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How Non-Compete Agreements Affect CEO Mobility, Job Security, and Compensation

By Omesh Kini, Ryan Williams and Sirui Yin June 19, 2018 by renholding

Firms generate profits through investments in physical and human capital. In legal regimes that recognize property rights, the firm generally has full ownership over its physical capital, as well as the right to future cash flows generated by these assets. …

How Non-CEO Inside Directors Add Value After an Unplanned CEO Exit

By Laurie Krigman and Mia Li Rivolta June 18, 2018 by renholding

The CEO-firm match theory posits that the CEO labor market is efficient and competitive and that the matching between CEOs and firms is optimal. However, both anecdotal and empirical evidence show that CEO departures, particularly unplanned CEO departures, can be …

Wachtell Lipton Discusses the Pros and Cons of Directors’ Notes

By David A. Katz and Laura A. McIntosh June 15, 2018 by renholding

“To take notes or not to take notes – that is the question” often asked in corporate board rooms today. As a matter of good governance, it is important that the minutes serve as the single, clear, official record of …

Does Firing a CEO Pay Off?

By George Alexandridis, John A. Doukas and Christos Mavis June 14, 2018 by renholding

The chief executive officer (CEO) and the top management team are typically viewed as critical to the success or failure of companies. As it is not uncommon for top executives to make value-destroying decisions, the role of internal control mechanisms, …

Mergers and the Market for Busy Directors: A Global Analysis

By Stephen Ferris, Narayanan Jayaraman and Min-Yu (Stella) Liao June 12, 2018 by renholding

The issue of directors serving on multiple corporate boards has come under increasing scrutiny from both academicians and practitioners. There are two types of arguments associated with the conflicting evidence of how multiple directorships affect firm value and performance. The …

Cleary Gottlieb Discusses Long Term Investors’ Duty to Revive the Staggered Board

By Neil Whoriskey June 11, 2018 by renholding

Beyond the cacophonous din of voices calling for companies to serve a “social purpose,” adopt a variety of governance proposals, achieve quarterly performance targets, and listen to (and indeed even “think like”) activists, there is now, most promisingly, a call …

Product Markets Offer New Evidence on How Board Structure Affects Firm Performance

By Onur K. Tosun, Xiaoyuan Hu and Danmo Lin June 7, 2018 by renholding

In a new paper, we discuss our findings on how corporate board structure affects firm performance under different product market conditions. Though many studies have examined the relationship between corporate board structure and firm performance, some have found that board …

Wachtell’s Lipton Shines a Spotlight on Boards for 2018

By Martin Lipton June 4, 2018 by renholding

The ever-evolving challenges facing corporate boards prompt an updated snapshot of what is expected from the board of directors of a major public company—not just the legal rules, but also the aspirational “best practices” that have come to have equivalent …

Experts and the Defense of Reliance in Delaware Corporate Law

By Alexandros Rokas May 25, 2018 by renholding

In all aspects of corporate life—from creation to expansion and from restructuring to demolition—experts are available to advise directors, managers, shareholders, financiers, and other participants. In particular, directors often rely on, for example, accounting firms to review financial statements, attorneys …

Are Directors Holding Multiple Board Seats Too Busy or Well-Connected?

By Anna Bergman Brown, Jing Dai and Emanuel Zur May 24, 2018 by renholding

Directors frequently hold multiple board seats, simultaneously lending their expertise to the boards of multiple firms. Director “busyness” is often thought to be detrimental to firm performance, as it leaves directors with insufficient time to devote to their duties at …

The Third Stage of Corporate Governance

By James P. Hawley and Jon Lukomnik May 22, 2018 by renholding

The recent announcements from major institutional investors about issues such as gender diversity and climate change seem like reactions to social ills. But they are not unmoored from investing. They are logical expressions of a relatively newly empowered, third phase …

Institutional Investor Voting Behavior: A Network Theory Perspective

By Luca Enriques and Alessandro Romano May 17, 2018 by renholding

It is received wisdom that institutional investors have insufficient incentives to cast informed votes because they compete on relative performance. If BlackRock invests in the monitoring of one of its portfolio companies, it will become relatively less competitive vis-à-vis the …

Telecom Italia Vote Shows How Activists and Passive Investors Can Work Together

By Sahil Mahtani May 16, 2018 by renholding

It’s not every day that Italian capitalism can be heralded as a bastion of transparency. But the showdown on May 4 at Telecom Italia’s board meeting between U.S. activist fund Elliott Management and French conglomerate Groupe Bolloré proved to be …

The Death of Corporate Law

By Zohar Goshen and Sharon Hannes May 15, 2018 by renholding

For decades, corporate law played a pivotal role in regulating corporations across the United States. Consequently, Delaware, the leading state of incorporation, and its courts played a central part in corporate law and governance. More than half of publicly traded …

Wachtell Lipton Discusses Labor Department’s Cautionary Tone on ESG-Related Matters

By David M. Silk, Sabastian V. Niles, Alicia C. McCarthy and Carmen X.W. Lu May 8, 2018 by renholding

With shareholder proposals regarding ESG and sustainability matters becoming the most common kind of proposal, proxy advisory firm ISS marketing a new “Environmental & Social QualityScore” product for rating public companies, asset managers developing ESG-related guidelines and voting policies, and …

Can Adverse Effects of Private Management-Investor Meetings Be Mitigated by Board Independence?

By Robert M. Bowen, Shantanu Dutta, Songlian Tang and Pengcheng Zhu May 7, 2018 by renholding

Private meetings between management and investors (site visits) occur worldwide and are generally held at corporate headquarters with invited investors and sell-side analysts. Ng and Troianovski (WSJ, 2015) report that U.S. investors spend $1.4 billion a year for face time …

Fried Frank Discusses Key Delaware Decisions on M&A and Corporate Governance

By Gail Weinstein, Philip Richter, Warren S. de Wied, Steven Epstein and Steven J. Steinman May 7, 2018 by renholding

New Risk of Below-Deal-Price in Appraisal Results

Last quarter, the Delaware courts issued the first post-Dell appraisal decisions—Aruba and AOL (issued by the Court of Chancery) and SWS Group (issued by the Delaware Supreme Court, affirming the Court …

Columbia Law Professors Write Three of Top 10 Corporate and Securities Articles

By Reynolds Holding April 23, 2018 by renholding

Zohar Goshen, Kathryn Judge, and Eric Talley were among the authors of three of the 10 best corporate and securities articles last year, the Corporate Practice Commentator has announced. The Columbia Law School professors were joined by Gabriel Rauterberg, a

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K&L Gates Discusses D&O Insurance for Cyber Liabilities

By Jeffrey Meagher and Sarah Turpin April 16, 2018 by Carly Goeman

Scarcely a day goes by without news headlines reporting yet another data breach or cyber crime incident, which can have devastating consequences for any business in terms of both reputation and balance sheet. A cyber incident may also have serious …

Corporate Governance and Human Capital: Evidence from SMBO Boards

By Ranko Jelic, Dan Zhou and Mike Wright April 13, 2018 by renholding

Consistent with predictions made in the late 1980s, the buyout market has grown tremendously and, together with the private equity (PE) model, has become a global phenomenon. One consequence of the maturity of the market is substantial secondary management buyout …

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