Corporate governance - Vigil

On November 2nd, the House Ways and Means Committee introduced its tax reform bill, referred to as the ‘Tax Cuts and Jobs Act.’ Our initial review of the bill identified a few provisions which could have significant implications for organizations’ compensation and incentive programs.

Business leaders know—culture is the key to success. This is the one event in Canada that gets to the heart of the matter.

This article examines whether female CEOs face more threat of shareholder activism compared to male CEOs. Over the last two decades, there has been a gradual increase in the number of women CEOs, so that women now occupy 4.8% of CEO positions among Fortune 500 firms.

Yesterday [November 1, 2017], the SEC Staff issued a new Staff Legal Bulletin (SLB) on shareholder proposals. The most striking impact it will likely have initially is on the ordinary business exclusion, Rule 14a-8(i)(7), as the SLB requires boards to undertake the responsibility to analyze proposals. It appears that the SLB is effective immediately.

On October 6, 2017, the US Department of the Treasury released a 220-page report on reforming the US regulatory system for the capital markets (Capital Markets Report). [1] The Capital Markets Report includes 91 recommendations directed at financial regulators and Congress, but with a focus on the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

A mid-sized consumer products company introduced a relative total shareholder return (TSR) measure to its long-term incentive program. The company had an “all-for-one, and one-for-all” culture, so all managers in the organization carried that same relative TSR metric. After a few years of challenged market performance, several mid-level managers left the company, seeing their unvested equity values fall and having a general sense that their individual contributions were too distant to affect relative TSR.

A recent decision by the Delaware Court of Chancery, Mehta v. Kaazing, C.A. No. 2017-0087-JRS (Del. Ch. Sept. 29), confirms that stockholder demands to inspect corporate books and records based on the need to value a stockholder’s shares may be validly denied if the stockholder is unable to demonstrate that it has a “present” need to value its shares. Indeed, as the court makes clear, simply reciting a proper purpose, such as valuing one’s shares or investigating mismanagement, is not enough. To justify inspection, the stockholder must set forth the circumstances underlying its need for inspection and demonstrate that the stockholder has a need to inspect corporate books and records at the present time.

On November 2nd, the House Ways and Means Committee introduced its tax reform bill, referred to as the ‘Tax Cuts and Jobs Act.’ Our initial review of the bill identified a few provisions which could have significant implications for organizations’ compensation and incentive programs.

The problem we address is that corporate accountability to shareholders is incompletely supported by existing systems of financial accounting and reporting. This is important to corporate decision-makers, to shareholders and to society more broadly, because a failure to account adequately for corporate activity is likely to correspond to a misallocation of economic resources.

“What is the significance of having BlackRock as our largest shareholder?” This question is being asked by corporations around the world as they prepare for annual meetings and plan to engage with shareholders.

An executive compensation contract, especially when it comprises equity-based remuneration, ought to align the managerial objectives with those of shareholders. In our paper Takeovers and (Excess) CEO Compensation, we study if a CEO’s equity-based compensation—especially when it seems excessive—affects the choice and expected value generation in takeovers announced by European firms.

The Public Company Accounting Oversight Board (the “PCAOB”) recently released Staff Audit Practice Alert No. 15 (the “Practice Alert”), titled “Matters Related to Auditing Revenue From Contracts With Customers.”