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Milton Friedman’s Essay and the True Purpose of the Business Corporation

By Martin Lipton September 18, 2020 by renholding

From a practical standpoint, the most significant part of the 1970 Milton Friedman essay in the New York Times was the headline: “The Social Responsibility Of Business Is to Increase its Profits.” For a half-century, that phrase has …

What Blockchain and Artificial Intelligence Won’t Do for Corporate Lawyers

By Jeffrey M. Lipshaw September 15, 2020 by renholding

There have been a number of scholarly paeans to blockchain as a corporate governance tool. It creates a permanent and irreversible chain of custody that can be used for shareholder record keeping and voting, insider trading, corporate disclosures, and trade …

ESG, Common Ownership, and Systematic Risk: How They Intersect

By John C. Coffee, Jr. September 14, 2020 by renholding

This brief column will assert that three developments that seem unrelated are in fact closely related and may soon impact U.S. corporate governance with the force of a freight train. This column summarizes a longer article just posted by this …

Recent Delaware Cases on Managing Conflicts: Board- and Stockholder-Level Measures from MFW Case Law

By Nate Emeritz, Brian Currie and Jason Schoenberg September 11, 2020 by renholding

Delaware courts have recently had opportunities to address the dual conditions for management of controlling stockholder conflict transactions under Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014) (“MFW”) and its progeny. That MFW structure provides …

Recent Delaware Cases on Managing Conflicts: Stockholder-Level Measures

By Nate Emeritz, Brian Currie and Jason Schoenberg September 8, 2020 by renholding

Delaware courts have recently had the opportunity to evaluate and discuss management of potential conflicts. That guidance may be particularly salient in the context of insider transactions and down-rounds, which may animate potential conflicts and lead to difficult litigation for …

Recent Delaware Cases on Managing Conflicts: Board-Level Measures

By Nate Emeritz, Brian Currie and Jason Schoenberg September 4, 2020 by renholding

Recent Delaware case law offers useful guidance regarding options for management of potential conflicts. Those cases demonstrate that conflicts can be mitigated by board or stockholder actions and that such measures for managing conflicts should be thoughtfully tailored to the …

SEC Commissioner Peirce Speaks on Corporate Governance

By Hester M. Peirce August 28, 2020 by renholding

We are here today to talk about excellence in corporate governance. Before I begin, I have to remind you that the views I represent are my own and not necessarily those of the Securities and Exchange Commission or my fellow

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Delaware Law and the “End of History” in Creditor Protection

By Jared A. Ellias and Robert J. Stark August 27, 2020 by renholding

What should a judge do when creditors claim that they were harmed by management and a board’s carelessness or disloyalty? If the creditors were shareholders, the judge would apply fiduciary duty doctrines to determine liability. Yet it’s unclear what legal …

Does Environmental and Social Disclosure Affect Innovation at Companies?

By Brian Gibbons August 26, 2020 by renholding

Companies are typically not compelled to disclose environmental and social (E&S) information because this information does not meet the materiality standard used in many jurisdictions. However, some shareholders have an explicit mandate to screen potential investments based on E&S criteria. …

The Social Voice of CEOs

By Swarnodeep Homroy August 25, 2020 by renholding

CEOs have increasingly been speaking out on social issues that are not directly related to their core businesses. Why are they doing so, and what are the consequences for their companies?

In a new paper, I examine the phenomenon of …

Wachtell Lipton Discusses Executive Compensation Considerations – Looking Ahead and Staying Nimble

By Jeannemarie O'Brien and Adam J. Shapiro August 25, 2020 by renholding

Unpredictability has dominated the economic climate over the last six months and likely will continue in the months ahead. Companies that swiftly and thoughtfully assess and respond to evolving challenges will most effectively manage through the pandemic. This theme applies …

How to Address Nonprofit Governance Failures

By Peter Molk and D. Daniel Sokol August 24, 2020 by renholding

Governance failures at for-profit corporations are the topic of frequent media stories, judicial opinions, and academic analyses. Nonprofit governance, however, has received significantly less attention. This lack of attention is not because nonprofits are immune from governance failures, and recent …

Changing the Guard: Improving Corporate Governance with D&O Insurer Rotations

By Andrew Verstein August 19, 2020 by renholding

Insurance companies try to detect and reduce risk. Health insurers encourage preventative care, fire insurers insist on functioning sprinklers, police insurers investigate alleged misconduct and drop departments that tolerate excessive force, and Hollywood insurers flag risky scenes as requiring stunt …

Wachtell Lipton Discusses the Other “S” in ESG: Building a Sustainable and Resilient Supply Chain

By David M. Silk, David B. Anders, Sabastian V. Niles, Christina C. Ma and Carmen X.W. Lu August 17, 2020 by renholding

The current pandemic, blind spots in information flows through supply lines, the shutdowns in meat processing plants around the world, the ongoing shortages in personal protective equipment and, most recently, the scandal involving British retailer Boohoo, have all underscored the …

The False Dichotomy of Corporate Governance Platitudes

By Jeffrey M. Lipshaw August 12, 2020 by renholding

Last August, the Business Roundtable (an organization of around 200 corporate CEOs) announced it was amending its Principles of Corporate Governance to eliminate the statement that the “primary purpose” of a corporation was to serve its shareholders. The CEOs wanted …

How to Integrate New Corporate Directors Online

By Seth C. Oranburg and Benjamin P. Kahn August 12, 2020 by renholding

The coronavirus may have ended the office era. Even though governments allowed businesses to reopen, few workers have returned to offices. It is not clear how many will ever return. Tech giant Facebook, for example, plans to shift up …

Skadden Reviews ESG for First Half of 2020

By Scott C. Hopkins, Simon Toms, Adam M. Howard and Patrick Tsitsaros August 10, 2020 by renholding

Interest in the environmental, social and governance (ESG) policies of companies and their impact on the wider community has continued to increase amongst institutional investors, retail shareholders and the media during the first half of 2020. The COVID-19 pandemic and …

Artificial Intelligence in Hiring: Problem or Solution?

By Kimberly A. Houser August 7, 2020 by renholding

In my new paper, I explain how the creation of responsible artificial intelligence (AI) can address why women and under-represented minorities have a difficult time gaining a foothold in male-dominated industries. This is an especially important topic today as companies …

Wachtell Lipton Discusses the Purpose and Objective of the Corporation

By Martin Lipton, Steven A. Rosenblum, William Savitt, Karessa L. Cain, Hannah Clark and Bita Assad August 7, 2020 by renholding

As we approach the first anniversary of the Business Roundtable’s abandonment of shareholder primacy and embrace of stakeholder governance, and the fourth anniversary of our development for the World Economic Forum of The New Paradigm: A Roadmap for an Implicit …

The Case for Contingent Shareholder Action

By Mira Ganor August 6, 2020 by renholding

Shareholder action is restricted to a binary choice, a decision that requires a “yes” or a “no.” For example, shareholders may be asked whether or not to participate in a tender offer, redeem SPAC shares, exercise preemptive rights, or approve …

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