Sky Blog
Directors of a Delaware corporation must act in the best interest of the corporation and its shareholders.[1] Other stakeholders – such as employees, creditors, customers, and suppliers – may only be considered by directors to the extent there …
The replacement of a CEO is one of the most important responsibilities of corporate boards. The most common theoretical underpinning of CEO replacement is related to CEO ability: The corporate board learns about the ability of its CEO from firm …
During a four-month span in late 2018, two events occurred at opposite ends of the country that could dramatically reshape the regulation of corporations in America. First, in September 2018, California enacted the nation’s first law mandating board gender diversity…
The Business Roundtable’s controversial new Statement on the Purpose of a Corporation (“Statement”) is a significant corporate governance development that requires thorough board discussion. The Statement will not only affect corporate purposes generally, but also have a very uncertain impact …
Audit committee responsibilities have consistently increased, and practitioners have raised concerns that audit committees may be overloaded with duties. For example, in a 2005 interview, one audit committee member noted, “It’s becoming almost excessive. We get press releases almost weekly …
The ever-evolving challenges facing corporate boards prompt periodic updates to a snapshot of what is expected from the board of directors of a major public company—not just the legal rules, or the principles published by institutional investors and various corporate …
In the 2019 proxy season, “overboarding” became a center-stage issue for many companies and investors. Several large asset managers, including Vanguard, BlackRock, and LGIM, enhanced their voting guidelines to apply stricter criteria, while some directors serving on multiple public company …
As the U.S. annual shareholder meeting season is coming to an end, we review the characteristics of newly appointed directors to reveal trends director in nominations. As of May 30, 2019, ISS has profiled the boards of 2,175 Russell 3000 …
As the busiest part of the 2019 U.S. proxy season is behind us, we take an early look at the vote results of annual general meetings convened from January to May. As of now, approximately 70 percent of Russell 3000 …
Until recently, the dialogue on corporate governance has focused almost exclusively on how to increase the ability of shareholders to impose their will on corporations. Shareholder groups, advisory firms and academics continually developed and added to a set of “best …
Understanding factors that facilitate or inhibit boards’ ability to monitor the chief executive officer (CEO) is central to corporate governance. In a recent paper, we analyze how informal relationships between directors and non-CEO executives (hereafter, internal ties) affect board effectiveness.…
Vanguard recently made three significant announcements, including an update to its proxy voting guidelines, changes to proxy voting responsibilities for its external managers and a commentary on its views and approach to corporate governance and sustainable investing.
What does boardroom culture yield when a board commits to a broad embrace of diversity—including diversity of gender, ideas, ethnicity, race, education, age, and skills? Do chances improve for decisions that help lead the company to maximize its potential and …
A series of significant developments provides a timely prompt for boards of directors to acknowledge the expanding role and importance of chief legal officers (“CLO”).
These developments include the departure of several high-profile CLOs; the recognition of the CLO as …
Employee participation in corporate decision-making is a trending issue for politicians on both sides of the pond. In the U.S. and the UK, politicians and the popular press are debating whether assigning board seats to workers by law could be …
A board of directors performs essential strategic and oversight roles that maximize the value of the shareholders’ residual claim. However, despite careful selection of board members, too often boards neither reach their full potential nor perform their necessary governance obligations. …
In a new article, I discuss how investment advisers like Blackrock, State Street, and Vanguard, can become adequately informed prior to voting their proxies without having to read massive amounts of information about the hundreds or thousands of companies …
There is substantial debate about the role of outside (i.e., non-employee) directors in enhancing corporate governance. Most of the research on this topic has focused on public corporations, which are required by law to have adequate representation of outside directors …
In a recent study, we examine whether a director’s “diversity” explains two employment outcomes: being retained on the board and being promoted to board leadership positions. We define diversity as the director’s dissimilarity to the other members of the board …
Regardless of industry, size or performance, no company should consider itself immune from hedge fund activism. No company is too large, too popular, too new or too successful. Even companies that are respected industry leaders and have outperformed the market …