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Program on Corporate Governance Advisory Board
- Peter Atkins
- David Bell
- Kerry E. Berchem
- Richard Brand
- Daniel Burch
- Paul Choi
- Jesse Cohn
- Arthur B. Crozier
- Renata J. Ferrari
- Andrew Freedman
- Ray Garcia
- Joseph Hall
- Jason M. Halper William P. Mills
- David Millstone
- Theodore Mirvis
- Philip Richter
- Elina Tetelbaum
- Sebastian Tiller
- Marc Trevino
- Steven J. Williams
Author Archives: Harvard Law School Forum on Corporate Governance and Financial Regulation
Freeing Trapped Cash in Cross-Border Deals
In private company transactions, dealmakers often spend significant amounts of time talking about how to treat the cash held by an acquisition target. For example, if the buyer and the seller are negotiating price on the assumption that the target will be sold on a cash-free, debt-free basis, how does the purchase price get adjusted […]
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Posted in International Corporate Governance & Regulation, Mergers & Acquisitions, Practitioner Publications
Tagged Acquisition agreements, Cash flows, China, Cross-border transactions, Foreign firms, International governance, Mergers & acquisitions
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Delaware Court: Fee-Shifting Bylaw Does Not Apply to Former Stockholder
In Strougo v. Hollander, the Delaware Court of Chancery held that a fee-shifting bylaw did not apply to a former stockholder’s challenge to the fairness of a 10,000-to-1 reverse stock split that the corporation undertook in connection with a going-private transaction because (i) the bylaw was adopted after the stockholder’s interest in the corporation ceased […]
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Posted in Court Cases, Mergers & Acquisitions, Practitioner Publications
Tagged Attorneys' fees, Charter & bylaws, Delaware cases, Delaware law, DGCL, Going private, Merger litigation, Mergers & acquisitions
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The Benefits of Limits on Executive Pay
Our paper, When Less Is More: The Benefits of Limits on Executive Pay, forthcoming in the Review of Financial Studies, addresses the question of whether limits on executive compensation harm or benefit shareholders. In particular, our model shows that if regulation limits executive compensation, this can make it possible for the board to give the […]
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Posted in Academic Research, Boards of Directors, Executive Compensation
Tagged Agency model, Boards of Directors, Contracts, Equity-based compensation, Executive Compensation, Executive performance, Firm performance, Incentives
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Crossing State Lines Again—Appraisal Rights Outside of Delaware
Even as the Delaware appraisal rights landscape continues to evolve, dealmakers should not assume that the issues and outcomes will be the same in transactions involving companies incorporated in other states. Although once an afterthought on the M&A landscape, in recent years appraisal rights have become a prominent topic of discussion among dealmakers. In an […]
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Posted in Mergers & Acquisitions, Practitioner Publications
Tagged Appraisal rights, Arbitrage, Delaware law, Fair values, Firm valuation, Jurisdiction, Merger litigation, Mergers & acquisitions, State law
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The Corporation as Time Machine
My article, The Corporation as Time Machine: Intergenerational Equity, Intergenerational Efficiency, and the Corporate Form, advances an explanation for the rise of the corporate form and an alternative perspective on its economic function. The article argues that the board-controlled corporate entity is a legal innovation that can transfer wealth forward and sometimes backward through time, […]
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Posted in Academic Research, Boards of Directors
Tagged Boards of Directors, Corporate forms, Growth rates, Long-Term value, Short-termism, Stock returns
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The Evolving Landscape of Shareholder Activism: Developments and Potential Actions
Editor’s Note: The following post comes to us from Sullivan & Cromwell LLP, and is based on a Sullivan & Cromwell publication by Jay Clayton, Mitchell S. Eitel, Joseph B. Frumkin, and Glen T. Schleyer.
It is clear that shareholder activism continues to evolve, expand and increase in influence. There is a growing emphasis, in particular by large mutual funds and other institutional investors, on shareholder engagement and shareholder-friendly governance structures that, together with the increased activity of activist hedge funds and other “strategic” activist investors, make shareholder engagement and preparedness an essential focus for public companies and their boards.
Most recently, BlackRock Inc. and the Vanguard Group, the largest and third largest U.S. asset managers with more than $7 trillion in combined assets under management, have made public statements emphasizing that they are focused on corporate governance and board engagement. Vanguard recently sent a letter to many of its portfolio companies cautioning them not to confuse Vanguard’s “predominantly passive management style” with a “passive attitude toward corporate governance.” The letter goes on to emphasize numerous corporate governance principles and to highlight in detail (as discussed further below) the importance of direct shareholder-director interactions. BlackRock recently updated its voting policies to make clear that they are more than just guides to how BlackRock votes–they represent “our expectations of boards of directors.” The new policies continue an emphasis on direct interaction between investors and directors.
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Posted in Boards of Directors, Institutional Investors, Practitioner Publications
Tagged Board communication, Boards of Directors, Engagement, Institutional Investors, Shareholder activism
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Harvard Convenes the Corporate Governance Roundtable
The Harvard Law School Program on Corporate Governance and the Harvard Law School Program on Institutional Investors convened the Harvard Roundtable on Corporate Governance last Wednesday, March 18. The event brought together for a roundtable discussion 75 prominent experts with a wide range of perspectives on this subject, including those of investors, issuers, advisors, and academics. Participants in the event, and the topics of discussion, are set out below.
The Roundtable, which was co-organized by Lucian Bebchuk, Stephen Davis, and Scott Hirst, was sponsored by a number of co-sponsors (listed here), the supporting organizations of the Program on Corporate Governance (listed on the program site here), and the institutional members of the Harvard Institutional Investor Forum (listed here).
The Roundtable sessions focused on board composition, and other current issues in corporate governance. The Roundtable began with discussion of board composition issues. The participants discussed a variety of issues on the topic, including director experience and skills, director tenure and age, board refreshment, board diversity and board evaluations. The Roundtable then moved to a discussion of proxy access and other current issues in corporate governance, and engagement between issuers and investors on such issues.
The participants in the Harvard Roundtable on Corporate Governance included:
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Posted in Program News & Events
Tagged Corporate governance, Program on Corporate Governance, Program on Institutional Investors
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SEC Charges Schedule 13D Filers for Untimely Disclosure
Editor’s Note: David A. Katz is a partner at Wachtell, Lipton, Rosen & Katz specializing in the areas of mergers and acquisitions, corporate governance, and complex securities transactions. This post is based on a Wachtell Lipton memorandum by Mr. Katz and Alison Z. Preiss.
The Securities and Exchange Commission announced last week that it had charged eight directors, officers and major stockholders for failing to timely disclose steps taken to take their respective companies private in their beneficial ownership reports on Schedule 13D. The orders issued by the SEC indicate the SEC staff became aware of the violations in the course of their review of proxy and Schedule 13E-3 transaction statements, which described the steps taken in the required disclosures regarding the background of the transactions. The orders note that emails and other contemporaneous communications clearly indicate the steps taken that had not been properly disclosed. The orders issued by the SEC (to which the offending parties consented) resulted in cease-and-desist orders and payment of civil penalties.
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Posted in Accounting & Disclosure, Practitioner Publications, Securities Litigation & Enforcement
Tagged Beneficial owners, Disclosure, Schedule 13D, SEC, SEC enforcement, Securities enforcement
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Key Points From the 2015 Comprehensive Capital Analysis and Review (CCAR)
Editor’s Note: The following post comes to us from Dan Ryan, Leader of the Financial Services Advisory Practice at PricewaterhouseCoopers LLP, and is based on a PwC publication by Mike Alix, Steve Pearson, and Armen Meyer.
The 2015 stress test results published on March 11th as part of the Federal Reserve’s (“Fed”) CCAR follow last week’s release of Dodd-Frank Act Stress Test (“DFAST”) results. [1] CCAR differs from DFAST by incorporating the 31 participating bank holding companies’ (“BHC” or “bank”) proposed capital actions and the Fed’s qualitative assessment of BHCs’ capital planning processes. The Fed objected to two foreign BHCs’ capital plans and one US BHC received a “conditional non-objection,” all due to qualitative issues.
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Posted in Banking & Financial Institutions, Financial Regulation, Practitioner Publications
Tagged Banks, Capital requirements, Distributions, Federal Reserve, Financial institutions, Financial regulation, G-SIB, Risk, SIFIs
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