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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
- Byron Georgiou
- Joseph Hall
- Jason M. Halper William P. Mills
- David Millstone
- Theodore Mirvis
- Philip Richter
- Elina Tetelbaum
- Sebastian Tiller
- Marc Trevino
- Steven J. Williams
HLS Faculty & Senior Fellows
The Delaware Law Series
Chancery Finds Funds Liable for Aiding Directors’ Fiduciary Breaches
Gail Weinstein is a Senior Counsel, Philip Richter is a Partner, and Steven Epstein is the Managing Partner at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, Steven Steinman, Maxwell Yim, and Hannah Reiner; and is part of the Delaware law series; links to other posts in the series are available here.
In Guilbeau v. Footprint (May 11, 2026), the Court of Chancery held, at the pleading stage of litigation, that it was reasonable to infer that certain directors of Footprint International Holdco, Inc., a non-controlled Delaware corporation (the “Company”), breached their fiduciary duties when they approved a Company financing (the “Financing”) that was proposed, and largely funded, by three institutional investors (the “Funds”) that were among the Company’s largest stockholders. The court also held that the Funds may have aided and abetted the directors’ breaches, acting through their designees on the Company’s board.
The Financing raised $500 million ($450 million of it from the Funds) through the issuance of a new class of preferred stock (the “Class F Stock”), at a time the Company was verging on insolvency. The Financing was recommended by a three-member special committee of independent directors (the “Committee”) and approved by the full ten-person board of directors (the “Board”) (which included one designee from each of the three Funds—collectively, the “Fund Designees). As would be typical in connection with this type of financing, the Company provided special benefits to the Funds and to two large stockholders (“ZenCap” and “Koch”) who had blocking rights.
Lessons from ExxonMobil
Katherine Terrell Frank and Meredith Jeanes Lyons are Partners and Robert L. Kimball is a Senior Partner at Vinson & Elkins LLP.
After 144 years of legal domicile in New Jersey, ExxonMobil Corporation, which has been physically headquartered in Texas since 1989, is consolidating its legal and physical homes to Texas. With approximately 71 percent of votes cast in favor at its 2026 annual meeting, Exxon’s reincorporation to Texas reflects the Lone Star State’s growing competitiveness as a corporate law jurisdiction and demonstrates that reincorporation into Texas may be an achievable result for widely-held public companies. Exxon Chairman and Chief Executive Officer Darren Woods explained that Texas has cultivated a policy and regulatory environment that enables companies to focus on creating shareholder value rather than navigating unnecessary red tape and political interference.[1]
Boards considering reincorporation into Texas should carefully consider the corporate governance and shareholder outreach strategies employed by Exxon and other successfully redomiciled public companies. Because proxy advisors have generally opposed reincorporation to Texas, favorable votes for reincorporation are not guaranteed for corporations that lack a controlling shareholder or a large, friendly voting block. Successful reincorporations will require companies to work well in advance of shareholder meetings to solicit investor feedback, determine an acceptable Texas corporate governance structure, and educate voters on the benefits of reincorporation.
Special Committees in Conflict Transactions: A Practical Guide
Maeve O’Connor and William D. Regner are Partners, and Amy Zimmerman is an Associate at Debevoise & Plimpton LLP. This post is based on a Debevoise memorandum by Ms. O’Connor, Mr. Regner, Ms. Zimmerman, and Hadel Alfagir.
Key Takeaways:
- Special committees can be important tools for boards facing actual or potential conflicts of interest.
- To realize their benefits, special committees should consist of only disinterested and independent directors, receive a clear and comprehensive mandate, function independently, and ensure that their work is well documented.
- This article offers practical guidance about when to form a special committee, committee composition, advisors to the committee, and documenting the committee’s work, with a focus on Delaware law.
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.
The Art of Indemnifying Attorneys’ Fees for M&A Disputes
Frank Favia and Jonathan Dhanawade are Partners, and Andrew Stanger is Knowledge Counsel at Mayer Brown. This post is based on their Mayer Brown memorandum, and is part of the Delaware law series; links to other posts in the series are available here.
Buyers in M&A transactions often assume that they will be able to recover reasonable attorneys’ fees in connection with a successful indemnification claim if the purchase agreement generally includes attorneys’ fees in the definition of indemnifiable losses. However, buyers may be surprised to learn that Delaware law presumes that attorneys’ fees incurred by a buyer in pursuing an indemnification claim against a seller (often referred to as a “first-party” claim) are not recoverable unless the purchase agreement includes a “clear and unequivocal articulation” of the parties’ intent to require fee shifting.
This Legal Update examines two recent Delaware opinions that illustrate this legal principle. It also discusses drafting nuances for parties that wish to include attorneys’ fees for first-party claims among indemnifiable losses.
Delaware Case Applying Indemnification Materiality Scrape Creates Risks for the Unwary
Andrew J. Noreuil is a Partner and Andrew J. Stanger is a Knowledge Counsel at Mayer Brown LLP. This post is based on their Mayer Brown memorandum, and is part of the Delaware law series; links to other posts in the series are available here.
In a recent post-trial opinion, the Delaware Superior Court, applying a representations and warranties materiality scrape under an M&A purchase agreement indemnification provision, held that the seller breached its absence of changes representation that no event had occurred that had or reasonably could have an “adverse effect” (as opposed to a material adverse effect) on the acquisition target. In addition, the Court considered the buyer’s claims for fraud and willful misconduct for the representations that were determined to have been breached after applying the materiality scrape. This Legal Update examines in detail the Court’s analysis of the purchase agreement and its application of the materiality scrape and discusses considerations for parties when negotiating materiality scrape provisions.
SEC & Mandatory Arbitration: Policy Evolution and Supreme Court Precedent
Peter Altman, Marshall Baker, and John Patrick Clayton are Partners at Akin Gump Strauss Hauer & Feld LLP. This post is based on an Akin Gump memorandum by Mr. Altman, Mr. Baker, Mr. Clayton, Garrett DeVries, Lauren Huennekens, and Jessica Ro.
Introduction
On September 17, 2025, the U.S. Securities and Exchange Commission (the “Commission”) published a policy statement concerning the inclusion of mandatory arbitration provisions in registration statements for investor claims arising under the federal securities laws. The policy statement marked an important development in the United States’ securities regulatory regime.
For the first time, the Commission directly addressed the role and treatment of mandatory arbitration provisions in registration statements filed under the Securities Act of 1933. In determining that such arbitration provisions will not serve as a basis to grant, deny or otherwise affect the acceleration of registration statements, the Commission’s new approach reflects alignment with established U.S. Supreme Court jurisprudence. It also marks a shift from previous regulatory interpretations that viewed mandatory arbitration with skepticism, at best.
In this alert, we review the context of the Commission’s policy evolution, the Supreme Court precedents that underpin the changed approach, the implications for issuers, investors and others (especially in light of a recent amendment to Delaware law) and the emerging key practical takeaways.
‘We Will Get By, We Will Survive’ – The Future of Shareholder Proposals
Brad Goldberg is a Partner, Michael Mencher is Special Counsel at Cooley LLP. This post is based on their Cooley memorandum and is part of the Delaware law series; links to other posts in the series are available here.
As discussed in more detail in Cooley’s October 10 alert, remarks by Securities and Exchange Commission (SEC) Chairman Paul Atkins suggest that Delaware-incorporated companies may be able to exclude precatory (nonbinding) shareholder proposals under Rule 14a-8(i)(1) of the Securities Exchange Act of 1934 – provided they submit a no-action request to the SEC accompanied by a Delaware law opinion stating that such proposals are not a proper subject for shareholder action under Delaware law, and, in the event of a conflicting opinion, this interpretation is upheld by the Delaware Supreme Court. In addition, as discussed in Cooley’s November 20 alert, the SEC also announced that for the 2026 proxy season, it would only provide substantive no-action letters under Rule 14a-8(i)(1), potentially further encouraging companies to pursue the Delaware opinion approach. In the short term, the SEC’s new approach to Rule 14a-8 no-action letters may cloud the strategic landscape as both proponents and companies wait to see whether it becomes common for companies to exclude proposals (other than for straightforward procedural deficiencies) in the absence of no-action relief.
Should the Delaware opinion approach be upheld by the Delaware Supreme Court this could open the floodgates to precatory proposal exclusions and quickly radically change the shareholder proposal landscape, especially if companies otherwise prove reluctant to exclude proposals in the absence of no-action letters. In the last three years, nearly 3,000 shareholder proposals were submitted to Russell 3000 companies, and fewer than 20 were binding proposals. This raises the question of how shareholder proposal proponents would react if companies were able to exclude precatory proposals under Rule 14a-8(i)(1). It is likely overly optimistic to assume that serial shareholder proposal proponents will pack up their bags and admit defeat – rather, they are likely to explore new avenues to pressure companies.
When (and When Not) to Form a Special Committee in Activist Defense and M&A
Melissa Sawyer, Lawrence S. Elbaum, and Jacob M. Croke are Partners at Sullivan & Cromwell LLP. This post is based on a Sullivan & Cromwell memorandum by Ms. Sawyer, Mr. Elbaum, Mr. Croke, Emma Ouellet Lizotte, H. Rodgin Cohen, and Marc Treviño.
Summary
Establishing a special committee is a common corporate governance practice in the context of transactions involving insiders, controlling stockholders or other related persons (so called “conflict transactions”). Special committees are designed to create a record of independent decision-making. That said, in other circumstances, special committees are not generally necessary or advisable and may be counterproductive. In most cases, a well-advised board can respond effectively to an unsolicited proposal or address an activist threat without a special committee. This memo addresses key points boards should bear in mind when considering whether to form a special committee and offers practical guidance and potential alternatives.
Keynote Address by Chair Atkins on Revitalizing Public Company Appeal
Paul S. Atkins is the Chairman of the U.S. Securities and Exchange Commission. This post is based on his recent keynote address. 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.
Good evening, ladies and gentlemen. Thank you, Larry [Cunningham], for your generous introduction and your kind invitation for me to be here today. It is an honor and pleasure for me to participate in the Weinberg Center’s twenty-fifth anniversary. Larry, I should also like to congratulate you on your recent appointment as director of the Center. I know that you are deeply devoted to the Center’s mission, and I am confident that you will contribute to its work in extraordinary ways, consistent with the excellence that has defined your career.
Tonight marks my third time attending this forum, but my first as SEC Chairman. So, I am sure that you appreciate that the views I express here are in my capacity as Chairman and do not necessarily reflect those of the SEC as an institution or of my fellow Commissioners. With that disclaimer out of the way, it is a pleasure to return to the Weinberg Center—and a special privilege to do so tonight. For a quarter century, the Center has distinguished itself as one of the premier and longest-standing corporate governance institutions in academia. Its insights command the attention of practitioners in boardrooms and courtrooms alike. And tonight, we convene not only to honor the Center’s legacy, but also to build on it.