board.

This report examines how board director compensation practices across US public companies have evolved in 2025, drawing on comprehensive longitudinal data to assess levels, structures, mix, and emerging trends across the Russell 3000 and S&P 500.

Trusted Insights for What’s Ahead

  • Director pay has largely leveled off, rising just 2% in the Russell 3000 and remaining flat in the S&P 500, reflecting a mature and disciplined compensation model with medians clustered near $250,000.
  • Shareholder-approved limits have become a core governance safeguard, now adopted by roughly three-quarters of companies in both indexes, with a typical $750,000 cap that signals tighter oversight and growing investor scrutiny.
  • Director core pay elements have largely settled into a stable pattern, with cash retainers flat at $75,000 (Russell 3000) and $105,000 (S&P 500), stock awards holding at $150,000 and $190,000, and only minor variation in option values.
  • Companies have converged on a streamlined retainer-only structure, used by about 90% of firms as meeting fees continue to decline in prevalence and value, reinforcing a shift toward simpler and more predictable pay designs even as director responsibilities expand.
  • Director perquisites remain modest and highly concentrated, with travel reimbursement still the only widespread benefit (above 50% in both indexes) and most other perks—such as education support or charitable-match programs—concentrated among larger S&P 500 companies.

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Climate Disclosure and the Transformation of Gatekeeping

Posted by Andrew F. Tuch (Washington University in St. Louis), on
Tuesday, February 10, 2026
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Andrew F. Tuch is Professor of Law at Washington University in St. Louis. This post is based on his recent paper.

How might enhanced climate disclosures disrupt the verification practices of gatekeepers in capital markets transactions? Relatedly, should GHG emissions metrics be certified by experts? In a recent essay, I explore these questions, using the SEC’s now-stayed 2024 Climate Rule as a guide.

Enhanced climate disclosures are inevitable, and their credibility will depend on robust verification mechanisms. Moreover, the Climate Rule itself still matters, whatever its eventual fate. Shaped by years of input and detailed analysis, it offers lessons to guide future regulatory design. And even if the Rule, or a revised version, never takes effect, disclosure regimes in other jurisdictions are likely to require similar disclosures and have a comparable impact on issuers and gatekeepers. READ MORE »

Drafting Guidance from Delaware Supreme Court on Earnouts, Efforts Obligations, and Fraud

Posted by Gail Weinstein, Philip Richter, and Steven Epstein, Fried Frank, on
Tuesday, February 10, 2026
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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, and Maxwell Yim, and is part of the Delaware law series; links to other posts in the series are available here.

In Johnson & Johnson v. Fortis Advisors (Jan. 12, 2026), the Delaware Supreme Court reversed the Court of Chancery’s decision that, based on the implied covenant of good faith and fair dealing, Johnson & Johnson breached its efforts obligations with respect to the first earnout payment under the Merger Agreement pursuant to which, in 2019, it acquired Auris Health, Inc., a medical robotics company. In a 2024 decision, the Court of Chancery had awarded Auris damages of over $1 billion ($300 million of it attributed to the breach with respect to the first earnout payment).

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Statement on Investor Concerns About Shareholder Rights and SEC Policy Before the SEC’s Investor Advisory Committee

Posted by Severine Neervoort, ICGN, on
Monday, February 9, 2026
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Severine Neervoort is the Global Policy Director at ICGN. This post is based on her remarks before the U.S. Securities and Exchange Commission (SEC) Investor Advisory Committee’s Corporate Governance Panel.

ICGN represents asset owners and managers from around the world, how are the recent regulatory changes in the US being perceived by global institutional investors?

The International Corporate Governance Network represents investors with over 90 trillion dollars of assets under management. We work to promote high standards of corporate governance globally and our members – both asset owners and asset managers – have significant exposure to the US market.

I would like to start by reminding you that investors, companies, and regulators all have a shared interest in efficient capital markets. This enables businesses to access long-term capital, support innovation and create jobs, while also generating the returns on which pension funds and citizens depend.

Capital markets flourish when investors are confident that their rights are respected, and that companies are operating with integrity and oversight.

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Financial Crises: New Insights

Posted by Eric Hilt (Wellesley College), on
Monday, February 9, 2026
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Eric Hilt is a Professor of Economics at Wellesley College. This post is based on his recent paper.

Financial crises, like disease outbreaks, are recurring events with devastating consequences.  Contagious and difficult to control, crises trigger steep declines in asset prices, disrupt credit intermediation, and precipitate waves of business failures, unemployment, and other economic dislocations. The experience of living through a crisis can have lasting impacts, even shaping individuals’ beliefs and preferences decades later. Crises can also have significant political repercussions. For example, the Great Depression contributed to the rise of fascism in Europe, and to an unprecedented reconfiguration of American institutions—President Franklin Delano Roosevelt’s New Deal.

The Global Financial Crisis of 2008 and the incipient financial panic at the outset of the Covid pandemic remind us that financial crises are likely to recur, and that understanding financial crises remains as important as ever. In recent years scholars have assembled new sources of data and utilized novel empirical designs to analyze financial crises, shedding light on old questions and producing new insights.  In what follows, I highlight some of those insights, as discussed in Hilt (2026). READ MORE »

Delaware Supreme Court’s Earnout Decision Reinforces Primacy of Contract and Illustrates the Limits of the Implied Covenant

Posted by Michael Holmes, Jason Halper, and Jeffrey Crough, Vinson & Elkins LLP, on
Monday, February 9, 2026
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Michael Holmes is a Vice Chair, and Jason Halper and Jeffrey Crough are Partners at Vinson & Elkins. This post is based on a Vinson & Elkins memorandum by Mr. Holmes, Mr. Halper, Mr. Crough, Timbre Shriver, Brandon Osowski, and Elizabeth Ilyina-Orak, and is part of the Delaware law series; links to other posts in the series are available here.

On January 12, 2026, the Delaware Supreme Court issued an en banc opinion in Johnson & Johnson v. Fortis Advisors LLC, No. 490, 2024, 2026 WL 89452 (Del. Jan. 12, 2026), largely affirming and reversing in part a Court of Chancery post-trial decision that awarded former stockholders of Auris Health, Inc. (“Auris”) over $1 billion in damages in their post-closing earnout dispute against Johnson & Johnson (“J&J”). Apart from the high stakes, the Supreme Court’s unanimous opinion, authored by Justice LeGrow, is notable because it is the first opinion to address the recent slew of earnout disputes in Delaware (which we have previously summarized here). The decision reinforces three key principles of Delaware M&A and contract law. First, absent unusual circumstances, a court will not utilize the implied covenant of good faith and fair dealing to rewrite the parties’ agreement as reflected in the words in the contract. Second, where a party’s obligation is dependent on regulatory approval, courts will hold the parties to the standard they set for themselves in the contract, including where that standard is by reference to the buyer’s past practices with respect to securing regulatory approval for its own products. Third, fraud claims based on extracontractual statements are precluded only by clear “anti-reliance” language in the contract, not by an “exclusive remedy” provision. Together, these principles underscore the importance of careful drafting so that the language of an agreement conforms to the parties’ expectations.

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2026 Corporate Governance Trends to Watch

Posted by Ray Garcia, Matt DiGuiseppe, and Arielle Berlin, PricewaterhouseCoopers, on
Sunday, February 8, 2026
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Ray Garcia is a Partner, Matt DiGuiseppe is a Managing Director, and Arielle Berlin is a Director at PricewaterhouseCoopers (PwC). This post is based on their PwC memorandum.

2026 begins with a business landscape that is unsettled yet full of possibility. Economic signals are mixed, and geopolitical tensions continue to reshape global markets. Technology (especially AI) is advancing at a breakneck pace, redefining how companies operate and how people work. Talent models are shifting, capital is beginning to flow more freely again, and stakeholders are asking tougher questions about how organizations create long-term value. In short, the ground is still moving underfoot, and companies are striving to stay ahead.

In this environment, the board’s role has never been more central. Directors must serve as steady navigators, helping steer their organizations through uncertainty toward sustainable, long-term growth. The companies whose boards thrive will be those that adapt—by revisiting established practices, embracing new technologies, and staying closely attuned to the evolving landscape. Against this backdrop, five governance trends stand out for 2026 that will shape board agendas and actions in the year ahead.

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Shareholder Engagement in Flux: Recent Developments and Practical Implications

Posted by Justin C. Nowell, Sonia G. Barros, and Andrea L. Reed, Sidley Austin LLP, on
Saturday, February 7, 2026
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Justin C. Nowell, Sonia G. Barros, and Andrea L. Reed are Partners at Sidley Austin LLP. This post is based on a Sidley memorandum by Mr. Nowell, Ms. Barros, Ms. Reed, Katie Klaben, Katie LaVoy, and Sara M. von Althann.

Evolving regulatory and market dynamics are reshaping the shareholder engagement landscape with an impact on the 2026 proxy season and beyond. The Securities and Exchange Commission’s (“SEC”) recent announcement regarding Rule 14a-8 shareholder proposals combined with increased scrutiny of proxy advisors, the increase of vote no / withhold campaigns, the implementation of retail voting programs, and updated guidance on historically routine shareholder engagement practices, present new considerations for issuers and investors alike. This article examines the implications of these changes and offers insight into navigating shareholder engagement in the current environment.

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