Boards of directors are encouraged to anticipate a renewed focus on corporate responsibility and ethics, which would be grounded at least initially in corporate self-regulation and new governance principles, rather than in new legislation or enforcement policy shifts.

The American Bar Association has defined “corporate responsibility” as referring to “behavior by corporate leaders that conforms with the law and results from the proper exercise of fiduciary duties, as well as ethical behavior beyond that required by minimum legal requirements [emphasis added]. [1] Corporate responsibility is a respected governance doctrine that first emerged in response to deficiencies in governance, leadership, and professional advice that contributed to the Enron-era financial crises. After being dormant for a number of years, it is now poised to make a boardroom comeback.

A new treatment of corporate responsibility principles would differ from their original iteration in the Sarbanes-Oxley Act and the corporate governance and legal ethics principles it prompted. Those laws, regulations, and principles arose from catastrophic bankruptcies that undermined the credibility of financial reporting and deeply weakened financial markets. Many of the Sarbanes-related efforts were thus focused on topics such as internal controls, financial reporting, accounting improvements, and changes to governance oversight and legal ethics.

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The Delaware Supreme Court’s recent opinion in Paragon Metals v. Smith[1] is a pointed reminder for M&A dealmakers: hints, partial disclosures, or due diligence “red flags” may not neutralize false contractual representations when the seller is actively concealing the truth. The case involved a CEO’s strategy to conceal damaging information about the target company while still attempting to avoid a fraud claim by providing enough hints about the situation to arguably put the buyer on inquiry notice about the issues. In reversing a trial court opinion, the Delaware Supreme Court held that the buyer could justifiably rely on the CEO’s representations despite imperfect due diligence because the CEO concealed critical customer-loss information and responded untruthfully when pressed. For M&A practitioners, the opinion sharpens several recurring issues, including when flawed due diligence becomes willful blindness, what standard of proof applies to Delaware fraud claims, how broadly a forward-looking “no material adverse effect” representation may reach, and what anti-reliance language can—and cannot—do.

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A less predictable, more complex path to the annual meeting

The path to the annual meeting grew less predictable and more complex in 2026, not because of a single landmark change, but because of compounding shifts. Legal challenges, regulatory intervention, political scrutiny and market driven adaptation are decentralizing stewardship decision-making and reshaping how proxy votes are decided. The result is a voting environment that is less transparent, less predictable, and more procedurally complex. The effect of these developments has shifted more of the burden onto issuers and steadily increased the risk borne by the board. Therefore, ongoing and proactive shareholder engagement has become a necessity for issuers. The 2026 vote outcomes brought those implications to bear across activism, compensation, and shareholder proposals.

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On July 9, the Staff of the Securities and Exchange Commission (the SEC) issued three new Corporation Finance Interpretations (CFIs) addressing disclosure obligations under Schedules 13D and 14A.

The guidance targets a specific but increasingly common activism structure: special-purpose vehicles that raise capital from investors to buy a single issuer’s securities and conduct an activism or proxy campaign. Activists who form these vehicles must now name the underlying investors in their 13D and contested proxy filings.

CFI 110.09: Investors in Company-Specific Activist Special Purpose Vehicles Must be Named in Schedule 13D

Under the guidance provided by CFI 110.09, an entity (such as a special purpose vehicle) formed specifically to raise funds to acquire the securities of a specific issuer and engage in an activism campaign at that issuer must disclose the identities of its investors under Item 3 of Schedule 13D (Source and Amount of Funds or Other Consideration). Item 3 requires reporting persons to name all parties to any transaction through which they obtained funds “for the purpose of acquiring, holding, trading or voting the securities” of the issuer. Because investors in a purpose-built vehicle contribute capital for exactly that purpose, filers must identify them in the Schedule 13D filing.

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I write in strong opposition to the proposal to reduce reporting to file semiannual reports on the new Form 10-S in lieu of quarterly reports on Form 10-Q. I note that this was prepared entirely by me, without the aid of AI or any LLMs.

I agree with many of the thoughtful comments from investors, like the excellent comment from Marcie Frost, CEO of CalPERS, especially this:

If the Commission’s objective is to lengthen corporate decision-making horizons, then the more effective and well-targeted lever, as we have urged in prior comment letters, is to discourage the voluntary issuance of forward quarterly earnings guidance, not to dilute the historical financial reporting on which investors depend.

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There have been several notable split decisions over the years in the Delaware Supreme Court, but it is a rara avis to see the justices split 3-2 over an issue involving access to books and records.

On March 25, 2026, a divided Delaware Supreme Court majority held that in exceptional circumstances, the Court of Chancery may consider post-demand evidence in the Section 220 context when analyzing whether a stockholder had a credible basis to suspect wrongdoing.

Justice Gary F. Traynor authored the majority’s opinion, ruling, among other things, that “nothing in [8 Del. C.] Section 220’s text prohibits the consideration of post-demand evidence,” and that a blanket prohibition could result in inefficiencies such as a repetitive process of updated demands and complaints.[1]

Chief Justice Collins J. Seitz, Jr. and Justice Karen L. Valihura dissented, arguing that, from a policy standpoint, a bright-line rule barring post-demand evidence would “discourage a premature race to the courthouse to attempt to gain a foothold for later merits-based litigation” and also would respect the intended summary nature of Section 220 proceedings.

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Key Takeaways

The external environment surrounding executive compensation is changing rapidly. Economic uncertainty, evolving SEC priorities, shareholder activism, and shifts in proxy voting practices are creating new considerations for compensation committees as they prepare for the 2026–2027 proxy season. In Part 1 of this two-part Viewpoint series, we examine:

External Environment and Regulatory Landscape
1. Economic Uncertainty, Supply Constraints, and … Stock Market Highs?
2. Upcoming Shifts in Disclosure Requirements
3. Fallout from Excluding Shareholder Proposals

Investor Landscape and Proxy Voting Dynamics
4. Changing Say-on-Pay Voting Climate
5. Emergence of AI-Based Proxy Voting

Part 2 will review key trends in compensation strategy.

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Overview

On June 4, 2026, the Supreme Court in Sripetch v. SEC unanimously held that the US Securities and Exchange Commission (SEC) need not prove that investors suffered a pecuniary loss before obtaining disgorgement. In doing so, the Court resolved a circuit split between the US Court of Appeals for the First Circuit and the Court of Appeals for the Ninth Circuit (both of which permitted disgorgement absent proof of investor losses) and the Second Circuit (which required such a showing). The Supreme Court’s decision, however, was notably narrow and left unresolved several significant questions concerning the scope and constitutional status of the SEC’s disgorgement authority, creating investigation and litigation opportunities for defendants.

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In spring 2025, there was significant debate over Delaware’s Senate Bill 21 (SB21), which offered new Delaware amendments addressing controller and board conflicts, as well as access to books and records. These amendments, codified in amended Section 144 and Section 220, were enacted to provide greater predictability but also to limit excessive litigation.

• Amended Section 144 established statutory safe harbors for conflicted transactions involving the board or controlling stockholders.
• Amended Section 220 was designed to curtail broad stockholder inspection rights.

In general, these provisions were heralded by the corporate bar as a stabilizing measure for corporate practitioners, offering greater clarity and certainty for books and records demands and transactions involving conflicts, and helping to avoid incessant and unnecessary litigation costs in every transaction.

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Key Points

• The decision clarifies that a party’s using a contractual gap to “intentionally harm” the counterparty may constitute a breach of the implied covenant. The court rejected ASM’s argument that the parties had intentionally left a contractual gap with respect to the efforts ASM had to use to obtain the consents, in order to allocate the risk to the Vendor of the landlords not giving the consent for any reason. The court stated that, at the pleading stage, it was reasonably conceivable that, without a standard of efforts set forth in the agreement, ASM could have been neutral with the landlords, but, based on the implied covenant, could not use the contractual gap to “intentionally harm” the Vendor.
• The decision underscores the need for careful drafting of third party consent conditions. Parties should consider whether to specify in their agreement a standard of efforts for obtaining such consents and may wish to specify the extent to which the other party can participate in the process of seeking to obtain them. Where a standard of efforts is not set forth, the party responsible for seeking a consent should keep in mind that, depending on the specific facts and circumstances, advocating for the third party not to give the consent may be considered to be intentionally harming the counterparty and thus a breach of the implied covenant.

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We refer to the Securities and Exchange Commission (SEC)’s request for comment on the proposed amendments to allow companies to file semiannual reports on new Form 10-S in lieu of quarterly reports on Form 10-Q to meet their interim reporting obligations under the Securities Exchange Act of 1934. We appreciate the opportunity to contribute our perspective.

Norges Bank Investment Management (NBIM) is the investment management division of the Norwegian Central Bank that manages the Norwegian Government Pension Fund Global. We work to safeguard and build financial wealth for future generations. As of year-end 2025, we managed over 2 trillion USD in assets, with the United States representing our largest market at 53% of total investments. Within our equity portfolio, 822 billion USD was invested in shares of 1,306 U.S. public companies. We are a minority shareholder in U.S. public companies, with an average equity ownership of 1.18 percent.

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This report draws on executive insights and disclosure data from US public companies to assess where corporate climate targets are credible, where emissions trends are off track, and what business leaders should do to govern, track, and communicate climate commitments more effectively.

Trusted Insights for What’s Ahead®

• Setting climate goals is a mainstream large-company practice. Some 84% of S&P 500 companies disclosed a climate target in 2025, compared with 34% of the Russell 3000.
• Many climate targets are at risk. About 58% of S&P 500 companies with Scope 1 (direct emissions from operations) targets and 62% with Scope 3 (indirect value chain emissions) targets have reported flat or rising emissions since 2021, while only 24% of polled sustainability leaders are fully confident in their goals.
• Scope 1 remains the hardest operational challenge. Median Scope 1 emissions fell 41% across the Russell 3000 from 2021 to 2025 but were flat among S&P 500 companies, and utilities saw emissions rise in 2025 as power demand increased.

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Executive Summary

• What’s new: Under the SEC Staff’s hands-off approach to company exclusions of shareholder proposals, companies excluding shareholder proposals in 2026 experienced litigation, the threat of proposal submissions under advance notice bylaws and the risk of lower voting support for directors.
• Why it matters: The SEC Staff’s hands-off approach is expected to continue for the 2027 proxy season. Company experiences from this proxy season will inform the approach companies take for the upcoming proxy season.
• What to do next: Companies will want to review the bases for exclusion, assess the risks in light of 2026 experiences and, where exclusion is chosen, clearly explain the bases for exclusion to minimize the risks of adverse reactions.

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Good morning, ladies and gentlemen, and thank you for being here today.

I should like to begin by extending a warm welcome to the Committee’s new members—Anya Coverman, Joseph Lucosky, Andrew Prystai, Rodrigo Seira, and Erik Syvertsen. I am certain that your collective expertise and many contributions will prove invaluable as we work to widen pathways to capital for small businesses.

Today, we turn to that very objective, as the Committee continues its consideration of a matter that I maintain to be among the most consequential before us: how to incentivize more companies—especially those small and growing—to go and remain public.

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This year marks the 50th anniversary of the OECD’s Guidelines For Multinational Corporations For Responsible Business Conduct, a set of principles to which the United States, the other OECD nations, and additional signatories totaling 52 nations comprising nearly two-thirds of the world’s economic activity and the bulk of market-based, democratic nations, adhere.  In this condensed set of remarks, the longer version of which can be found here, I was honored to help set the stage for a discussion of the importance of and ways to strengthen the Guidelines among leading representatives of business, labor, and governmental stakeholders.

We gather at a time when the citizens of OECD nations have reason to be cynical about whether political and business leaders can be trusted.

Facing incontrovertible evidence that human-caused climate change is accelerating and poses enormous economic and human harm, business leaders have abandoned commitments to help arrest warming before it is too late.  Knowing that artificial intelligence poses great dangers, the AI industry has pivoted from recognizing that legal regulation is necessary to advocating a “just trust us” approach, spending enormous sums to influence the political process against responsible regulation, and seismically expanding their use of climate-harming energy.

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One might expect the response to be uncomplicated—say, that such conversations would not be protected from discovery, under either the attorney-client privilege or the attorney work product doctrine, because AI is not an attorney. But courts are just beginning to grapple with this question, and the answers have been varied:

• In U.S. v. Heppner (S.D.N.Y. Feb. 17, 2026), a federal district court in New York held that a criminal defendant’s exchanges with a consumer version of Claude, which were not directed by his lawyer, were discoverable.
• And, in Fortis Advisors v. Krafton (Del. Ct. Ch. Mar. 19, 2026), the Delaware Court of Chancery considered as evidence a CEO’s ChatGPT exchanges that provided a legal strategy for the company to avoid having to pay an earnout obligation.
• However, in Warner v. Gilbarco Inc. (E.D. Mich. Feb. 10, 2026), a federal district court in Michigan held that a pro se litigant’s use of AI was work product, and so was protected from discovery, because it was used in anticipation of litigation and in a manner not likely to get into an adversary’s hands.

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As the 2026 U.S. proxy season draws to a close, both the volume of shareholder proposals brought to a vote and the level of investor support they received show a dramatic change from previous years in the shareholder proposal landscape.

Early in 2025, the SEC issued Staff Legal Bulletin No. 14M (SLB 14M), revising shareholder proposal framework and providing issuers greater flexibility to obtain no-action relief. This change had a significant impact during the 2025 proxy season, greatly increasing the number of proposals being omitted from the ballot. The shareholder proposal landscape was further upended ahead of the 2026 proxy season, with the SEC’s Division of Corporate Finance retreating from its traditional role as an arbitrator of shareholder proposals, declining to review or express views on most requests for shareholder proposal exclusions.

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This article is the sequel to the author’s previous article entitled Merger Agreements are Too Long.

In public company M&A deals, the target’s disclosure schedules typically consist of lists of facts about the target and its businesses.  Most of the listed items are either exceptions to detailed representations and warranties (the “reps”) or information specifically required by the reps to be listed out.  For example, disclosure schedules might include lists of all of the target’s registered trademarks or descriptions of all of the target’s pending litigation matters.  The resulting schedules can be hundreds of pages long and add little value from a risk allocation perspective for either buyers or targets.  Dealmakers should eliminate this burdensome “tree-killer” from the public company M&A playbook.

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Since the first application of the EU Corporate Sustainability Reporting Directive (“CSRD”) to companies in 2024, two projects have been underway to produce detailed sustainability reporting standards: (i) the EU’s Sustainability Reporting Standards, with separate standards for EU companies (the “ESRS”) and groups with non-EU parents (the “N-ESRS”) reporting under CSRD and (ii) the International Sustainability Standards Board’s (“ISSB”) standards published by the International Financial Reporting Standards (IFRS) Foundation. As states around the world adopt sustainability reporting standards by reference to the ISSB standards, either by directly adopting those standards or by producing local standards derived from ISSB, world-wide groups will produce sustainability reports by reference to more than one set of standards.[1]

States and regulators now have the opportunity to address the divergence that has developed internationally. In this In Depth, we discuss the challenges raised by different sustainability standards around the world and the steps that states and authorities are taking to develop an equivalence or passporting system.

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