Corporate governance - Vigil

On February 6, 2017 the Securities and Exchange Commission requested comments on further delay in implementing Section 953(b) of the Dodd-Frank Act that requires disclosure of CEO-employee pay ratios by public companies. This request should be analyzed in the context of a law that has been on the books almost seven years and has already been the subject of extensive public comments and SEC releases. Moreover, the SEC has granted to public companies considerable flexibility in calculating their ratios. These companies have substantial capabilities with today’s technology to collect and analyze data.

We examine the relations among various types of family firms, including those named after their founders (founder-named, or FN, firms), those managed by their founders (founder-managed, or FM, firms), and those named after and managed by their founders (founder-named-and-managed, or FN&M, firms). Our empirical results establish a strong and consistent pattern among family firm types.

While going public is without question a watershed event in the life of a firm, the lines between private and public listing status have become increasingly blurred in recent years. The number of publicly listed companies has decreased, but at the same time private companies are increasingly raising funding from investors who traditionally focused only on public companies. This study seeks to provide systematic evidence on the time-series trends in mutual funds’ investments in private firms. We examine the types of private companies in which mutual funds are most likely to invest, and we estimate the effects on the underlying companies, including the extent to which these mutual fund investments enable companies to stay private longer.

Environmental, societal and governance (ESG) issues should be a consideration for boards as part of their oversight of strategy and risk, according to a new whitepaper.

Median total compensation for the CEOs of some of the largest companies in the US rose by 6 percent in 2016 despite flat corporate performance, new research shows as companies tackle proxy season and potential votes on executive pay.

After 1,627 days and enough law firm memos to deforest a small country, the litigation relating to the Conflict Minerals Rule came to an end [April 3, 2017]. In this post, we discuss what this means for calendar year 2016 compliance, as well as the many other moving pieces relating to the Rule.

Around the turn of the millennium, a slew of corporate scandals involving outright fraud, including those at Enron, WorldCom, Global Crossing, and Adelphia Communications, among others, [1] plagued capital markets and shook investor confidence to the core. Faced with this runaway corporate malfeasance by managers of large firms around the turn of the millennium, Congress decided to discipline the managers by increasing the supervisory role of the board of directors. The Sarbanes-Oxley Act of 2002 (“SOX” or the “Act”), [2] was passed by Congress in an effort “[t]o protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes.” [3]

In September 2016, the International Business Council of the World Economic Forum published The New Paradigm: A Roadmap for an Implicit Corporate Governance Partnership Between Corporations and Investors to Achieve Sustainable Long-Term Investment and Growth. The New Paradigm conceives of corporate governance as a collaboration among corporations, shareholders and other stakeholders working together to achieve long-term value and resist short-termism. Around the same time, other groups of business leaders, corporate executives and investors published similar frameworks for long-term oriented governance, including the Commonsense Principles of Corporate Governance, the Business Roundtable’s Principles of Corporate Governance and the Investor Stewardship Group’s Stewardship Principles and Corporate Governance Principles.

The abrupt departure of Klaus Kleinfeld as Arconic’s chief executive officer this week opens a new chapter in the battle over leadership at the aerospace and auto parts supplier—and gives next month’s board election added urgency.

Good evening and thank you, Joy Thomas, for that kind introduction. It is an honor to be here with all of you in Toronto, and particularly an honor to have been invited by CPA Canada, an organization that has demonstrated an unwavering commitment to the public interest in its efforts to facilitate economic and social development. As the daughter of a CPA, I always feel right at home when I am surrounded by accountants, so thank you for making me feel welcome.

Executive compensation tops the list of governance issues occupying the thoughts of professionals – with political spending and board diversity also forcing their way in, according to a new poll.

On March 29th, 2017, the UK delivered a letter from the UK Prime Minister to the President of the European Council, Donald Tusk, which gave notice of the UK’s intention to withdraw from the European Union (“EU”) in accordance with Article 50 of the Treaty on European Union. Thus the starting gun has been fired on two years of negotiation in which both sides will attempt to agree the terms of exit for the UK and a framework for a future trading relationship. The task before the two sides is complex, with sensitive discussions anticipated on a possible transition deal, obligations of the UK to contribute to the EU budget, the status of UK and EU citizens post-Brexit and the legal jurisdiction of the EU courts.

In Brinckerhoff v. Enbridge Energy Company, Inc., the plaintiff, an investor in the Enbridge Energy Delaware master limited partnership (the “MLP”), challenged a $1.2 billion transaction between the MLP and the controlling parent corporation (“Parent”) of the MLP’s general partner (the “GP”). The factual context was the repurchase by the MLP of an asset it had previously sold to Parent—with the repurchase at a significantly higher price, despite strong indications that the value of the asset had declined, and without the GP or its banker having considered the earlier sale as a comparable transaction. The Delaware Supreme Court, in an opinion written by Justice Seitz (March 20, 2017), reversed the Court of Chancery’s dismissal of the case.

We recently published a paper on SSRN (From Boardroom to C-Suite: Why Would a Company Pick a Current Director as Its CEO?) that explores situations in which companies appoint a non-executive director from the board as CEO.

Here is a surprisingly difficult yet largely unexamined capital budgeting problem: imagine a corporate decision that will generate $5 million of profit today but result in the loss of one human life in ten years. This example is not abstract: corporations in a range of businesses engage in decisions and oversight that affect risk to human life: consider autonomous cars, airbags, pharmaceuticals, medical devices, and many categories of consumer products. Historically, regulation and tort liability have addressed corporate liability for the loss of human life, but the corporate governance literature, and corporate law, have had little to say.