Sullivan & Cromwell Discusses Agency Proposals for More Restrictive Rules on Incentive Compensation

By H. Rodgin Cohen, Heather L. Coleman, Julia E. Paranyuk and Marc Treviño June 6, 2024 by renholding

On May 6, 2024, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Federal Housing Finance Agency re-proposed their joint rule to implement Section 956 of the Dodd-Frank Act, which requires federal financial regulators …

How Foundation Ownership Affects Creditor Governance

By Bonnie Buchanan and Caglar Kaya June 5, 2024 by renholding

Foundation ownership represents a distinct form of corporate governance that challenges the traditional profit-maximization motive of the shareholder capitalism model. Foundations are independent self-governing bodies that own and control companies and pursue both commercial and social (often philanthropic) goals. As …

Who Re-Classifies a Board of Directors?

By Michael R. Levin June 5, 2024 by renholding

Classified boards of directors (BoD) remain one of the sorest of sore spots about portfolio companies. Investors complain about them endlessly. Proxy advisors loathe them. Shareholder proposals to de-classify tend to succeed.

Sure, many new IPOs and de-SPAC companies start …

Oscar Law: Governance and Other Legal Issues Involving the Industry of Elite Entertainment Awards

By Reid K. Weisbord and Jordan Bondurant June 4, 2024 by renholding

Each year, roughly 35 million television viewers tune in to watch live telecasts of the Oscars, Grammys, Emmys, Tonys, and Golden Globes. That celebratory ritual of broadcast television, which honors the year’s best stage, screen, and recording performances, has grown …

McRitchie v. Zuckerberg: Fiduciary Duties are Firm-Specific

By Andrew A. Schwartz May 31, 2024 by renholding

In a recent case involving Meta (née Facebook), the Delaware Court of Chancery issued an important opinion that speaks to the fundamental nature of corporate governance. Nearly everyone knows that corporate directors owe fiduciary duties to “the corporation and its …

How Debt Investors Are Influencing Corporate Governance

By Narine Lalafaryan May 30, 2024 by renholding

Since the global financial crisis of 2007-2008, the corporate finance markets have been dramatically transformed. Most notable has been the rise of non-traditional providers of debt finance such as private credit funds, which now aggressively compete with traditional finance providers …

Leveraging Information Forcing in Good Faith

By Hillary Sale May 29, 2024 by renholding

The duty of good faith and oversight, which is a branch of the duty of loyalty, has been the subject of considerable litigation in recent years, with cases revealing significant information asymmetries between directors and management. These cases are subject …

Director Independence Reconceived

By Claire A. Hill and Yaron Nili May 28, 2024 by renholding

Independent directors were originally conceived as guardians of shareholder interests who could safeguard a corporate board’s ability to check management’s power. They have since become a marquee feature of modern corporate governance. What, though, makes a director independent? Scholars, regulators, …

Autonomy Defaults in Contract Law

By Hanoch Dagan and Michael Heller May 20, 2024 by renholding

You can scribble an agreement on a napkin or hire lawyers to negotiate a contract that is hundreds of pages long. Either way, most of your contractual obligations won’t be in your agreement. They will be in the background rules …

Do Board Observers Improve Corporate Governance?

By Nizan Geslevich Packin and Anat Alon-Beck May 15, 2024 by renholding

In the complex world of corporate governance, a novel mechanism has reemerged: board observers. Operating without the conventional voting rights of board members, these individuals have become pivotal in bridging the gap between ambitious startups and their venture capital (VC) …

Faculty Governance Requires Faculty Accountability: A Response to David Pozen

By Joshua Mitts May 9, 2024 by renholding

In a recent Balkinization post, my colleague and friend Professor David Pozen critiques the power held by the office of Columbia University President Minouche Shafik and argues for a more “democratic model of internal governance.” Alongside his …

Stakeholder Governance and the Eclipse of Shareholder Primacy

By Martin Lipton and Kevin S. Schwartz May 8, 2024 by renholding

For decades, advocates of “shareholder primacy” as the North Star of corporate governance have steered our leading corporations and our Nation’s economic engine perilously off-course. Since the 1970s, when the work of Milton Friedman, Michael Jensen, and Frank …

The Governance Implications of DOJ’s New Voluntary Self-Disclosure Program for Individuals

By Michael W. Peregrine and Ashley C. Hoff May 3, 2024 by renholding

The Department of Justice recently announced a new policy on voluntary self-disclosure for individuals (the Pilot Program) that is likely to create significant challenges for a board of director’s audit and compliance committees, as well as tension among employees — …

Skadden Discusses Proposed DGCL Amendments’ Impact on Stockholder Agreements, M&A Practices

By Allison L. Land, Edward B. Micheletti and Lauren N. Rosenello April 24, 2024 by renholding

On March 28, 2024, the Council of the Corporation Law Section of the Delaware State Bar Association (DSBA) approved proposed amendments to the Delaware General Corporation Law (DGCL) in order to align the DGCL’s provisions with current market practices following

…

Do Investors Care Who Led the Audit?

By Daniel Aobdia, Vincent Castellani and Paul Richardson April 23, 2024 by renholding

Following a lengthy and contentious standard setting process, the Public Company Accounting Oversight Board (PCAOB), the U.S. regulator overseeing the auditors of publicly traded companies, implemented Rule 3211 in 2017. This rule requires audit firms to disclose the name of …

How Delegated Corporate Voting Advances Corporate Democracy

By Sarah C. Haan April 22, 2024 by renholding

Starting in the 1930s with the earliest version of its proxy rules, the Securities and Exchange Commission gradually increased the proportion of instructed votes on a shareholder’s proxy card until, for the first time in 2022, it required a fully-instructed …

Kirkland Discusses Proposed Regulations for Excise Tax on Share Repurchases

By Mike Carew, P.C., Sara B. Zablotney, P.C., Adam Kool, P.C., JoAnne Mulder Nagjee, Joseph Tootle and Michael P. Alcan April 22, 2024 by renholding

On April 12, 2024, the U.S. Department of Treasury and the Internal Revenue Service published proposed regulations regarding the 1% excise tax on certain stock redemptions and economically similar transactions (corporate “repurchases”) by publicly traded U.S. corporations (“Covered Corporations”) on …

Does Being Ethical Pay for Firms?

By Saurabh Ahluwalia, Linda Ferrell, O.C. Ferrell and Priyank Gandhi April 19, 2024 by renholding

Most businesses follow an explicit or implicit code of conduct that guides their operations, their relations with the public, and their treatment of customers, employees, and other stakeholders. These rules often go beyond what is legally required, and businesses often …

Europe Needs a Business Law. What Would It Look Like?

By Jan H. Dalhuisen April 12, 2024 by renholding

Globalization, whatever its problems, has created international flows of goods and other items that in value far exceed the GDP of the largest states (or combinations of them like the EU). and so it may lay claim to its own …

Sullivan & Cromwell Discusses Delaware Supreme Court Ruling on MFW’s Application to Controller Transactions

By Eric M. Krautheimer, Melissa Sawyer, Matthew A. Schwartz, Matthew L. Strand and Mimi Wu April 12, 2024 by renholding

In the important 2014 case of Kahn v. M & F Worldwide Corp., the Delaware Supreme Court held that freeze-out mergers, in which a controlling stockholder takes a company private, are subject to Delaware’s heightened “entire fairness” standard of …

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