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Stock Market Indices: Inside the Black Box

By Anita Anand and Adriana Z. Robertson March 21, 2018 by renholding

The news that a whistleblower contacted U.S. regulators last month about alleged manipulation of the Chicago Board Options Exchange Volatility Index, or VIX, highlights near universal reliance on information that stock market indices provide. While the VIX is not itself …

VUCA and the Management of Legal Risk

By Robert C. Bird March 15, 2018 by renholding

VUCA is an acronym for volatility, uncertainty, complexity, and ambiguity – four dimensions of risk – and a tool that can used to better manage legal risk. Designed by the U.S. military and reinforced by business,[1] it describes an …

A Rule-Based Method for Comparing Corporate Laws

By Lynn M. LoPucki March 13, 2018 by renholding

Scholars, lawyers, judges, and policymakers frequently need to compare corporate laws, both internationally and domestically. In part, this need results from the internal affairs doctrine, a conflict-of-laws rule that is unique to corporate law. The doctrine requires that courts apply …

Enhancing Governance in Dual-Class Share Firms

By Anita Anand February 27, 2018 by renholding

In a typical public company, shareholders can elect the board, appoint the auditors, and approve fundamental changes. In other words, they can participate in the governance of the firm. Firms with dual class shares (DCS) alter this balance by inviting …

Protecting LLC Owners While Preserving LLC Flexibility

By Peter Molk February 26, 2018 by renholding

Limited liability companies, or LLCs, have emerged as the entity of choice for new businesses. The form attracts many everyday owners and entrepreneurs as an easy way to combine corporation-style limited liability protection with partnership-style tax treatment. LLCs also offer …

Fried Frank Discusses Delaware Decision Absolving LCC Board of Duty to Maximize Price

By Gail Weinstein, Robert C. Schwenkel, Brian T. Mangino, Matthew V. Soran and Andrea Gede-Lange February 23, 2018 by renholding

In Miller v. HCP (Feb. 1, 2018), the Court of Chancery dismissed claims made against the members of a limited liability company board, a majority of whom had been appointed by the private equity firm that was the company’s controlling …

Changes in Corporate Governance: Externally Dictated vs. Organically Determined

By Onur K. Tosun February 20, 2018 by renholding

Several major corporate scandals in the United States during the early 2000s brought attention to corporate governance of large U.S. companies. As a result, Congress passed the Sarbanes-Oxley Act (SOX), and the Securities and Exchange Commission (SEC) announced several regulations …

Following the Corporate Governance Canon Pays Off for Chinese Companies

By Say Hak Goo and Bryane Michael February 19, 2018 by renholding

Over the years, a consensus on the best corporate governance practices has emerged. The OECD Guidelines of Corporate Governance epitomize a canon of such practices, including things like having non-executive shareholders on boards, having an audit committee, and following special …

Perpetual Dual-Class Stock: The Case Against Corporate Royalty

By Robert J. Jackson, Jr. February 16, 2018 by renholding

My first few weeks at the Securities and Exchange Commission have been a whirlwind—and just to be clear, I am not talking about the markets.[1] In a few short weeks, I have gotten a crash course on SEC policymaking—and

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Corporate Governance that Works for Everyone

By Barnali Choudhury and Martin Petrin February 15, 2018 by renholding

Corporate governance has traditionally been viewed as a way to reduce agency costs between shareholders and managers in the context of private ordering. Laws and regulations pertaining to corporate governance have, therefore, typically aimed to enhance long-term wealth for shareholders.…

Wachtell Lipton Discusses Investor Engagement in the New Paradigm for Corporate Governance

By Martin Lipton, Steven A. Rosenblum, Karessa L. Cain and Sabastian V. Niles February 13, 2018 by charlesbluesky

The accelerated interest in sustainability, ESG, corporate social responsibility and investment for long-term growth and value creation (the new paradigm) as most cogently exemplified by Value Act’s newly formed Spring Fund focusing on promoting environmental and social goals of the

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Europe Faces Problem of Strong Shareholders and Weak Outside Investors

By María Gutiérrez-Urtiaga and Maria Isabel Sáez-Lacave February 7, 2018 by renholding

Corporate governance literature has largely focused on listed firms with dispersed ownership, but those with controlling stockholders are increasingly important in the United States and Europe. In the U.S., the likes of Google, Facebook, and other technology firms have gone …

New Year’s Resolutions for Director Compensation from Investors Bancorp

By Jennifer S. Conway, Edmond T. Fitzgerald, Arthur H. Kohn, Brian D. Robbins and Vanessa C. Richardson February 5, 2018 by renholding

In recent years, shareholder plaintiffs have brought a series of claims before the Delaware Court of Chancery alleging that directors of Delaware companies have abused their discretion in granting themselves excessive equity compensation for their board service. These cases raised …

Has Their Time Come? A Tale of Two Corporate Responsibility Movements

By Joanne Bauer and Elizabeth Umlas February 2, 2018 by renholding

Amid the many calls for corporations to be socially responsible, two movements that have emerged since the turn of the 21st century stand out as being particularly serious about defining and holding corporations accountable to higher standards. One is the …

Proxy Access and Optimal Standardization in Corporate Governance

By Reilly S. Steel January 31, 2018 by renholding

According to conventional wisdom, “one size does not fit all” in corporate governance. Firms’ governance needs vary, implying that the optimal corporate governance structure for one company may not work for another. This one-size-does-not-fit-all axiom has featured prominently in arguments …

What Happens When an Activist Goes on the Board?

By John C. Coffee, Jr. and Joshua R. Mitts January 29, 2018 by renholding

After over a year of work, which included the review of some 635,450 Form 8-Ks filed by 7,799 public companies from January 1, 2000, to September 30, 2016, we think we know at least one answer to the question in …

Weil Discusses 2018 10-K and Proxy Season: Spotlight on Corporate Sustainability

By Catherine Dixon and Aabha Sharma January 24, 2018 by charlesbluesky

Institutional investor calls for enhanced transparency regarding portfolio companies’ identification and management of evolving sustainability risks gained considerable momentum over the past year, as reflected in shareholder voting patterns during the 2017 proxy season, developments in investor “stewardship” codes and …

Deadlock on the Board

By Jason Roderick Donaldson, Nadya Malenko and Giorgia Piacentino January 23, 2018 by renholding

The board of directors is the highest decision-making authority in a corporation. But sometimes boards struggle to make decisions. In surveys, 67 percent of directors report the inability to decide about some issues in the boardroom. Moreover, 37 percent say …

Excluding Shareholder Proposals: When Ratification Creates a Direct Conflict

By Keith F. Higgins January 15, 2018 by renholding

The annual scrum between companies and shareholders seeking to have their proposals included in the company’s annual proxy statement is well underway. One of the bases upon which a company may exclude a shareholder proposal from its proxy statement is …

The Governance Implications of Business Disruption

By Michael W. Peregrine and Kenneth Kaufman January 12, 2018 by renholding

In 2018, corporate boards will increasingly be called upon to respond to how innovative competitors disrupt their companies’ business models. These competitors use technology, scale, and sharp insights into consumers to lower prices, improve products and services, and draw customers …

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