In Rudd v. Brown, et al, C.A. No. 2019-0775 MTZ (Del. Ch. Sept. 11, 2020), the Delaware Court of Chancery (the “Court”) dismissed the plaintiff’s claim that the board members and the chief financial officer of Outerwall, Inc. (the “Company”) disloyally pursued and disclosed a two-step merger...
The FY 2020 report of the SEC Office of the Whistleblower reveals that the SEC whistleblower program is firing on all cylinders. Enforcement actions from whistleblower tips have resulted in orders for more than $2.7 billion in monetary sanctions, including more than $1.5 billion in disgorgement of which almost $850 million has been, or is scheduled to be, returned to harmed investors...
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On October 15, 2020, Institutional Shareholder Services, Inc. (“ISS”) published preliminary FAQs providing general guidance as to how ISS may assess COVID-related executive compensation decisions as part of its regular pay-for-performance qualitative evaluation for the upcoming proxy season...
This Post will begin a series of blog entries focused on the topic of linking executive pay to a publicly-traded issuer’s diversity and inclusion (“D&I“) initiatives...
The U.S. Securities and Exchange Commission (the “SEC” or the “Commission”) held its annual SEC Speaks conference via Webex on October 8 and 9, 2020. The conference featured remarks from the Chairman and several commissioners, discussions regarding current enforcement initiatives and enforcement priorities for the upcoming year, and an update on litigation, judicial and legislative developments...
The dernier cri of corporate governance is "stakeholder capitalism", but this begs the question of what makes someone or something a "stakeholder"...
After testing the waters with SB 826’s gender diversity mandate, California’s legislature has further committed the state to equitable board representation with its new measure, AB 979 , which was passed on September 1. If Governor Newsom signs the bill into law by the September 30 deadline, California will (once again) lead the way in statutory diversity and inclusion mandates for public company boards...
The U.S. Securities and Exchange Commission has canceled a scheduled vote on proposed rules that would restructure its Dodd-Frank Act mandated whistleblower reward program. This is the second time the vote on the proposed changes has been canceled...
The U.S. Securities and Exchange Commission’s (“SEC” or “Commission”) will shortly approve proposed amendments to its Dodd-Frank Act whistleblower program . [1] The most controversial proposal concerned a perceived “soft cap” that would limit the amount of awards in most large cases...
Washington State is the latest state to respond to studies showing a gap between the percentage of women in the workforce and the percentage of women serving on corporate boards...
Regardless of size or industry, thoughtful director appointment is critical to the success of any public company. Yet following the departure of a director, many boards are left scrambling...
On July 16, 2020, Delaware adopted new amendments to its public benefit corporation statute, continuing a trend to make this relatively new corporate form more accessible. The amendments, among other things, (i) reduce impediments to use of the public benefit corporation form by eliminating supermajority voting requirements...
The COVID-19 pandemic has underscored the importance of board-level oversight of workforce issues at public companies. How boards have managed mandatory shutdowns and the ongoing return to work are likely to have a significant and lasting impact on company reputation and performance...
It is well-settled that the assets of non-qualified deferred compensation programs are subject to the claims of the company’s general creditors. Securing the assets with a Rabbi Trust does nothing to change that answer...
In the context of the current COVID-19 pandemic, however, an increased focus on Board oversight, and the creation of a good record of Board oversight, is especially important...
The COVID-19 pandemic has had a dramatic impact on the management of organizations, including throwing managers at all levels into an “all-hands-on-deck” reactive mode. In large measure, the immediate focus of management-level employees has been on business continuity...
With annual reports on Form 10-K publicly filed and first quarter earnings releases getting underway, proxy season – the annual practice of filing and distributing proxy statements, reserving meeting venues and courting shareholders – is now in full effect...
The CARES Act restricts how much executive compensation can be paid by employers that avail themselves of loans and loan guarantees from the US Treasury’s Exchange Stabilization Fund under Title IV of the CARES Act. Employers seeking this relief need to carefully assess the impact of these restrictions before applying for loans or loan guarantees. Participation in the Exchange Stabilization Fund is conditioned on complying with the executive compensation restrictions...
Yesterday, the Securities and Exchange Commission announced awards totaling over $570,000 to two whistleblowers paid out by the investor protection fund. The first will receive a whistleblower award of approximately $478,000, and the other will receive the remainder...
On December 30, 2019, New York governor Andrew M. Cuomo signed legislation requiring the New York State Department of State, partnered with the Department of Taxation and Finance, to conduct a study of the proportion of female members on the boards of domestic and foreign corporations licensed to do business in New York. The “Women on Corporate Boards Study” law requires corporations to report the number of directors on their boards and how many of those directors are women...
In a win for employers, the Second Circuit Court of Appeals recently held that whistleblower claims under the Dodd-Frank Act are arbitrable. Daly v. Citigroup Inc. , 939 F.3d 415 (2d Cir. 2019). The Second Circuit also held that a plaintiff’s failure to exhaust administrative remedies related to a Sarbanes-Oxley Act claim serves as a jurisdictional bar, warranting dismissal of the claim...
On November 1, Glass Lewis released its 2020 US Proxy Paper Guidelines. The updates to the voting guidelines primarily add additional factors that Glass Lewis will review when evaluating proposals and issuing its voting recommendation for shareholders...
In High River Limited Partnership v. Occidental Petroleum Corp., C.A. No. 2019-0403-JRS, 2019 WL 6040285 (Del. Ch. Nov. 14, 2019) (Slights, V.C.), the Delaware Court of Chancery held that a stockholder’s mere disagreement with a business decision of a board of directors and intent to pursue a bone fide proxy contest is not a “proper purpose” to support a demand to inspect the corporation’s books and records ...