Corporate governance codes have been adopted in jurisdictions around the world as frameworks that systematically set out governance disciplines for companies. The United Kingdom, which is generally regarded as having one of the longest histories in this area, developed its framework against the backdrop of a series of financial and corporate scandals in the late 1980s and early 1990s. The 1992 Cadbury Report, which made recommendations concerning the effectiveness and reporting responsibilities of boards and the role of external auditors, marked an important starting point. In 1998, the Financial Reporting Council (FRC) issued the Combined Code as a statement of best practices in corporate governance. The OECD Principles of Corporate Governance followed in 1999 and have since served as practical guidance for policymakers in both OECD member and non-member jurisdictions.

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Mergers & Acquisitions

Why Divisive Mergers Are Gaining Popularity and How They Can Be Structured to Mitigate Risk

Although spin-offs and asset sales are the traditional means of separating business lines, divisive mergers provide an attractive option for companies looking to achieve contractual continuity and a clean separation of assets and liabilities. A divisive merger is a statutory mechanism that divides a company’s assets, liabilities and operations among two or more recipient entities, functioning in the reverse direction of a traditional merger. A key advantage is that divisive mergers allow complex businesses to avoid individually assigning each contract and obligation as required in traditional asset sales. However, this flexibility comes with unique risks of fraudulent transfer challenges and remedies.

Certain states, including Texas and Delaware, have statutory schemes that allow for divisive mergers. Texas first codified divisive mergers by broadening its definition of “merger” to include the division of one domestic entity into two or more organizations.[1] Under Texas law, all types of corporate entities (including corporations, partnerships and limited liability companies) may undergo a divisive merger, and the resulting entities may take any corporate form, even one different from that of the original entity.[2] Delaware, by contrast, allows only limited liability companies, limited partnerships and limited liability limited partnerships to effect divisive mergers, and the resulting entities must be of the same form as the original dividing entity.[3] Corporate entities may first undergo a change of corporate form in order to take advantage of the Delaware divisive merger statutes. In both states, divisive mergers are not considered assignments of assets or liabilities, potentially allowing companies to avoid triggering anti-assignment provisions,[4] reduce transaction costs and bypass third-party waivers or consents.

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The primer was jointly produced by the Center for Political Accountability, an NGO leading the effort to bring transparency and accountability to corporate political spending, and The Impact, Value, and Sustainable Business Initiative at the Wharton School of the University of Pennsylvania (Wharton Impact).

The primer couldn’t be more timely as K Street and corporate America brace for possible post-midterm congressional investigations.  Business leaders and general counsels know that their companies’ political donations will be in the crosshairs.

For companies, the primer comes out as corruption has become a major political issue. A recent Gallup survey found a record-high 89 percent in the U.S. responded that government corruption, of which political spending is a part, is widespread. (Record-High 89% in U.S. Say Government Corruption Widespread)

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On September 16, 2026, the SEC proposed a package of amendments intended to modernize the federal proxy solicitation rules. The proposal targets several paper-era or otherwise outdated requirements whose original rationale has largely been displaced by EDGAR, electronic communication and other changes in market practice, and would simplify annual meeting and proxy production and create flexibility in transaction and meeting calendars. As Commissioner Mark Uyeda stated, “Eliminating duplicative or outdated requirements reduces unnecessary compliance costs for issuers and intermediaries.”

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Introduction

It has been a year since we published our 2025 State of U.S. Sustainability Reports. The sustainability landscape remains marked by heightened scrutiny and uncertainty, as ongoing political conflicts and evolving global regulation continue to shape the expectations of key stakeholders.

For example, in the U.S., Republican state attorneys general continued to scrutinize company participation in climate initiatives, plastics and packaging and other sustainability-related activities. At the same time, California moved forward with mandatory climate disclosure requirements and Democratic states have scrutinized company rollbacks of diversity initiatives. Outside the U.S., the European Union continued efforts to simplify its sustainability reporting regime, while additional jurisdictions moved toward adopting disclosure requirements aligned with international frameworks (e.g., International Sustainability Standards Board (ISSB)). Amid this ongoing uncertainty and confusion globally, U.S. companies largely stayed the course on their sustainability reporting in 2026.

To help companies plan for reporting in 2027, we analyzed 250 sustainability reports from S&P 500 companies published in 2026. In this report, we provide (i) our study methodology; (ii) our top 10 takeaways from 2026 sustainability reports; and (iii) key statistics of 2026 sustainability reports.

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KEY TAKEAWAYS

• 2026 is shaping up to be the strongest Say-on-Pay (SOP) season in recent history. Average S&P 500 SOP support reached 90.3%, the only time above 90% in the past 5 years.
• Low support is less prevalent. Only 5% of companies received less than 70% support in 2026, down from 11% in 2022.
• Strong S&P 500 total shareholder return (TSR) coincided with favorable SOP results. Since 2024, SOP failures have remained at 1% of S&P 500 proposals while one-, three-, and five-year TSR results were strongly positive.
• Influence of proxy advisor SOP opposition continues to deteriorate. Institutional Shareholder Services (ISS) opposition declined to 9% year-over-year, while Glass Lewis (GL) opposition increased slightly to 13%. When both proxy advisors opposed SOP this season, only 19% failed to receive majority shareholder support, down from 50% in 2022.
• The “big five” investors continue to take a selective approach to opposing S&P 500 SOP proposals and rely heavily on their proprietary voting frameworks. Top asset managers supported SOP at a rate of 95.6% in 2026 and deviated from proxy advisor SOP opposition in an overwhelming majority of cases.
• As the proxy voting landscape continues to evolve, understanding investor expectations and effectively communicating rationale for compensation decisions is critical to strengthening SOP support.

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Summary

On September 17, 2026, the Securities and Exchange Commission issued two five-year, conditional exemptions to facilitate the permissioned trading of “Tokenized NMS Stock” through automated market makers (“AMMs”) and liquidity pools (together, “AMM Liquidity Pools”):

• an exemption from the definition of “exchange” for Tokenized Securities Venues (“TSVs”); and

• an exemption from the definition of “dealer” for certain liquidity providers in an AMM Liquidity Pool that supplies liquidity to the liquidity pool in the form of Tokenized NMS Stock.

Together, these exemptions allow certain venues that use AMM Liquidity Pools to facilitate trading tokenized versions of certain listed U.S. stocks without registration as a national securities exchange or alternative trading system, while also permitting liquidity providers to deposit tokenized stock into those AMM Liquidity Pools without registering as dealers, in each case subject to several conditions and limitations as discussed below. The Innovation Exemption is effective immediately. The SEC is requesting comment on all aspects of the Innovation Exemption.

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As anticipated, the U.S. Securities and Exchange Commission (the “SEC”) has proposed to rescind Rule 14a-8 under the Securities Exchange Act of 1934. The SEC has also proposed to close the Rule 14a-4(c) “loophole,” which has inadvertently allowed shareholders who file their own proxy materials to add multiple shareholder proposals to a company’s proxy card. The rescission of Rule 14a-8 and the closure of the Rule 14a-4(c) loophole would mean that shareholders would need to turn to a company’s governing documents to propose business at an annual meeting. With the exception of Texas, which last year adopted ownership and solicitation requirements for shareholder proposals, no other state has enacted legislation governing shareholder proposals.

Rule 14a-8 will likely remain effective for most if not all of the 2026-27 proxy season, and the proposed rescission could be challenged in the courts. However, the SEC has already discontinued responding to all no-action requests related to Rule
14a-8, although companies are still required to notify the SEC of their decision and basis for excluding a shareholder proposal. With the SEC no longer substantively adjudicating shareholder proposal exclusions for the second year running, companies will need to continue making an independent judgment as to whether there is a reasonable basis to exclude a proposal. Last year, shareholder proponents filed six lawsuits contesting the exclusion of their proposals. Those lawsuits resulted in three settlements that led to the inclusion of the proposal in the company’s proxy statement and one successful preliminary injunction.

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In an awaited but not surprising proposing release, on September 16, 2026, the Securities and Exchange Commission (the “SEC” or the “Commission”) proposed rescinding Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which governs the processes under which a shareholder may include a proposal in a public company’s proxy materials. The SEC also proposed to amend Rule 14a-4(c) to expand the circumstances under which a company may exercise, with respect to proxies it receives, discretionary voting authority on proposals that will be presented at a shareholder meeting but not included in the company’s proxy materials. This proposal (the “Rule 14a-8 Rescission Release”) marks a significant change in the Commission’s view of the federal government’s role in interactions between companies and their shareholders.

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As we approach the third anniversary of the date when incentive compensation “received” is subject to clawback, we have taken a closer look at the disclosures companies have made since implementation.

This Thoughtful Pay Alert summarizes our findings from reviewing publicly available disclosures of “recovery analyses” conducted between January 1, 2024 and June 30, 2026.

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Key Takeaways:

• The U.S. Food and Drug Administration and Securities and Exchange Commission recently announced a new three-year Memorandum of Understanding (“MOU”) establishing a formal framework for the agencies to exchange nonpublic information concerning FDA-regulated products, activities and companies.
• For pharmaceutical, biotechnology and medical-device companies that are publicly traded or otherwise are SEC-reporting companies, the MOU could have significant implications for disclosures concerning clinical trials, FDA interactions, product approvals, manufacturing and inspection developments, and other regulatory matters that may be material to investors.
• Although the MOU does not change the securities-law disclosure standard, it likely makes it easier for SEC staff to test a company’s account of an FDA interaction against FDA’s own contemporaneous record.

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Key Takeaways

• CEO pay continued to climb to record levels in fiscal 2025, with median S&P 500 CEO compensation reaching $17.5 million, while median pay among Russell 3000 companies (excluding the S&P 500) remained relatively stable;

• Equity compensation remained the primary driver of CEO pay growth, as companies increased long-term incentive award values and expanded both the prevalence and magnitude of one-time equity grants;

• The prevalence of CEO security perquisites in the S&P 500 continued to increase sharply, and the Russell 3000 has followed suit;

• Say-on-Pay (SOP) support climbed to five-year highs across both the S&P 500 and Russell 3000, while SOP failures reached multi-year lows;

• Potential changes in SEC rulings may fundamentally alter compensation disclosure and voting in years to come.

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Three years after our first survey documented the reemergence of contingent value rights (“CVRs”) in public life sciences M&A, 2025 marked their biggest year yet. A record 28 of 59 announced public life sciences transactions (approximately 47%) included a CVR, the highest ever annual count and share. The concentration was even greater in biopharma, where over half of announced public biopharma transactions included a CVR. CVRs also moved upmarket and carried more of the potential deal value. More than a third (approximately 37%) of the $1 billion-plus life sciences CVR deals in our full dataset (going back to 2008) were announced in 2025 and the first half of 2026. Moreover, nearly half of all life sciences CVR deals above $3 billion were announced in 2025 and the first half of 2026, with two additional CVR deals over $3 billion announced since June 30, 2026. In addition, 2025 produced more CVRs with maximum potential payouts exceeding 100% of the upfront consideration than any other year surveyed.

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Significant stockholders of Delaware corporations may negotiate for the right to designate one or more directors of their choosing to the board. While such a designation right may be extremely valuable, several recent Delaware Chancery Court opinions highlight the risks of personal liability for the designated directors and the stockholders who appoint them. This Legal Update provides guidance on how designated directors and stockholders can navigate these risks, particularly in light of the 2025 amendments to Delaware General Corporation Law (DGCL) §144.

Background and Key Principles

Fiduciary Duties of Designated Directors: Directors appointed by a specific stockholder or a class of stockholders are often referred to as “constituency directors,” “designated directors,” or “blockholder directors,” among other terms. The right to appoint such directors might appear in the certificate of incorporation or in a separate governance agreement. [1] A company might grant director designation rights to its venture capital, private equity, or strategic investors, as well as to stockholders as part of a shareholder activist proxy contest settlement. Often, the designated directors are principals, officers, or employees of the appointing stockholder; however, they can also be individuals independent of both the corporation and the appointing stockholder.

Holders of designation rights might hold the mistaken belief that a designated director is intended to serve as their representative, who in addition to providing information and monitoring corporate developments, should vote in their interests. In reality, Delaware courts have long held that a designated director owes fiduciary duties of care and loyalty to the corporation and all the stockholders and not to any subset of stockholders, including the stockholders that appointed the director. Specifically, directors owe fiduciary duties to “the stockholders in the aggregate in their capacity as residual claimants, which means the undifferentiated equity as a collective, without regard to any special rights.” [2] In other words, a director’s duties run to “the entity and the entire body of stockholders generally rather than to individual stockholders or stockholder subgroups.”[3]

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This report examines forced CEO departures in the Russell 3000 and S&P 500 from 2024 through August 2026, focusing on differences by index, business sector, company size, and the circumstances driving board-initiated leadership changes.

Trusted Insights for What’s Ahead®

• Roughly 1 in 7 CEO succession cases were forced in both 2024 and 2025. The Russell 3000 recorded 49 forced departures in 2024 and 55 in 2025, while the S&P 500 increased from seven to 10; in 2026 so far, forced departures account for a smaller share of CEO succession cases than the prior two years.
• While there is no single industry profile for forced CEO turnover, health care accounts for the largest share so far in 2026. The sector represents 35% of all Russell 3000 forced departures year to date, after consumer discretionary recorded the highest number of forced departures in 2025.
• Company size was not a consistent predictor of forced CEO turnover. Elevated rates appeared across the revenue spectrum, suggesting succession risk is driven more by company-specific performance and strategic circumstances than by scale alone.
• Underperformance became a more prominent driver of forced departures in 2025. It rose from 31% of Russell 3000 forced departures in 2024 to 44% in 2025 and remains the largest reason category through August 2026.
• Activist pressure was a notable factor among S&P 500 forced departures. It accounted for eight of 19 departures across the period, reinforcing the importance of boards independently testing strategy, capital allocation, and leadership effectiveness before external pressure forces the issue.
• Successfully navigating potential forced departures requires proactive management. Boards can focus on establishing the criteria for when underperformance becomes a leadership issue, regular maintenance of their succession plan, and reaching out to shareholders to keep abreast of possible concerns or issues.

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Good morning, ladies and gentlemen, and thank you for joining us today to discuss preparations for expanding 24-hour trading in the U.S. equities markets. Before sharing a few reflections, I must note that the views I express here are my own as Chairman and do not necessarily reflect those of the SEC as an institution or of my fellow Commissioners.

We are moving towards a new day—and night—for our capital markets. Only 20 years ago, when I was last here as a commissioner, there was much angst and gnashing of teeth over proposals to extend U.S. trading hours by mere minutes, not hours. Today, critical business and economic events are not confined to traditional trading hours. When the world reacts in real time to breaking news, waiting to adjust a position or rebalance a hedge until the clock strikes 9:30 on Monday morning may beget missed opportunities or additional risk, especially these days. Instead, many investors are seeking the ability to respond and adjust their positions on an ever-more-frequent basis.

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