Corporate governance - Vigil

Facing a self-declared “death spiral” of public debt, the Governor of Puerto Rico announced a debt moratorium earlier this year, halting payments to bondholders. A series of missed payments followed, including a landmark default on constitutionally guaranteed bonds in July. At the same time, Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA or “promise” in Spanish), which combines a debt restructuring system with federal controls over the island’s finances. But enacting PROMESA is only a first step. Coordination and engagement with creditors is the next step—and an even more complicated one—in Puerto Rico’s long journey towards solvency and fiscal stability.

Last week, the U.S. Court of Appeals for the Ninth Circuit affirmed the SEC’s interpretation of Section 304 of the Sarbanes-Oxley Act, which authorizes the SEC to seek to claw back performance-based compensation paid to CEOs and CFOs of public companies in certain circumstances.

Over the last decade, corporate criminal enforcement in the U.S. has undergone a dramatic transformation. Federal officials no longer simply fine publicly held firms that commit crimes. Instead, in addition to imposing a fine, prosecutors regularly use their enforcement authority to impose mandates on firms alter their internal governance.

No publicly traded company would consider a request for a sizable donation from a newly formed charity without exercising rigorous due diligence on how its money will be spent. Doing otherwise would risk its reputation and violate the managers’ fiduciary duties to the company shareholders. Good business practice requires no less of a company when it engages in political spending. Indeed, when it comes to political spending, the risks may even be greater because of the myriad of laws, federal and state, that regulate political spending and reputational challenges posed by greater media scrutiny.

Le vote consultatif peut rapprocher les parties prenantes
15 septembre 2016 Dominique Lemoine
Le vote consultatif des actionnaires mis en place en 2014 dans les entreprises françaises du CAC40 au sujet de la rémunération des hauts dirigeants aurait mené à des augmentations de l’adhésion des actionnaires aux régimes de rémunération globale proposés.

On May 16, 2016, the much-anticipated era of retail crowdfunding officially began in the United States. While it is far too early to pass judgment on the long-term prospects of the crowdfunding project more generally, it is possible at this juncture to assess how certain aspects of crowdfunding are developing. With respect to the menu of financing instruments being offered to prospective investors, early market participants are potentially sabotaging the crowdfunding experiment by making widespread use of a relatively new startup-financing instrument—the simple agreement for future equity (SAFE)—that may frustrate the ability of investors to share in the upside of successful crowdfunding companies.

The idea that directors could suffer penalties imposed by the external labor market when they fail in their oversight responsibilities is not a new one. Fama (1980) suggests that external labor market penalties could provide incentives for directors and help ensure shareholder-aligned oversight of firms.

As we go to press, the UK cabinet is finally beginning the serious business of drawing up its “blueprint for Brexit”: the objectives and principles that should govern the future relationship with the EU and which will therefore drive the negotiated terms of exit. There are already reported to be tensions within Whitehall.

It may be time for corporate boards which reject takeover offers to get more skin in the game.