Monthly Archives: April 2026

Delaware LLC Parties Cannot Bypass Fiduciary Waivers via Implied Covenant

Posted by Alex Kaplan and Katie Lutz, Sidley Austin LLP, on
Sunday, April 12, 2026
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Alex Kaplan is a Partner and Katie Lutz is an Associate at Sidley Austin LLP. This post is based on their Sidley memorandum and is part of the Delaware law series; links to other posts in the series are available here.

On April 30, 2025, the Delaware Court of Chancery issued a memorandum opinion dismissing with prejudice a post-closing challenge to the VillageMD acquisition of CityMD. The Delaware Supreme Court later summarily affirmed.

The Delaware Court of Chancery found that where an LLC agreement (i) eliminates fiduciary duties, (ii) authorizes conflicted action/self-interest, and (iii) expressly addresses the challenged conduct through detailed governance and amendment provisions, plaintiffs cannot repackage fairness or disclosure theories as an implied covenant claim. Unlike Delaware corporations — where fiduciary duties are structural and cannot be eliminated by contract — Delaware LLCs and partnerships are built around freedom of contract, and courts will not “import” fiduciary-like obligations by implication when the parties have bargained them away.

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The Expanding Role of the Audit Committee Chair

Posted by Jenna Fisher and Catherine Schroeder, Russell Reynolds Associates, on
Saturday, April 11, 2026
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Jenna Fisher is a Managing Director and Catherine Schroeder is Global Commercial Strategy & Insights Leader at Russell Reynolds Associates. This post is based on their Russell Reynolds memorandum.

The role of the audit committee chair has expanded meaningfully over the past decade. While responsibility for financial oversight remains foundational, today’s chairs are operating in an environment shaped by accelerating technological change, rising regulatory scrutiny, and a far more complex risk landscape.

To better understand the evolving expectations of audit committee chairs, Russell Reynolds Associates interviewed 15 best-in-class audit committee chairs and members across public company boards. A consistent picture emerged.

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Meta’s New Executive Pay Plan Ties Nearly $1 Billion to Stock Performance

Posted by Joyce Chen, Equilar, Inc., on
Friday, April 10, 2026
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Joyce Chen is an Associate Editor at Equilar, Inc. This post is based on an Equilar memorandum by Ms. Chen and Courtney Yu.

Meta Platforms recently introduced a new executive compensation structure centered on large equity awards, drawing close comparisons to the aggressive pay model pioneered by Tesla. The new pay structure places significant weight on stock price appreciation for executives, including Chief Technology Officer Andrew Bosworth, Chief Product Officer Chris Cox, Chief Operating Officer Javier Olivan and Chief Financial Officer Susan Li, with the potential for extensive payouts if ambitious market capitalization targets are achieved.

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Weekly Roundup: April 3-9, 2026

Posted by the Harvard Law School Forum on Corporate Governance, on
Friday, April 10, 2026

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This roundup contains a collection of the posts published on the Forum during the week of April 3-9, 2026

A Beacon in the Storm: C-suite Mentoring as a Leadership Imperative

Posted by Kurt Harrison and Suzanne Bose-Mallick, Russell Reynolds Associates, on Friday, April 3, 2026
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Beyond the PSU Mandate

Posted by Voytek Sokolowski, FW Cook, on Saturday, April 4, 2026
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DExit: So You Want to Leave Delaware? What To Consider Beyond the Legalese

Posted by Garrett Muzikowski, Andrea Hearon, Pat Tucker, FTI Consulting, on Sunday, April 5, 2026
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Special Committees in Conflict Transactions: A Practical Guide

Posted by Maeve O’Connor, William D. Regner, and Amy Zimmerman, Debevoise & Plimpton LLP, on Monday, April 6, 2026
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Consumers Cut Back, CEOs Depart, and Boards Act

Posted by Dick Patton and Alex Madronal, Russell Reynolds Associates, on Monday, April 6, 2026
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SEC Speaks 2026: What Public Companies and Investment Advisers Need to Know

Posted by Paul Helms, Caitlyn Campbell, and Jen Levengood, McDermott Will & Schulte, on Tuesday, April 7, 2026
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Top 5 Corporate Governance Priorities for 2026

Posted by Matteo Tonello, The Conference Board, Inc., on Tuesday, April 7, 2026
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Lessons From the Skies for Executive Compensation Programs

Posted by Alessandra Murata and Michael Bergmann, Cooley LLP, on Wednesday, April 8, 2026
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Why Shareholder-Driven Corporate Social Responsibility Failed

Posted by Mark J. Roe (Harvard Law School), on Wednesday, April 8, 2026
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Board Practices: Crisis Management and the Board

Posted by Natalie Cooper (Deloitte LLP) and Randi Morrison (Society for Corporate Governance), on Wednesday, April 8, 2026
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When Fiduciaries Collide: Foreshadowing a Looming Conflict in Corporate Governance

Posted by Paul Rissman, Rights CoLab, on Thursday, April 9, 2026
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Against Limited Liability

Posted by Lynn M. LoPucki (UF Levin College of Law), on Thursday, April 9, 2026
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Regulatory Simplification and the SEC’s Core Mission

Posted by Paul Atkins, U.S. Securities and Exchange Commission, on Thursday, April 9, 2026
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Regulatory Simplification and the SEC’s Core Mission

Posted by Paul Atkins, U.S. Securities and Exchange Commission, on
Thursday, April 9, 2026
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Paul S. Atkins is the Chairman 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 Chairman Atkins and do not necessarily reflect those of the Securities and Exchange Commission or its staff.

Thank you very much, Jim [Lee], and good morning, ladies and gentlemen. Governors Abbott and DeSantis, I am grateful to share the stage with you. And to Messieurs [Jim] Esposito and Lee, I thank you for the perspectives that you have shared and for the example that you have set.

First principles have very clearly found fertile ground here in Florida. And at its core, I believe that the momentum taking place across the Boom Belt reflects a deeply American idea: that competition—among firms; among markets; and yes, among States—is the animating force behind a system that has produced more prosperity than any other in human history.

Competition, as I noted recently in Texas, does not pause for tradition, nor does it defer to legacy jurisdictions. Over time, it compels systems, and States, to adapt—or to yield. Through competition, good ideas spread, poor ones fade, and the system itself grows stronger.

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Against Limited Liability

Posted by Lynn M. LoPucki (UF Levin College of Law), on
Thursday, April 9, 2026
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Lynn M. LoPucki is the Levin, Mabie & Levin Professor of Law at the University of Florida Levin College of Law and Professor Emeritus at the UCLA School of Law. This post is based on his recent article, forthcoming in the Boston University Law Review.

Limited liability is a firmly entrenched aspect of entity law. Prominent scholars have referred to it as “one of mankind’s greatest ideas.”[1] As applied to tort liability, however, it is one of mankind’s dumbest mistakes. Limited liability lets business owners escape liability for the damage their projects wrongly inflict on others, shifts business risks and costs to victims and government, and puts businesses that capitalize and insure to meet their obligations at a competitive disadvantage. Limited liability diverts investment away from the businesses whose operations would have maximized social wealth.

Professor Michael Simkovic has conservatively estimated the externalization of risk and loss from business owners to third parties at $4.3 trillion in 2017, about 20% of GDP.[2] The true figure is probably much higher.  Limited liability is an engine of destruction that hampers the American economy by steering a large portion of economic activity into socially wasteful, but artificially profitable, projects.

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When Fiduciaries Collide: Foreshadowing a Looming Conflict in Corporate Governance

Posted by Paul Rissman, Rights CoLab, on
Thursday, April 9, 2026
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Paul Rissman is Co-Founder of Rights CoLab. This post is based on his Rights CoLab memorandum.

When Fiduciaries Collide: Foreshadowing a Looming Conflict in Corporate Governance

Envision a situation with two sets of fiduciaries, one a Delaware corporate board, the other a shareholder of the corporation who is also the trustee of a diversified retirement fund. The corporation in question generates negative externalities in the form of sub-living wages and carbon pollution, contributing to systemic macroeconomic risk[1] that reduces income growth and aggregate demand, damages productivity, and increases the likelihood of financial crises. The retirement trustee has determined that in aggregate, the economic toll of these externalities constitutes an unacceptable risk to beneficiaries’ future financial health. The trustee, in observing its duty of prudence, therefore believes these externalities should be reduced by the firms in the retirement portfolio responsible for them. The trustee additionally believes that our corporate board will not voluntarily undertake steps to reduce the externalities, as this will entail substantial cost in the form of higher labor expense and increased expenditure on pollution control equipment, or even an undesired change in the business model. Our well-diversified trustee, invested in thousands of assets, assesses that its portfolio weighting in the corporation is minuscule, so that any financial damage to the corporation itself, as a result of these increased costs, will be nothing more than a rounding error to the trustee’s portfolio as a whole. On the other hand, the trustee estimates that the pecuniary long-term damage to the overall portfolio, in the absence of systemic risk mitigation, will be significant. The trustee, cognizant of the fiduciary duty to investigate and monitor portfolio risk, engages with the corporation’s board to encourage it to reduce the firm’s externalities. As affirmed in McRitchie v. Zuckerberg, however, the corporate director’s fiduciary duty is not to any particular shareholder, but to the long-term value of the company’s shares. The board has judged that reducing the firm’s externalities would harm the long-term value of the shares, so the board refuses the demand. The trustee escalates by initiating a “vote no” campaign against the board, hoping to remove the incumbent directors and thereby shift the corporation’s behavior.

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Board Practices: Crisis Management and the Board

Posted by Natalie Cooper (Deloitte LLP) and Randi Morrison (Society for Corporate Governance), on
Wednesday, April 8, 2026
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Natalie Cooper is a Senior Manager at Deloitte LLP and Randi Morrison is General Counsel and Chief Knowledge Officer at the Society for Corporate Governance. This post is based on a Deloitte and Society for Corporate Governance report by Ms. Cooper, Ms. Morrison, Christine Davine, Maureen Bujno, Krista Parsons, and Caroline Schoenecker.

Crisis management is a vital organizational function, enabling resilience and mitigation against potential adverse implications associated with disruptive events such as financial instability, cyberthreats, operational breakdowns, and reputational harm—any of which may jeopardize ongoing  operations and an organization’s long-term viability. The board of directors plays a crucial role in this area by providing strategic oversight, establishing governance frameworks, and making informed decisions that are important, particularly in today’s increasingly complex risk landscape.

This Board Practices Quarterly is based on a recent survey of members of the Society for Corporate Governance representing public and private companies. The survey, fielded in Q4 2025, examined organizational crisis preparedness and governance, including topics such as crisis plan formalization, types of crises addressed in the plan, management functions that participate in crisis teams, and the role of the board of directors.

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Why Shareholder-Driven Corporate Social Responsibility Failed

Posted by Mark J. Roe (Harvard Law School), on
Wednesday, April 8, 2026
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Mark J. Roe is the David Berg Professor of Law at Harvard Law School. This post is based on his recent article, forthcoming in the University of Pennsylvania Law Review.

A decade ago, hopes were high in some circles that pressure from the new, large, economically-powerful institutional shareholders, like BlackRock, for more corporate social responsibility—on issues like climate change, the environment, and justice—would become a major feature of the corporate landscape and move the American corporation to do what government was not doing. That hope arose because incentives emanating from America’s shareholding structure had shifted when firm-by-firm investments by large shareholding institutions evolved to market-wide, across-the-economy investments in very large portfolios. Institutional investors of this sort no longer picked stocks; they invested broadly across the stock market and the American economy. In some circles that ownership structure looked to be creating incentives for financial institutions with wide ownership to pressure the American corporation to benefit the economy overall, and not just boost the profits of their portfolio companies. In CSR circles, hopes were high that the new universal owner had incentives to fulfill social responsibility gaps seen as having been left by government.

For example, investors with across-the-economy ownership had more reason to make their companies internalize externalities; if one firm in the portfolio profited at the expense of another firm, the new investor’s profit in one would be offset by the loss in the other firm. And turning from government regulation to private pressure was needed, said many analysts and activists, because of our broken government. With deadlocked government a dead-end, the CSR and ESG movements sought to pressure large institutional shareholders in corporate America toward social progress.

Many in the new shareholder class of universal owners indeed bought into the new corporate social responsibility playbook and pressed corporate America for more socially responsible action.

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Lessons From the Skies for Executive Compensation Programs

Posted by Alessandra Murata and Michael Bergmann, Cooley LLP, on
Wednesday, April 8, 2026
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Alessandra Murata and Michael Bergmann are Partners at Cooley LLP. This post is based on their Cooley memorandum.

As seasoned pilots know, a downward spiral often starts gradually, almost imperceptibly, unless you heed the early warning signs. If those signs are missed or ignored, trouble compounds. It’s often tough to know whether you’re really in a spiral until it starts to tighten, and at some point – sometimes seemingly suddenly – breaking free may no longer be possible.

So, you’re thinking, what does that have to do with the design and administration of executive compensation programs? Although the nexus is perhaps not immediately obvious, the hard lessons from the sky have something to teach us.

Unfortunately, unlike pilots with instruments tailored to reveal an incipient spiral, those responsible for making decisions about executive compensation programs don’t have specialized tools that can reliably identify external factors that could cause the program to misfire and fail to achieve its intended purpose. Most commonly those external factors relate to the broader macroeconomic climate – for instance, the 2008 financial crisis or, more recently, the COVID-19 pandemic. The volatility caused by financial or geopolitical shocks can easily disrupt compensation programs, leading them to a spiral toward dysfunction – for example, because of unanticipated swings in equity value or the depletion of cash reserves.

So is a spiral for compensation programs tightening? No one knows of course. The only thing that’s certain is that something will happen, even if that something is simply not much of anything. That realization will cause its own reckoning.

The lesson for executive compensation programs is to be prepared for the uncertainty and whatever may (or may not) come out of it. The playbook for that preparation is becoming well-worn, but it’s worth reviewing, particularly with the incentive award season in full swing.

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