Wachtell Lipton Offers Thoughts for Boards of Directors in 2019

By Martin Lipton, Steven A. Rosenblum, Karessa L. Cain, Amanda S. Blackett and Kathleen C. Iannone December 20, 2018 by renholding

In recent years, it has become increasingly evident that the activism-driven corporate world is relatively fragile and is proving to be unsustainable, particularly when viewed in the broader context of rapidly changing political and social norms and increasing divisiveness across …

ISS Discusses How Governance Practices Show that Independent Board Leadership Matters

By Anthony Garcia and Kosmas Papadopoulos November 30, 2018 by renholding

The debate over board leadership does not seem to go away especially in the U.S. where market participants have long agreed on the need for greater independence in principle, while largely disagreeing on the measures required to put it into …

Bonfire of the Vanities–2018 Style: The Case of Elon Musk

By John C. Coffee, Jr. October 2, 2018 by renholding

Elon Musk came close to doing something truly unique. No, not his electric car. Rather, he was about to roll the dice with his shareholders’ equity.

Securities analysts estimate that somewhere between 25 and 35 percent of the value of …

SEC Commissioner Airs Her Beef With Stakeholders

By Hester M. Peirce September 26, 2018 by renholding

Last time I flew to California, the skies were so clear that I was able to keep an eye on the changing landscape below all the way across the country. The vastness and great variety was striking. Having grown up

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Corwin at a Crossroads: Could DVMT Stock Be the Tracker Jacker in Dell’s Hunger Games?

By Eric Talley September 25, 2018 by renholding

Of all the conjured hazards faced by the teenage gladiators in the dystopian novel The Hunger Games, the Tracker Jacker (a genetically engineered wasp) was the most deadly and unpredictable when provoked. Dell Technologies Inc. may soon have to …

Corporate Governance and Countervailing Power

By Brian Cheffins September 19, 2018 by renholding

The analysis of corporate governance has been a strikingly one-sided affair. The focus has been almost exclusively on “internal” checks and balances, namely scrutiny of executives by the board of directors and by shareholders. In contrast, mechanisms that can operate …

How Credit Default Swaps Affect Managers’ Voluntary Disclosure

By Jae B. Kim, Pervin K. Shroff, Dushyantkumar Vyas and Regina Wittenberg Moerman September 17, 2018 by renholding

Credit Default Swaps (CDSs) enable lenders to distribute credit risk to parties more willing and able to bear it, thereby enhancing the liquidity and flexibility of individual lenders and the financial system (Greenspan 2004). However, empirical evidence suggests that CDSs …

SEC Commissioner Jackson Issues Statement on Shareholder Voting

By Robert J. Jackson, Jr. September 14, 2018 by renholding

Today, the Office of the Chairman and the Division of Investment Management at the Securities and Exchange Commission suddenly raised questions about long-resolved issues regarding shareholder voting.[1] Because the Investor Advisory Committee’s critical work in this area is ongoing, …

Why Firms Disclose a Supplemental CEO-to-Median Worker Pay Ratio

By Sun Moon Jung, Natalie Kyung Won Kim, Han Seong Ryu and Jae Yong Shin September 5, 2018 by renholding

Pay disparity between executives and employees has been criticized as evidence of corporate greed. It can also create perceptions of unfairness and dissatisfaction among employees, weakening their commitment and performance. To provide more information about pay disparity, the U.S. Congress …

SEC Chair Issues Statement on Proxy Process Roundtable

By Jay Clayton August 1, 2018 by renholding

Shareholder engagement is a hallmark of our public capital markets, and the proxy process is a fundamental component of that engagement. In 2010, the Commission issued a concept release seeking public comment on whether the U.S. proxy system as a …

New Data Shed Light on Mutual Fund Time Horizons

By Anne M. Tucker July 2, 2018 by renholding

Short-termism is a loaded phrase in debates over investment time horizons, often used to criticize investors and corporate managers deemed overly focused on near-term gains at the expense of long-term value. One argument is that U.S. mutual funds, as significant …

How Non-Compete Agreements Affect CEO Mobility, Job Security, and Compensation

By Omesh Kini, Ryan Williams and Sirui Yin June 19, 2018 by renholding

Firms generate profits through investments in physical and human capital. In legal regimes that recognize property rights, the firm generally has full ownership over its physical capital, as well as the right to future cash flows generated by these assets. …

The Death of Corporate Law

By Zohar Goshen and Sharon Hannes May 15, 2018 by renholding

For decades, corporate law played a pivotal role in regulating corporations across the United States. Consequently, Delaware, the leading state of incorporation, and its courts played a central part in corporate law and governance. More than half of publicly traded …

Blue Sky Banter Podcast: SEC’s Robert Jackson on Dual Class Shares and More

By Reynolds Holding April 19, 2018 by renholding

Robert Jackson, a commissioner of the U.S. Securities and Exchange Commission and a former professor at Columbia Law School, speaks with Reynolds Holding about becoming a commissioner, the problem of perpetual dual class stock, and what the commission can do

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Sticking Around Too Long? Dynamics of the Benefits of Dual-Class Structures

By Hyunseob Kim and Roni Michaely April 12, 2018 by renholding

Lawyers and academics generally have a dim view of dual-class share structures. When Snap Inc., a technology-based social media company, was preparing for its initial public offering (IPO) in early 2017, for example, CalPERS and many other prominent institutional investors …

The Purpose of the Corporation

By Martin Lipton April 11, 2018 by renholding

Whether the purpose of the corporation is to generate profits for its shareholders or to operate in the interests of all of its stakeholders has been actively debated since 1932, when it was the subject of dueling law review articles …

Sexual Harassment and Corporate Law

By Daniel Hemel and Dorothy Shapiro Lund April 9, 2018 by renholding

Tronc Chairman Michael Ferro became the latest corporate executive to resign amid accusations of unwanted sexual advances when he stepped down from the helm of the newspaper publishing chain in mid-March. Ferro joins a long list of high-profile executives who …

Is There a Delaware Effect for Controlled Firms?

By Edward G. Fox April 6, 2018 by renholding

The effect of Delaware incorporation on firm value is an enduring question in corporate law. Robert Daines shifted the terms of this debate in Does Delaware Law Improve Firm Value? (2001) by showing that publicly traded Delaware corporations, controlling for …

The Power of Voluntary Disclosure by Activist Shareholders

By Ryan McDonough and Jordan Schoenfeld March 29, 2018 by renholding

A key challenge for activist investors is convincing other shareholders that the activist agenda will increase the value of a target firm. Accordingly, activists commonly release public disclosures through traditional and social media, news wires, or their fund’s website. These …

Antitrust as Corporate Governance: Why a Firm’s Mission Is to Earn No Profit

By Ramsi Woodcock March 28, 2018 by renholding

BlackRock, the vast asset manager, has been feted for demanding that the boards of its portfolio firms pursue a social purpose, which likely entails spreading corporate profits beyond shareholders to include labor and victims of environmental harm.[1] But despite …

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