Wachtell Lipton Discusses SEC’s Proposed Climate-Related Disclosure Rules and Audit Committees

By David M. Silk, Carmen X.W. Lu and Ram Sachs April 11, 2022 by renholding

The SEC’s proposed amendments to Regulations S‑K and S‑X to require new climate-related disclosures will, if adopted, require an expansion in the scope and responsibilities of audit committees. As described in our prior memo, the rules contemplate domestic and foreign …

Controlling Tunneling Through Lending Arrangements

By Alperen Afşin Gözlügöl April 8, 2022 by renholding

In a recent article, I examine how common provisions in lending arrangements (drawing from the LMA and LSTA modal agreements) handle the problem of value diversion in debtor companies. “Tunneling,” which is the expropriation of company value by corporate …

To Call a Donkey a Racehorse: The Fiduciary Duty Misnomer in Corporate and Securities Law

By Marc I. Steinberg April 7, 2022 by renholding

In a new article, I address a subject that has been ignored for too long: The fiction of meaningful fiduciary standards in the corporate and securities laws contexts. My article explores the standards that legislatures and courts apply to corporate …

The Limits of Enlightened Shareholder Activism

By Virginia Harper Ho April 6, 2022 by renholding

One of the more visible market shifts over the past decade is the rise of what might be called “enlightened shareholder activism” – the use of shareholders’ governance rights to encourage corporations to take action around environmental, social, and governance …

Sullivan & Cromwell Discusses Court Decision Invalidating California Board Diversity Law

By Patrick S. Brown, Diane L. McGimsey, Adam S. Paris, Alexandria M. Ross and John L. Savva April 6, 2022 by renholding

On April 1, 2022, in Crest v. Padilla, California Superior Court Judge Terry Green granted summary judgment in favor of plaintiffs who had challenged AB 979, one of California’s two board diversity statutes, as violating the California Constitution. The …

Wachtell Lipton Discusses Board Oversight of ESG and the 2022 Proxy Season

By David M. Silk, Sabastian V. Niles and Carmen X.W. Lu April 4, 2022 by renholding

Last year’s proxy season saw investor support for an unprecedented number of ESG proposals, on issues ranging from climate change to human capital management to diversity, equity and inclusion. Proxy advisory firms increasingly recommended that shareholders vote for such proposals. …

How to Translate Climate Disclosure into Investor Action

By Felix Mormann and Milica Mormann March 31, 2022 by renholding

Massive investment is required if mankind is to meet, and master, the challenges presented by global climate change. A recent report by McKinsey & Company posits that capital spending on energy and land-use infrastructure alone will need to exceed $9 …

Exequity Discusses Board Committee Oversight of ESG

By Ben Burney and Emily Brown March 30, 2022 by renholding

Over the past two years, Environmental, Social, and Governance (ESG) matters have become an increasingly important issue in the boardroom. This trend is accelerating today as a growing number of investors and stakeholders expect companies to both produce strong stock …

Does Media Exposure Affect Financial Reporting Quality Through Auditors?

By Steven Cahan, Chen Chen and Rencheng Wang March 24, 2022 by renholding

The media play an important role in capital markets. Media coverage can attract the attention of investors and the public at large and affect the decisions of management. As such, the media can have a corporate governance role in disciplining …

Max Oversight Duties: How Boeing Signifies a Shift in Corporate Law

By Roy Shapira March 21, 2022 by renholding

In September 2021, the Boeing 737 Max debacle turned into an important moment in corporate law. A Delaware court allowed a derivative lawsuit brought by Boeing shareholders to proceed, based on the theory that Boeing’s directors breached their oversight duties …

The “S” in ESG: Human Capital Management

By George S. Georgiev March 16, 2022 by renholding

Over the past decade, ESG has morphed from a fringe concern into one of the most prominent topics in corporate governance – and a flourishing research area as well.[1] Nevertheless, some notable blindspots remain. Based on a recent survey, …

ISS Discusses Women on California Boards

By Paul Hodgson March 15, 2022 by renholding

Since 1995, US presidents have issued a series of annual proclamations designating March as Women’s History Month to celebrate the contributions women have made to the US and recognize the specific achievements women have made over the course of American

…

Stakeholder Capitalism as ESG-Constrained Shareholder Capitalism

By Peter H. Huang March 11, 2022 by renholding

Intense debates are alive and well on the nature and meaning of corporate purpose and corporate personhood. In a new paper, I analyze proposals by the U.S. Securities Exchange Commission to require that all reporting companies make periodic, mandatory …

Power and Pay in the C-Suite

By Afra Afsharipour and Darren Rosenblum March 10, 2022 by renholding

Over the past few decades, chief executive officer (CEO) pay has risen spectacularly, as has debate regarding why this has occurred and whether policy should or can correct it. Yet one glaring fact about the C-Suite eludes much of the …

Initial Public Offerings and Optimal Corporate Governance

By Albert H. Choi March 9, 2022 by renholding

Do companies adopt optimal governance arrangements when they go public? This question has been a hotly debated topic in corporate law and governance and one that I examine in a recent paper.

At the time of an initial public offering …

How to Reconcile Corporate Interests with Broader Social Interests

By Yong-Shik Lee March 4, 2022 by renholding

The widely accepted primary purpose of corporations is to maximize profit or value to shareholders, otherwise known as “shareholder primacy.” Shareholder primacy represents not only the prevalent objective of corporations but also a norm: A seminal case in corporate law, …

Skadden Discusses New Pressure on Companies to Disclose Political Policies and Contributions

By Ki P. Hong, Melissa L. Miles and Karina Bakhshi-Azar February 28, 2022 by renholding

Political activities of corporations are increasingly subject to scrutiny on environmental, social and governance (ESG) grounds. Demands that corporations and their political action committees (PACs) justify their contributions based on candidates’ voting records on ESG issues came to the fore …

Cravath Discusses Dollar Cost Averaging of Long-Term Incentive Grants

By John W. White, Eric W. Hilfers, Jonathan J. Katz, Michael L. Arnold and Matthew J. Bobby February 24, 2022 by renholding

“Dollar cost averaging” is an investment strategy whereby investors spread a desired investment amount into periodic investments over a period of time, which mitigates the price risk inherent in investing the entire amount at an inopportune moment. Virtually all public …

Skadden Discusses Delaware Law Authorizing Captive Insurance for D&O Coverage

By Allison L. Land, Edward B. Micheletti and Peter Luneau February 18, 2022 by renholding

On February 7, 2022, Delaware’s governor signed a bill amending the Delaware General Corporation Law (DGCL) to expressly authorize Delaware corporations to purchase and maintain directors’ and officers’ (D&O) liability insurance by or through captive insurance companies. This amendment, described …

Why the Campaign Against Corporate Personhood Is Misguided

By David Gindis and Abraham A. Singer February 8, 2022 by renholding

Considerable controversy has surrounded the Supreme Court’s sharply divided decisions in Citizens United and Hobby Lobby. Critics argue that giving business corporations unwarranted constitutional protections entrenches corporate power at the expense of democracy by putting legal fictions on the …

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