Corporate share buybacks are under attack, mainly from the political left (e.g., Senators Bernie Sanders, Chuck Schumer, and Elizabeth Warren and President Joe Biden), but also to some degree from the right (e.g., Senator Marco Rubio).  Critics decry the large sums distributed to shareholders via buybacks because that cash could have been used to fund greater investment and, especially, investment that would make workers better off...

As companies address two fundamental and related shifts—the intensified focus on environmental,
social & governance (ESG) issues driven by investors, employees, consumers, business partners, ESG rating agencies, and regulators, [1] and the shift to a multistakeholder form of capitalism [2] —corporate boards are not only incorporating nonfinancial matters into discussions of company strategy and business plans, but also increasingly considering ESG performance measures in incentive plans...

In June, the comment period closed on the SEC’s proposed rulemaking on “The Enhancement and Standardization of Climate-Related Financial Disclosures” (the Proposal). The SEC received more than 5,000 comments on the Proposal...

With increased attention on systemic racism in the aftermath of the killing of George Floyd (on May 25, 2020) and the widespread Black Lives Matter (BLM) protests, growing number of stakeholders recognize racial diversity on corporate boards (or rather lack thereof). After the BLM protests, institutional investors started to demand disclosure of boardroom racial composition and focused on inclusion and equal opportunities policies...

A case presently before the Delaware Court of Chancery challenging a corporation’s advance notice bylaw amendments, initiated by activist investor Politan Capital Management LP in October 2022, brings to mind the storied Icarus. In the legend, a master craftsman creates wings of feathers and wax for himself and his son to escape danger. He cautions his son Icarus not to fly too close to the sun, lest the wings melt. Icarus, carried away with this device figuratively and literally, flies too high and tumbles into the sea...

On the one hand, board members are keenly aware of the environmental and social requirements their companies must address— given emerging legislation and global reporting standards, sustainability-conscious investors and customers, and the increasingly clear link between long-term company performance and sustainability. Boards know that environmental, social, and governance (ESG) goals can no longer be an afterthought, way down the agenda after financial governance and performance...

An epic battle has been waged this year between Twitter and Elon Musk after Musk tried to get out of the acquisition agreement between them. Twitter won, and its shareholders and corporate leaders captured large financial gains as a result...

Longstanding decisions of the U.S. Supreme Court coupled with more recent developments in the corporate law of Delaware have sparked renewed concerns that publicly traded corporations may adopt arbitration provisions precluding shareholder lawsuits, particularly securities fraud class actions. In particular, in a line of decisions spanning decades, the U.S. Supreme Court has steadily expanded the reach of the Federal Arbitration Act (“FAA”). Section 2 of that statute mandates...

Do diverse boards foster more diverse workforces? Currently, women make up 28% of U.S. boards, and women of color, 6%. Over 1,300 directors joined their boards before the turn of the century and 40% of them are now nearing retirement...

Faced with inflationary pressures, geopolitical uncertainty, and market volatility, companies’ commitment to an elevated culture of shareholder engagement has never been more critical. Coupled with these headwinds are the introduction of a universal proxy card and a shifting legislative environment. These developments have the potential to significantly alter the landscape of shareholder activism...

This post provides an overview of shareholder resolutions filed at Russell 3000 and S&P 500 companies through mid-July 2022, including trends regarding the volume and topics of shareholder proposals, the level of support received by those proposals when put to a vote, and the types of proposal sponsors. The report is accompanied by a Live Dashboard, which contains the most current figures and enables data cuts by market index, business sectors, and company size groups. Please refer to the dashboard for the most recent data...

Audit fees are an indicator of audit complexity and risk. Higher risk audits require more auditor resources (hours, personnel, specialists, etc.) to reduce audit risk to an acceptable level. Analyzing fees by industry, company size, and location can provide insight into the level of risk and auditor effort various sectors of publicly listed companies entail...

France and Europe are at the forefront of ESG regulation. They have taken steps that go far beyond mere reporting requirements, aiming at designing a new capitalism. This so-called responsible capitalism will have significant consequences for European companies, but also for non-European companies doing business in Europe, as the EU shows more and more inclination to enforce its ESG regulation on a worldwide basis...

Separate fields of business law are undergoing tumultuous debates. The orthodox view that antitrust law should focus exclusively on consumer welfare is threatened by increasingly influential figures like Lina Khan and Tim Wu, who urge a focus on preserving smaller companies and the threat of political domination by large firms. The orthodox view that bankruptcy law should focus on creditor interests has drawn public outrage as parties and judges pursue it to its logical conclusion in cases of mass injury like Purdue Pharma and Johnson & Johnson, pursuing maneuvers that protect financial creditors and investors and curtail litigation by victims of ...

Today, the Commission is considering adopting final rules mandated by the Dodd-Frank Act regarding clawbacks of erroneously awarded incentive-based compensation. I believe that these rules, if adopted, would strengthen the transparency and quality of corporate financial statements, investor confidence in those statements, and the accountability of corporate executives to investors...

As 2022 nears its close, companies across Corporate America are preparing for 2023 and what’s developing to be one of the most anticipated proxy seasons in recent years. In August 2022, the United States Securities and Exchange Commission (SEC) officially adopted its “Pay Versus Performance” rules, following several rounds of comments and proposals. The new rules require public companies to disclose information reflecting the relationship between compensation actually paid to a company’s named executive officers (NEOs) and the company’s financial performance...

The activism landscape in a post-pandemic world continues to evolve. This year has been characterized by a sharp increase in campaigns relative to recent years, a heightened focus on M&A transactions and increased presence of environmental, social and governance (ESG) themes. Amid all of this evolution, the recent implementation of the universal proxy card regime represents a step function change in activism campaigns, the impact of which is only beginning to be felt...

Perhaps the most important corporate law debate over the last several years concerns whether directors and executives should manage corporations to maximize value for investors, or to also take into account the interests of other stakeholders or society (see, e.g., Hart and Zingales, 2017; Bebchuk and Tallarita, 2020; Rock, 2021). But this raises several important questions that have received much less attention: Do individual investors themselves wish to maximize returns, or are they willing to forgo returns for social purposes...

A hot new front is opening in the timeless fights for corporate control between supine boards and activist shareholders: advance notice bylaws that impose onerous conditions on stockholder nominations of new directors...

Activists won at least one board seat at 29% of campaigns that went to a vote or settled this proxy season, according to Insightia’s Activism module, compared to at 54% and 34% of campaigns throughout the 2020 and 2021 proxy seasons, respectively. Most of the wins were at smaller companies, while activists had less luck against bigger companies with resources to mount a vigorous defensive...

• 44 new campaigns launched in Q3, a 52% increase over prior year Q3, marking the third consecutive quarter of significant year-over-year increased activity
• Total campaigns YTD (171) up 39% over the same period last year, already approaching the total for full-year 2021 (173)
• Continuing an H1 trend, Technology companies were the most frequently targeted in Q3, accounting for 22% of new activist targets
• With 5 new campaigns in Q3, Elliott continued to accelerate its 2022 pace and has now launched 11 campaigns YTD (more than double the next most prolific names)...

This year marks the twentieth anniversary of the passage of the Sarbanes-Oxley Act of 2002. Sarbanes-Oxley essentially requires every large public corporation to dedicate substantial resources to preventing securities fraud...

Investment in environmental, social and governance (ESG) factors is a top priority for private equity, and it has been for quite some time. Thanks to the increasing belief that strong ESG scores command a higher premium, ESG has rapidly transformed from a nice-to-have differentiator into an integral component of each stage of the investment life cycle, from the growing mandate for investment in ESG to asset owners’ calls for general partners (GPs) to apply an ESG lens to all potential investments...

Over the past 40 years, the value of compensation packages awarded to corporate executives in the US has risen dramatically. At the same time, a less well-known trend has shaped the US economy: in the presence of increased pretax corporate profits, effective corporate income tax rates have decreased significantly...