Corporate Governance Research and Resources

There was no shortage of disappointment and discourse from all sides during the recent negotiations on the EU’s Corporate Sustainability Due Diligence Directive (CSDDD). Opinions were plentiful, diverse, passionate, and the gloves certainly came off in the final round. The debate played out amongst ourselves, where on February 5, 2024  one of us (Eccles, a […] Read more

The Hidden Logic of Shareholder Democracy Posted by Usha Rodrigues (University of Georgia), on Friday, April 19, 2024 Tags: AMC, DGCL, Shareholder, Voting The Case Against the SEC’s Final Climate Rules Begins in Earnest (and What It Means) Posted by Paul Davies, Sarah Fortt, and Betty Huber, Latham & Watkins LLP, on Saturday, April 20, […] Read more

The Department of Justice (DOJ) recently announced that it is embarking on a “90-day  sprint” to develop a whistleblower award program. This is a promising and welcome development for fairness and the rule of law in corporate America. Whistleblower programs at other federal agencies have been resounding successes, bolstering enforcement efforts against hard-to-detect crimes by […] Read more

Huge private companies like Epic Games or SpaceX are everywhere, creating gaps between the private-market reality and legal structures that were designed for public companies. This major economic shift has created a blind spot in the law and its analysis. Although an emerging literature explores the world of startups, whole areas remain unexamined. A key […] Read more

A growing number of former directors and founders have turned dissident as of late, returning to companies to push for new strategies and reforms. Outside of campaigns where former executives are brought forward as nominees, such as Trian Partners’ slate for Walt Disney featuring the media giant’s former chief financial officer Jay Rasulo, U.S.-headquartered companies […] Read more

Introduction Proponents as of mid-Feburary 2024 had filed at least 527 shareholder resolutions on environmental, social and related sustainable governance issues for the 2024 proxy season.  This is down by only a few from 536 last year at the same time.  It still seems possible the total will reach the 630-year-end total of last year. […] Read more

One must search long and hard to find an academic, journalist, politician, or citizen who does not believe that the best tool for deterring corporate crime is criminal prosecution of individual employees, especially managers.  Even the Justice Department’s oft-maligned program for negotiated settlements with offending companies prioritizes leveraging corporate criminal liability to produce otherwise elusive […] Read more

Summary The U.S. Supreme Court ruled today in Macquarie Infrastructure Corp. v. Moab Partners, L. P., 601 U.S. ___, 2024 WL 1588706 (2024), that a violation of Securities and Exchange Commission Item 303—which requires public companies to disclose “known trends or uncertainties” that could impact their income— cannot, in the absence of an otherwise misleading […] Read more

Earlier this month, SCOTUS unanimously decided Macquarie Infrastructure Corp v. Moab Partners, holding that a pure omission of information required to be disclosed—in this case required in MD&A under Item 303—cannot form the basis of a private securities fraud action under Rule 10b-5(b). The Court was clear: “Pure omissions are not actionable under Rule 10b–5(b).” To be actionable under Rule 10b-5(b), the Court said, the omission must render an affirmative statement materially misleading. According to the Court, a “pure omission occurs when a speaker says nothing, in circumstances that do not give any particular meaning to that silence.”  Actionable “[h]alf-truths, on the other hand, are ‘representations that state the truth only so far as it goes, while omitting critical qualifying information’…….In other words, the difference between a pure omission and a half-truth is the difference between a child not telling his parents he ate a whole cake and telling them Read more

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 … Read more

Sounds like a novel, right? Rather than our effort to distill to its essence the complicated, enormous lawsuit that TSLA shareholder Richard Tornetta won against CEO Elon Musk and eight directors to clawback $56 billion in exec comp? Now that TSLA published its preliminary proxy statement for its 2024 AGM, we know how the company […] Read more

The environmental, social, and governance (ESG) moniker implies a coherence between corporate social responsibility and corporate governance. In a paper recently posted to SSRN, I argue, to the contrary, that governance trade-offs must be made if corporations are going to be able to pursue social benefits other than just profits. The analysis provides a novel […] Read more

What is alternative data? Altdata generally is understood to include information about an organization that is available outside of traditional financial and regulatory reporting channels, press releases, or other authorized materials. It includes data about an organization and its operations that the organization makes public or otherwise discloses to third parties knowingly or unknowingly. Altdata […] Read more

In an article in the Fordham Journal of Corporate and Financial Law, “Minutes Are Worth the Minutes: Good Documentation Practices Improve Board Deliberations and Reduce Regulatory and Litigation Risk,” former Chief Justice of the Delaware Supreme Court, Leo Strine, discusses—convincingly—the importance of good “corporate minuting and documentation processes.” (See also this post presented on The Harvard Law School Forum on Corporate Governance.) Strine acknowledges upfront that the topic is “decidedly not sexy,” and “the favorite task of no one involved in the process.”  Drafting minutes, he suggests, is the “equivalent of eating your least favorite vegetable, either you do it hastily, as infrequently as you can, or, if you can get away with it, not at all.” (Perhaps the leitmotif of this piece might be Strine’s evident hostility to vegetables. Later, he characterizes minutes as “the spinach that must be eaten.”)  But, in his view, it is an “unquestionably essential, Read more

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 … Read more

Observations on the Global Activism Environment in Q1 2024 1 U.S. and APAC Campaign Activity Remains Steady as Europe Sees Slow-Down There have been 63 campaigns launched through Q1, down 19% versus the 78 launched YTD in 2023 Activity in the U.S. and APAC has remained steady, with 29 and 20 campaigns YTD vs. 30 […] Read more

What is the justification for the U.S. corporate tax? Scholars have provided various potential explanations for this question. Yet, no explanation has gained consensus among scholars and, indeed, this article claims that none of the current explanations is convincing. The main contribution of this article is introducing the corporate governance effects of the corporate tax […] Read more

Our research shows a correlation between strong governance and higher stock returns. Investors have long theorized that companies with poor corporate governance practices may be more prone to mismanagement and weak returns. To investigate further, we’ve looked inward to a key data source: our proxy votes. Specifically, we draw a correlation example between governance and […] Read more

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 … Read more

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 … Read more

Surprisingly, last month’s announcement regarding the addition of an Artificial Intelligence (AI) member to the board of Abu Dhabi’s International Holding Company (IHC) does not appear to have galvanized global attention. Co-developed by a local Emirati AI company G42 and Microsoft, Aiden Insight, the first AI board member in the Middle East, is positioned to […] Read more

On March 21, 2024, the US Court of Appeals for the Eighth Circuit was selected as the court that will hear challenges against the Securities and Exchange Commission (SEC or Commission) over its final climate disclosures rules, which were adopted on March 6. On April 4, 2024, the SEC announced that it would voluntarily stay its final […] Read more

In the Hidden Logic of Shareholder Democracy, I examine the basic rules of shareholder voting. I begin with a simple observation: In Delaware, voting rules specify different voting populations, depending on the type of vote at issue. When shareholders vote on ordinary business matters, the voting formula focuses on the number of votes cast, once […] Read more

Creditor rights, collateral reuse, and credit supply Posted by Brittany Lewis (Washington University in St. Louis), on Friday, April 12, 2024 Tags: BAPCPA, Congress, Credit supply, GFC Key Considerations for the 2024 Annual Reporting and Proxy Season: Proxy Statements Posted by Maia Gez, Scott Levi and Danielle Herrick, White & Case LLP, on Saturday, April 13, 2024 Tags: […] Read more

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 … Read more

The 2024 proxy season is in full swing, as public companies are in the process of submitting their proxy statements (DEF14A) to the Securities and Exchange Commission (SEC) ahead of annual shareholder meetings. The proxy statement features detailed information on pressing matters related to executive compensation and corporate governance. This analysis focuses on 2024 proxy […] Read more

The “disinterested and independent board majority” is one of the most important concepts in corporate law, because it is the fulcrum on which most corporate litigation turns. Where such a majority is present, it is virtually impossible for plaintiff-shareholders to win a lawsuit. In keeping with its importance, disinterestedness and independence receive ample judicial attention. […] Read more

Two recent SEC enforcement actions offer a first look at how the agency is approaching the use of artificial intelligence (“AI”) tools by registered firms. Against the backdrop of its pending proposed rules regarding predictive data analytics (“PDA”) and artificial intelligence, the SEC on March 18, 2024 announced settled charges against two investment advisers—Delphia (USA) Inc. (“Delphia”) and […] Read more

The Center for Audit Quality has released its 2024 “Audit Committee Practices Report: Common Threads Across Audit Committees.”  The report highlights the top five audit committee priorities identified by committee members in a survey from CAQ and discusses practices to improve effectiveness and other observations. Interspersed throughout the report are recommendations and advice from the CAQ. What was identified by respondents as the “most important topic, risk, or issue” for their audit committees in the next 12 months? Not financial reporting or financial audits—core responsibilities for the audit committee—as you might expect. Nope, it was cybersecurity.  According to the CAQ report, the scope of audit committee responsibilities “continues to expand beyond the traditional remit of financial reporting and internal controls, internal and external audit, and ethics and compliance programs. Topics like cybersecurity, artificial intelligence (AI), and climate are now regularly showing up on many audit committee agendas, especially when it’s Read more

This proxy season, some of the world’s biggest fund managers are launching or expanding pass-through voting programs to give their fund investors a say on how shares of portfolio companies are voted.  Firms such as BlackRock, Vanguard and State Street Global Advisors are reaching out to their fund shareholders and providing them with multiple options […] Read more