Corporate Governance

Do Companies Take Remedial Actions After Socially Irresponsible Behavior?

By Wei Cai, Aneesh Raghunandan, Shivaram Rajgopal and Wenxin Wang March 16, 2023 by renholding

Companies involved in scandals often suffer damage to their reputations from media, consumer, or investor criticism For instance, notable oil spills, from Exxon’s 1989 Exxon Valdez disaster to BP’s 2010 Deepwater Horizon debacle, resulted in both hundreds of millions of …

Activist Shareholders in Corporate Governance: Lessons from Australia

By Tim Bowley March 14, 2023 by renholding

Much of the debate about activist shareholders is informed by experience in Northern Hemisphere markets, particularly the United States. In my recently published book, I examine the topic from an Australian perspective.

Australia is ideal for exploring shareholder activism for …

How Public Short Campaigns Harm Product Innovation

By Claire Liu, Angie Low and Talis Putnins March 10, 2023 by renholding

The GameStop short squeeze at the beginning of 2021 has brought attention to a class of short sellers who launch high-profile public short campaigns (PSCs) to talk down a target firm’s stock. These activist short sellers, unlike traditional short sellers …

The Challenges of Succeeding a Long-Tenured CEO

By Gonul Colak and Eva Liljeblom March 9, 2023 by renholding

Financial theory suggests that a firm with strong corporate governance (e.g., an effective board of directors), keeps a CEO exactly as long as is optimal for the firm. When the firm’s board and other corporate governance mechanisms are ineffective, however, …

ISS Discusses Russell 3000 Boards Becoming More Diverse

By Paul Hodgson, Aditi Aier and Carmen Luk March 1, 2023 by renholding

There has been a lot of talk about how to increase racial and ethnic diversity on U.S. corporate boards as well as many initiatives to help nominating committees identify candidates from under-represented groups. To assess the current situation, ISS Corporate …

The Adani Group Scandal Casts Doubt on the Rule of Law in India

By Georges Ugeux February 27, 2023 by renholding

Sound policymaking has helped India modernize and achieve robust economic growth, positioning it to become an increasingly important player on the world stage. But recent developments – and scandals – show that the government must address some major issues if …

Covington Discusses Corporate Political-Disclosure Shareholder Proposals

By Robert Kelner, Matthew Franker, Zachary G. Parks and Mellissa Campbell Duru February 27, 2023 by renholding

The 2023 proxy season is underway for public companies and their investors. Corporate secretaries, lawyers, and executives are actively engaged in the SEC’s shareholder proposal process. Consistent with recent proxy seasons, a significant number of companies are receiving proposals calling …

Why the Poison Pill Is Still Relevant After All These Years – Even in Japan  

By Curtis J. Milhaupt and Zenichi Shishido February 23, 2023 by renholding

More than 40 years after its invention by lawyer Martin Lipton, the poison pill remains the subject of important judicial decisions and academic debate over corporate governance questions, in both the United States, its country of origin, and Japan, its …

The Determinants and Consequences of Appointing Activist Directors

By Ian D. Gow, Sa-Pyung Sean Shin and Suraj Srinivasan February 22, 2023 by renholding

In recent years, an increasingly popular strategy among hedge fund activists has been to acquire  seats on the boards of target companies. These board seats are held by what we refer to as “activist directors,” who may be affiliated with …

OECD Presents New Research on Corporate Sustainability

By Serdar Çelik, Caio de Oliveira and Adriana De La Cruz February 22, 2023 by renholding

The Organisation for Economic Co-operation and Development (OECD) has published a new report on sustainability policies and practices for corporate governance. It includes a new dataset comparing the main trends and features of corporate sustainability at the global level, …

Board Committee Charters and ESG Accountability

By Lisa M. Fairfax February 16, 2023 by renholding

Increasing corporate focus on environmental, sustainability, and governance (“ESG”) has prompted considerable criticism from across the ideological spectrum.  Those who disagree with that focus – viewing it as a breach of fiduciary duty and antithetical to profit maximization – have …

The Effects of SEC Comment Letters on Compensation Contract Efficiency

By Rachel Geoffroy, Sophia Hamm and Brent Schmidt February 14, 2023 by renholding

In a new paper, we examine whether SEC comment letters on deficiencies in compensation disclosure have an impact on executive-compensation “contract efficiency,” meaning the extent to which such contracts align with shareholder interest. The goal of comment letters is not …

Is Social Justice a Corporate Scam?

By Dan Subotnik February 14, 2023 by renholding

Last December, Subaru boasted in TV ads of having donated over $250 million to charity in the last few years.  The company specifically claimed that it was the ASPCA’s largest corporate donor. Animal lover that I am, I got a …

Risk-Seeking Corporate Governance

By Brian Broughman and Matthew Wansley February 13, 2023 by renholding

Several developments suggest that venture capitalists (VCs) are retreating from their traditional corporate governance role of monitoring their portfolio companies. Startup founders are retaining more equity and control over their companies, and contrary to past practice, some VCs say they …

ISS Discusses Dual-Class Share Structures in Europe

By Paul Hodgson February 13, 2023 by renholding

While unequal voting structures in the U.S. are commonly associated with technology and media companies, there is no such industry specific tendency in Europe – with its tradition of so-called “loyalty shares” and government ownership. This paper surveying dual class

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Skadden Discusses ESG in 2022 and Predictions for 2023

By Raquel Fox, Marc S. Gerber, Aurora Luoma, Greg Norman and Simon Toms February 10, 2023 by renholding

Following another year of increasing focus on environmental, social and governance (ESG) considerations by companies, investors and regulators alike, ESG appears to have cemented its position in the corporate landscape. As set out in our 28 July 2022 client alert …

How Companies Evaluate Their Corporate Governance

By Lauren Cunningham, Christie Hayne, Terry Neal and Sarah Stein February 9, 2023 by renholding

Practitioners and academics alike debate best practices in corporate governance, but rarely do companies reveal how they determine what governance practices work best for them. In a new paper, we report the results of interviews on this topic with …

Does ESG Information Affect Individual Investors’ Portfolio Choices?

By Catharina Janz, Rainer Michael Rilke and B. Burcin Yurtoglu February 7, 2023 by renholding

Socially responsible investing (SRI) involves considering environmental, social, and governance (ESG) issues when picking stocks.  Once a niche area of fund management, the volume of global sustainable investment in five major markets reached $35.3 trillion at the start of 2020, …

Mayer Brown Discusses Five Steps for Directors to Consider About Risk Governance

By Matt Bisanz, Andrew Noreuil, Jodi Simala, Bill Kucera and Megan Webster February 7, 2023 by renholding

Historically, directors have been protected from personal liability in connection with risk management by the high standard set in the seminal 1996 Caremark[1]case. In recent years, however, courts have held that certain plaintiffs have pled facts sufficient to …

Skadden Discusses Delaware Chancery Decision Questioning Fundamental SPAC Structure

By Howard L. Ellin, Edward B. Micheletti, Gregg A. Noel, Richard C. Witzel, Jr. and Sarah Runnells Martin February 3, 2023 by renholding

With all the SPAC activity and scrutiny over the past several years, it was only a matter of time before the Delaware courts had an opportunity to weigh in on SPAC stockholder litigation.

Early last year, in January 2022, Vice …