Monthly Archives: March 2026

CEO Tenure is More Important than the CEO-Chair Debate

Victoria Tellez is the Research Director at FCLTGlobal. This post is based on her FCLTGlobal memorandum.

In governance circles, few topics generate more debate than whether the CEO should also serve as board chair. Regulators in some markets have taken firm positions, and activists often argue that separation between the two roles is a universal best practice.

But the empirical evidence tells a different story: serving as both chair and CEO is not inherently good or bad – in fact, CEOs who hold both roles tend to remain in office longer, by an average of three years, than peers who do not.
The more consequential issue is not formal structure, but how boards design leadership and oversight in an environment of shorter CEO tenures. As leadership cycles compress, the risk to long-term value lies in repeated strategic resets, erosion of institutional memory, and underinvestment in long-term priorities.

For boards and executives, the key is not conforming to a governance trend or reacting to external pressure. It is choosing a structure that fits the company’s long-term needs, explaining that choice transparently, and ensuring the board has the expertise, independence, and processes to govern effectively, regardless of who holds the gavel.

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Quarterly Review on Q4 2025 Trends in M&A, Activism and Corporate Governance

G.J. Ligelis Jr., Andrew M. Wark, and Bethany A. Pfalzgraf are Partners at Cravath, Swaine & Moore LLP. This post is based on a Cravath memorandum by Mr. Ligelis Jr., Mr. Wark, Ms. Pfalzgraf, Edward O. Minturn, and Evan A. Hill.

Mergers & Acquisitions

WHY BUYERS ARE INCREASINGLY TURNING TO STATE LAW TO ACQUIRE DISTRESSED ASSETS

For companies and stakeholders seeking to execute distressed asset sales with speed, certainty, cost control and surgical execution, state law regimes offer non-bankruptcy alternatives to chapter 11 bankruptcy sales.[1] These state law regimes can facilitate distressed M&A transactions with significantly lower administrative costs, tighter timelines and greater process control, especially where secured creditors or other key stakeholders cooperate to drive a coordinated strategy.

One such state law mechanism, Uniform Commercial Code (UCC) Article 9 sale, implements a secured creditor’s statutory right to enforce against defaulted personal property-type collateral and dispose of it via public or private sale subject to the overarching requirement that every aspect of the disposition be “commercially reasonable.” Public sales permit credit bidding, generally require notice to only the debtor and other lienholders and allow the buyer to take assets free and clear of the foreclosing and subordinate liens. Private sales can be faster but require strong evidentiary backing (marketing, valuation) and limit credit bidding absent a recognized market for the assets.[2]

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Top Governance & Stewardship Trends for 2026

Subodh Mishra is the Global Head of Communications at ISS STOXX. This post is based on an ISS Governance Research report.

Key Takeaways

  • Compensation and Say-on-Pay: 
    • There will be a slight increase in 2026 in the number of U.S. companies expected to demonstrate responsiveness to prior-year pay concerns. The percentage of companies with failed say-on-pay votes only slightly increased from the record low of 1.1% in 2024 to 1.2% in 2025. However, median pay support decreased from 94.9% in 2024 to 94.5% in 2025, and the percentage of companies that received between 50% and 70% support increased from 5.1% in 2024 to 5.5% in 2025. There were several high-profile failed votes in 2025 that will warrant a closer look this year.
    • U.S. companies may receive limited shareholder feedback following the SEC’s new 13G and 13D filing guidelines. Following the new SEC filing guidelines for 13G and 13D forms, some investors have been wary of providing candid feedback on executive pay, particularly after a low say-on-pay vote result, due to the possibility of being reclassified as an “active” investor. As a result, in 2025 some companies disclosed in their proxy that they had difficulty receiving investor feedback following the SEC’s updates, and it is expected that more companies will have similar disclosures in 2026.

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Delaware Supreme Court Reverses Moelis

Walter Davis and Marjorie Duffy are Partners, and Randi Lesnick is a Co-Chair of the Corporate Practice at Jones Day. This post is based on a Jones Day memorandum by Mr. Davis, Ms. Duffy, Ms. Lesnick, Joel May, and Jennifer Lewis, and is part of the Delaware law series; links to other posts in the series are available here.

In Short

The Situation: A stockholder sought a judgment declaring that certain provisions of a stockholders agreement were facially invalid and unenforceable under 8 Del. C. § 141(a). The Court of Chancery found that the plaintiff’s claims were timely and that the stockholders agreement violated Delaware law.

The Result: The Delaware Supreme Court held that the challenged provisions, to the extent they conflict with the managerial authority of the board conferred by § 141(a), were voidable (not void) and that the plaintiff unreasonably delayed in asserting its challenge to those provisions.

Looking Ahead: The Court of Chancery’s decision was the catalyst for the 2024 amendments to § 122(18), which resolved market uncertainty in the wake of that decision. The Delaware Supreme Court’s decision provides another measure of certainty by making clear that a plaintiff’s facial challenges to voidable acts must be timely brought.

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Five Ways AI Could Transform Coming Proxy Seasons

James E. Langston and Carmen X. Lu are Partners at Paul, Weiss, Rifkind, Wharton & Garrison LLP. This post is based on a Paul Weiss memorandum by Mr. Langston, Ms. Lu, Katherine Forrest, and Jonathan Ashtor.

Recent decisions by J.P. Morgan Asset Management and Wells Fargo to deploy artificial intelligence (“AI”) to guide proxy voting are evidence of deeper structural changes already underway that could transform future proxy seasons. The near-term impact of AI will likely be most acutely felt in the shift away from benchmark voting policies developed by proxy advisors to customized voting policies developed with the aid of AI. Over the medium to longer term, AI could potentially upend the tactics, tools and timing of future proxy contests. We highlight below five potential changes that could occur in the coming years.

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Arizona Senate Bill 1503: The “Sole Economic Interest” Standard and State-Level Intervention in Proxy Voting and Fiduciary Governance

Elizabeth Goldberg is a Partner and Yara Ismael is an Associate at Morgan, Lewis & Bockius LLP.

Arizona Senate Bill 1503 (SB1503) would reshape the legal landscape for proxy voting by public pension fiduciaries and their engagement with proxy advisory firms. The bill — introduced on January 29, 2026, sponsored by Senators David Gowan and Javan Mesnard and Representative Justin Olson — has advanced out of committee.

The bill reflects a broader national trend toward heightened scrutiny of proxy voting practices, fiduciary duties, and shareholder engagement. For example, Texas recently enacted SB 2337, which imposes disclosure and economic-interest requirements on proxy advisory firms when their recommendations are not based solely on shareholders’ financial interests, and a recent Executive Order has directed federal agencies to review the regulation of proxy advisors and environmental, social, or governance (ESG) related voting practices within the federal fiduciary framework. Senator Gowan told the committee that SB1503 mirrors recent federal action aimed at refocusing fiduciary decision-making on economic return and limiting the influence of ESG and diversity, equity, and inclusion (DEI) considerations in proxy voting.

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Key Issues for Companies and Activist Investors Heading into the 2026 Proxy Season

Kerry E. BerchemJohn Patrick Clayton, and Bryan D. Flannery are Partners at Akin Gump Strauss Hauer & Feld LLP. This post is based on an Akin Gump memorandum by Ms. Berchem, Mr. Clayton, Mr. Flannery, Steven FranklinDouglas A. Rappaport, and Kate D. Shapiro.

Executive Summary

As the 2026 proxy season prepares to go into full swing, significant structural shifts are underway in the proxy voting ecosystem. Regulatory scrutiny, evolving investor stewardship frameworks and innovations in retail voting platforms are combining to complicate traditional assumptions about governance activism. For shareholder activists, whether hedge funds, ESG- or sustainability-oriented groups or other investors, the new regime presents both opportunities and headwinds.

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Nathan Cummings Foundation v. Axon Enterprise, Inc.

Laura Campos is the Senior Director of Economic Justice at Nathan Cummings Foundation.

On February 17, 2026, Nathan Cummings Foundation (NCF) filed suit against Axon Enterprise for its intended omission of our shareholder proposal. We took this step reluctantly. It felt like our only option in the wake of a recent departure from decades of standard practice following the Securities & Exchange Commission’s (SEC) November 2025 announcement that its staff would abandon the practice of reviewing and responding to no-action requests.

Historically, companies that believed they had a valid basis under Exchange Act Rule 14a-8 (the Rule) to omit a proposal under one of the Rule’s enumerated exclusions filed a mandatory notice with the SEC, typically asking for no-action relief. I.e., the company seeking relief would ask the SEC staff to concur with its analysis and represent informally that the staff would not recommend an enforcement action against the company were the company to omit the proposal. The proponent, by rule, was entitled to respond to the companyʼs notice, and the staff would typically take both submissions under advisement and issue guidance either concurring or not concurring with the company’s analysis. While not binding in either direction, companies generally respected the staffʼs response.

Though shareholders retained their private right of action to sue the company, even when the staff concurred with the company’s request, the long-standing process often led to matters being resolved directly between the shareholder proponent and the company rather than through a lawsuit. For that reason, we have seen only sporadic suits. READ MORE »

Weekly Roundup: February 27-March 5, 2026


More from:

This roundup contains a collection of the posts published on the Forum during the week of February 27-March 5, 2026


Private Equity for All: The Paradoxical Push to Democratize Private Markets


Texas Judge Strikes Down Anti-ESG “Boycott” Law


Delegating Enforceability: A Novel Solution to Corporate Forum Selection Disputes


Business Concentration around the World: 1900-2020



Chancery Interprets LLC Agreement as Not Eliminating Fiduciary Duties


Systematic Corruption



Reframing Board Diversity Disclosure in 2026 Proxy Statements



Sustainability Disclosures: A Complex Legal and Regulatory Environment for Boards of Directors


Building a Policy-First System for Proxy Voting and Governance Analysis


Building a Policy-First System for Proxy Voting and Governance Analysis

Nicolaas Koster and Alexander Kaltenböck are Co-Founders, and Karla Bos is an Advisory Board Member at Proxywise AI.

Proxy voting is one of the most structured and observable ways institutional shareholders exercise governance rights. Yet the operational cost of applying voting policies consistently across thousands of ballot items remains high.

As Professor Lucian Bebchuk and others have emphasized, institutional ownership concentrates shareholder power in intermediaries. Voting authority is exercised through layered delegation: beneficiaries to asset owners, asset owners to asset managers, and managers to internal stewardship teams and (often) external research providers. Concentration does not eliminate agency costs; it relocates them. The practical costs of implementing and monitoring voting policy therefore shape whether shareholder power is exercised effectively.

At Proxywise AI, we are building a policy-first proxy voting and governance analysis system designed to make proxy voting more transparent, consistent, and auditable. This post highlights the core design choices behind the system and what we are learning from two early-stage pilots in proxy season 2026 – one with an asset owner and one with a large asset manager – running in parallel against existing workflows for testing and validation.

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