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Corporate Governance
Stakeholder Capitalism’s Viewpoint Diversity Problem
Concerns about a lack of viewpoint diversity in stakeholder capitalism have been touched upon in commentary about the SEC’s recent climate change proposal. For those not caught up, the SEC has proposed a rule that would “require registrants to provide …
What the Language of Shareholder Stewardship Can Teach Us
Stewardship has, along with sustainability, social equality, biodiversity, and climate risk management, emerged in recent years as a favorite buzzword in corporate governance and investment management circles. But the language used by investors to express stewardship objectives and practices varies …
ISS Discusses Progress in Racial and Ethnic Diversity on U.S. Boards Since 2020
The summer of 2020 was a turning point in the push for corporate diversity and inclusion initiatives. The tragic murder of George Floyd and the reactions that followed it resulted in demands for racial equality and anti-racism measures that resounded
Corporate Culture and Financial Reporting Quality
Corporate culture is an important determinant of companies’ behavior and success and, as a result, has drawn much attention, particularly from the business press. While some companies have received praise for their corporate cultures, others such as Wells Fargo, Valeant …
Wachtell Lipton Discusses Legal Considerations for Decentralized Autonomous Organizations
We recently wrote about the emergence of a new breed of business organizations — decentralized autonomous organizations (DAOs) — to contend that the governance design for these blockchain-based organizations should heed some of the hard-fought lessons that have helped to …
Paul Hastings Discusses Japanese Poison Pills Without Shareholders’ Blessing
In many jurisdictions, poison pills are devised and implemented by the board of directors without shareholders being involved. Since the 2007 Supreme Court case[1] (in re Bulldog Sauce) in Japan, however, courts have largely relied on the …
Does the Adoption of Say-on-Pay Laws Affect Firms’ ESG Performance?
Can investors successfully advocate for improved ESG outcomes at their portfolio companies? We examine whether the introduction of say-on-pay (SOP) laws provides investors with a way to increase the extent to which executive compensation is tied to ESG metrics and …
Issuer Liability: Ownership Structure and the Circularity Debate
In many countries, investors can hold publicly traded companies liable for public misstatements. Issuer liability is intuitively appealing because statements are generally made on behalf of the company by its representatives. Moreover, large companies typically have deep pockets, which ensures …
Reimagining Board Committees to Accommodate Worker Voice
Employees at U.S. public corporations have increasingly demanded that their concerns be heard at the very senior levels of management. If current trends continue, boards of directors could also be challenged to accommodate “worker voice” more formally. Rather than being …
ISS Discusses 2022 Shareholder Resolutions on Political Spending
Shareholder resolutions filed in the 2022 proxy season included several different types of proposals focused on political spending by corporations, reflecting investor concerns that support of certain candidates and causes may be inconsistent with the stated values of the company.
Skadden Discusses Delaware Court Rulings on Advance Notice Bylaws and Incumbent Director Conduct
In early 2020, in BlackRock Credit Allocation Income Tr., et al. v. Saba Capital Master Fund, Ltd.,1 the Delaware Supreme Court reiterated that Delaware courts will enforce clear and unambiguous advance notice bylaws according to their terms using …
ISS Discusses Shareholder Resolutions on Lobbying
Shareholder resolutions filed in the 2022 proxy season reflect continuing investor concern over lobbying activities and whether they are consistent with a company’s public positions and aligned with shareholder interests. However, the passage of only two such resolutions indicates that …
The Implications of Complexity in CEO Pay Packages
Tying chief executive officer (CEO) pay to performance goals aims to solve a classic principal-agent problem, helping to ensure that the CEO acts in the best interest of shareholders. But can it be too much of a good thing – …
Corporate Criminal Liability for ESG Initiatives Is on Its Way
The Securities and Exchange Commission (“SEC”) has signaled that it wants to increase enforcement against “greenwashing” – misrepresentation of a company’s environmental actions. It is not yet clear, though, whether these enforcement efforts will expand the risk of corporate criminal …
The Need for Engaged Governance During Existential Crises: The Case of Aerojet Rocketdyne
Engaged shareholder voting is often perceived as the linchpin of sound corporate governance. That reputation is well deserved: Even as corporate governance has broadened its sights of late to accommodate a wider set of stakeholders, the pivotal role of shareholders …
ISS Discusses Global Crackdown on ESG Greenwashing
The meteoric global rise of ESG investing is increasingly being met with an equally ambitious regulatory disclosure regime, and, targeting greenwashing, policymakers are beginning to bare their teeth. In the latest salvo, on 25 May the US Securities and Exchange …
Why Do Companies Going Public Choose Controversial Governance Structures, and Why Do Investors Let Them?
Over the past three decades, there has been increasing concern about how corporate governance structures such as classified boards and dual class stock entrench managers, reduce director effectiveness, and reduce firm value. Likely as a result, mature firms have increasingly …
Asset Managers as Regulators
The corporation’s role in society is in flux. Previous generations saw government as an important bulwark against corporate harm. Today, by contrast, corporate America is thought to be a solution to government dysfunction around issues like inequality and the environment. …
Wachtell Lipton Discusses Stakeholder Capitalism and ESG as Tools for Value Creation
Recent high profile investigations into greenwashing, the ongoing war in Ukraine and soaring energy costs have prompted questions as to the purpose and value of ESG, and more broadly, stakeholder capitalism. Some have criticized stakeholder capitalism and ESG as “woke” …