Corporate governance - Vigil

As in so many areas of public policy, it is very difficult, if not impossible, at the moment to provide any reliable prediction of how the new Administration may change white collar and regulatory enforcement priorities, policies or practices. What is certain is that things will change. But where and how will those changes come?

Modern corporations are characterized by the separation of ownership and control. Members of a corporate board are tasked to monitor managers. For board governance to be effective, shareholders must have a mechanism for disciplining directors. The shareholders’ right to elect directors is therefore a fundamental feature of corporate governance. Despite that feature’s importance, evidence that director elections matter in aligning directors’ incentives with those of shareholders is limited.

2016 was an active year in securities litigation. In the first half of 2016 alone, plaintiffs filed 119 new federal class action securities cases. It was also a busy year for SEC enforcement proceedings, with a record 868 cases filed, 548 of which were independent enforcement actions (as opposed to follow-up actions or cases based on delinquent regulatory filings). This continued the trend of growth in SEC enforcement activity, as independent actions have increased by nearly 61% since 2013. Amid this activity, there were a number of important legal and regulatory developments, including in the following areas:

Standard General LP is suing American Apparel’s other prebankruptcy lenders, alleging that they doomed the retailer’s turnaround after it emerged from a previous bankruptcy.

CPA Statement on President Trump’s Silence on “Draining The Swamp” in Money and Politics

In a noteworthy appraisal decision, Merion Capital v. Lender Processing Services, Inc. (Dec. 16, 2016), the Delaware Court of Chancery relied entirely on the merger price to determine “fair value” and issued an appraisal award equal to the merger price.

Companies whose shareholders include Norway's $885 billion sovereign wealth fund can expect closer scrutiny of executive pay when the next round of annual investor meetings begins.

Largest shareholder says company would benefit from addition of new directors

The M&A Market Trends Subcommittee of the Mergers & Acquisitions Committee of the American Bar Association’s Business Law Section recently released its annual Strategic Buyer/Public Target Deal Points Study.

Statistics released publicly by the Social Science Research Network (SSRN) indicate that, as of the end of 2016, Professor Lucian Bebchuk continued to lead SSRN citation rankings for law professors. Bebchuk ranked first among all law school professors in all fields in terms of the total number of citations to his work (as well as third in the total number of downloads of his work on SSRN). Bebchuk has led the SSRN citation rankings for law professors at the end of each of the preceding nine years.

The Delaware Supreme Court recently reversed a $171 million damages award in El Paso Pipeline GP Co., L.L.C. v. Brinckerhoff, ___ A.3d ___, 2016 WL 7380418 (Del. Dec. 20, 2016) (en banc), concluding that an MLP unitholder plaintiff lacked standing to pursue a derivative claim that an MLP overpaid for assets it acquired from its parent in a dropdown transaction.

New study provides comprehensive, hard data on hot topic of board refreshment.

Picking the marginally better option can be tremendously valuable.

Avis Budget Group Inc. took an unusual step to block its biggest shareholder, hedge fund SRS Investment Management LLC, from potentially increasing its sway over the company, a year after giving the investor a board seat.

Walgreens - I voted FOR proxy access and report on sustainability and pay practices; AGAINST pay, compensation committee, auditor and the financial expert.

The past five years have witnessed a dramatic change in the financing of entrepreneurial firms. Whereas once these firms were financed primarily by a small set of venture capital groups (VCs), who tightly monitored and controlled the companies in their portfolios, in recent years financing sources have broadened dramatically. In the years after firm formation, individual angels—whether operating alone or in groups—have played a far more important role, while on the back end, firms have delayed going public by raising considerable sums from investors who were traditionally associated with public market investing, such as mutual funds, sovereign wealth funds, and family offices.

UK Prime Minister Theresa May has recently backtracked on her proposals to increase employee representation on boards. It was an idea which had largely been confined to the wilderness of UK governance for several decades after seeing its heyday in the 1970s with the publication of the Bullock Report. Mrs May’s proposal has been lauded and criticised in equal measures, and it is unclear now whether it will be abandoned altogether or merely watered down.

China's President has addressed the World Economic Forum, the first Chinese head of state to do so. We assess his message to Donald Trump.  Plus the autho