Columbia Law School
Sky Blog
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
Corporate Governance
Corporate Governance that Works for Everyone
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
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
Europe Faces Problem of Strong Shareholders and Weak Outside Investors
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
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
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
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?
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
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
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
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
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 …
Corporate Governance, Tax Avoidance, and Finance Constraints
In response to greater financial constraints and more costly external financing, firms may avoid corporate taxes to generate funds for investment. In that sense, outside investors may recognize tax management as a value-increasing activity, especially for a financially constrained firm. …
Fried Frank Discusses Delaware Ruling that Corporate Recapitalization Required “Entire Fairness” Review
In NRG Yield v. Crane (Dec. 12, 2017), the Court of Chancery dismissed fiduciary duty claims against directors who approved a corporate recapitalization that was proposed by a controller and would perpetuate its control. The reclassification provided for the issuance …
CamberView Discusses ISS Changes to Compensation-Related Methodologies
On December 14, ISS released its Frequently Asked Questions (FAQ) documents on U.S. Compensation Policies and U.S. Equity Compensation Plans as well as a whitepaper on Pay-for-Performance Mechanics designed to help stakeholders understand upcoming changes to its compensation-related methodologies. These …
How Should the Law Classify Decentralized Businesses?
In July 2017, the Securities and Exchange Commission (SEC) issued a ruling on The DAO, a decentralized smart-contract based investment fund, determining that the tokens it sold were unregistered securities and warning that other initial coin offerings (ICO) may need …
Delaware Supreme Court Limits Ratification Defense for Director Compensation Awards
How Preliminary Examiners Could Improve Corporate Governance for Companies in Bankruptcy
In my article Chapter 11, Corporate Governance and the Role of Examiners, I propose a possible solution to corporate governance problems caused by the debtor-in-possession model of Chapter 11 bankruptcy proceedings.
Agency and Law Enforcement Problems in Chapter 11
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Does Shareholder Protection Drive Development of Stock Markets?
Does the quality of legal and other institutions make a difference to economic development and growth? In their very well-known studies of the relation between law and finance, Andrei Shleifer and his collaborators (in particular Rafael La Porta and Simeon …
King & Spalding Discusses ISS Voting Policies for 2018
On November 16, 2017, Institutional Shareholder Services (“ISS”) issued its updated proxy voting guidelines for the upcoming 2018 proxy season. Notable updates applicable to U.S. companies include new or revised policies:
- to respond to recurring patterns of excessive non-employee director