The following post comes to us from Trevor Norwitz, a partner at Wachtell, Lipton, Rosen & Katz in New York and a lecturer-in-law at Columbia Law School: 

In the upcoming proxy season, shareholders at several major corporations will be asked to vote on proposals submitted by shareholder activists requesting that the board of directors facilitate the ability of shareholders to act by written consent.   This means that, rather than the most important decisions being made at an annual or specially called shareholders meeting, such fundamental changes as replacing the board or even selling the company could be made, in many … Read more

My draft article, Blocking the Ax: Shielding Corporate Counsel from Retaliation as an Alternative to White Collar Hypercriminalization, recommends that the NYSE and Nasdaq amend their corporate governance listing standards to require that termination of a public company’s general counsel and lead outside corporate transactional and securities regulatory counsel be approved in advance by the company’s independent audit committee.

The article is written from the perspective of one who worked for many years in private practice as full equity partner at two major AmLaw 100 firms and during 2005-2006 served in a senior capacity with the Securities and Exchange … Read more

A shareholder typically brings a derivative suit on behalf of a corporation against the company’s current or former officers or directors in one of two contexts:  either after the shareholder has demanded that the board cause the company to bring suit on its own and the board refuses, or when the shareholder brings the suit directly on the basis that demand on the board would have been futile because a majority of the board is not sufficiently disinterested to make the decision as to whether to sue.  In either case, the company’s board (or board committee, such as a special … Read more

The accepted wis­dom is that a lawyer who repre­sents herself—by acting as both a lawyer and a director—has a fool for a client.  In our working paper, Lawyers and Fools: Lawyer-Directors in Public Corporations, my co-authors, Lubomir Litov and Simone Sepe, and I explain why the accepted wisdom is outdated.  The benefits of lawyer-directors in today’s world signifi­cantly outweigh the costs.  Beyond monitoring, they help manage litigation and regulation, as well as structure compen­sa­tion to align CEO and shareholder interests.  On average, a lawyer-director increases firm value by 9.5 percent, and when the lawyer is also a company executive, … Read more

Poor corporate governance is a pervasive problem in the charitable nonprofit sector. Prominent examples of mismanagement and abuse include instances of intentional misconduct, such as embezzlement and unauthorized self-dealing, and negligent conduct, such as failure to diversify the organization’s investment assets. In numerous cases, the lack of good corporate governance has led to the financial distress or failure of a charitable nonprofit firm. A rich literature on nonprofit law has considered the need for better corporate governance and enforcement of fiduciary duties, but the scholarship has yet to address the implications of financial distress and insolvency on corporate governance.

My … Read more

Last week, Professor Robert J. Jackson, Jr.  sat down with Bloomberg Law’s Lee Pacchia to discuss his SEC petition to require public companies to disclose their political spending.  The SEC has received more than 300,000 comments on the petition, more than any other rulemaking proposal in the Commission’s history. SEC staff members have suggested that they plan to propose rules by April.   Jackson tells Pacchia that, because “this is investors’ money,” shareholders have a right to know when the companies they own spend money on politics.

The full interview can be viewed here.  Jackson’s recent Blue Sky Blog post … Read more

When a business enterprise is confronted with a situation that suggests that there has been a violation of law, the judgments made at the outset may well be critical to the ultimate outcome. Indeed, poor choices concerning how the matter should be handled— perhaps made in a rush and almost certainly without full facts—may prove even more prejudicial and damaging to the enterprise than the underlying conduct. As has often been said, corporations get into real trouble more often due to “flunking the investigation” than due to the conduct being investigated.

The objective of the article,  The Corporate First Responder:  … Read more