Corporate governance - Vigil

In an earlier post, we discussed the attraction of using earnouts to bridge valuation gaps but quoted VC Laster’s astute description of earnouts as “often convert[ing] today’s disagreement over price into tomorrow’s litigation over outcome.” Since then, we have seen a continued steady pace of lawsuits brought by disappointed sellers asserting that an earnout milestone in fact has been satisfied or that the buyer’s failure to use the requisite efforts caused the failure to hit the milestone or maximize the earnout.

Activist investor Elliott Management urged BHP Billiton to spin off its U.S. petroleum assets and outlined a significant restructuring for the world’s largest listed miner.

Following the implementation of the Sarbanes-Oxley Act, many scholars and business leaders argued that one-size-fits-all corporate governance imposed disproportionately high compliance costs on small businesses, weakening their competitiveness vis-à-vis larger firms. [1] As an alternative, these critics contended that “proportionate regulation,” in the form of regulatory exemptions for small firms, is an appropriate means of minimizing disclosure obligations. While at first glance it may seem that small firms would seek to comply with less costly governance standards, is it possible that they would nonetheless voluntarily adhere to stricter standards?

In a 4-1 split decision in The Williams Cos., Inc. v. Energy Transfer Equity, L.P., et al., the Delaware Supreme Court affirmed the Court of Chancery’s decision permitting termination of a merger agreement by the acquirer based on the failure of the acquirer to obtain a tax opinion from its counsel, the receipt of which was a condition precedent to the closing of the merger.

– The New York Times reported that at a gathering of the nation’s top M&A lawyers and bankers, the consensus was that deal making should boom under the Trump presidency. Lower taxes and less regulation should contribute to strong stock prices, making companies more likely to strike big deals, the ...

In a February letter asking the White House to act on regulatory issues “of top concern” to our CEO members, Business Roundtable made another important but little-noticed request: Reform the federal regulatory process.

Activist investor Jana Partners has amassed a nearly 9% stake in Whole Foods Market and wants the upscale organic grocer to speed up its turnaround efforts while also exploring a possible sale.

Cyber threats and the means of dealing with them change every day. Hackers are growing up—into ransomers and sophisticated digital bad guys. A perimeter defense is hardly sufficient to protect companies. But everything you do to reduce cyber risk can hurt your business commercially, by invading employee and customer privacy, by slowing systems, and by hindering innovation. The solution: get the board on board and spread this essential gospel to every function and employee: cyber risk is not just an IT concern, but a crucial business issue.

The top SEC official charged with handling corporate bribery cases is to leave the agency in the latest change among the ranks of senior personnel at the regulator.

[On March 27, 2017], the U.S. Supreme Court granted certiorari in Leidos, Inc. v. Indiana Public Retirement System, No. 16-581. This appeal, which likely will not be decided until the first half of 2018, at the earliest, presents the question of whether non-disclosure of “known trends or uncertainties” under Item 303 of Regulation S-K may give rise to private liability for securities fraud under Section 10(b) of the Securities Exchange Act of 1934.

A pillar of modern corporate governance for U.S. public firms is shareholder representation by the board of directors. Shareholders, however, are generally unable to nominate the directors who will represent them in the boardroom. Instead, the incumbent board nominates new directors, who are almost always subsequently elected.