Corporate governance - Vigil

Compensation committees encouraged to monitor workforce pay calculations

Stock fraud, accounting scandals, and predatory behavior by investment banks have long plagued our nation’s financial markets. Fortunately, for over forty years, investors’ individual claims for recovery of damages under the U.S. securities laws have been protected and preserved by the filing of a securities class action. In 2013, however, a split emerged among the federal circuits regarding the scope of this class action “tolling” rule. That split, which recently deepened, has created great uncertainty and imposed heavy burdens on the institutional investor community.

The Department of Justice has publicly released its first declination letters since the launch of its FCPA Pilot Program two months ago. [1] The letters were sent to two companies, home-security and thermostat systems-maker Nortek, Inc. and internet-services provider Akamai Technologies, Inc., respectively, on June 3 and June 6.

Make no mistake, the invasion of the Millennials is upon us.  From actor and comedian Aziz Ansari to tech tycoon and philanthropist Mark Zuckerberg, Millennials have made an indelible mark on American society and the world. According to Pew Research Center analysis of U.S.

Investors expect a new approach to engagement—one that covers important topics, meets their needs, and often involves directors. Companies with effective engagement programs are seizing the opportunity to build important relationships with long-term shareholders before crises hit. And they’re taking credit for them publicly, setting the bar higher for other companies. So how does your company measure up?

Despite their differences of opinion on other issues, most corporate law and governance scholars have tended to agree upon one thing at least: that the overarching normative objective of corporate governance—and, by implication, corporate law—should be the maximization (or, at least, long-term enhancement) of shareholder wealth. Indeed this proposition—variously referred to as the “shareholder wealth maximization”, “shareholder value”, or “shareholder primacy” norm—is so ingrained within mainstream corporate governance thinking that it has traditionally been subjected to little serious policy or even academic question.

In SEC v. Graham, No. 14-13562 (11th Cir. May 26, 2016), the Eleventh Circuit held that the five-year statute of limitations applicable to SEC enforcement proceedings under 28 U.S.C. § 2642 applies to disgorgement and declaratory relief claims, but not to injunctive relief claims. The Eleventh Circuit reasoned that the backward-looking remedies of disgorgement and declaratory relief constitute a “civil fine, penalty or forfeiture” within the express meaning of the statute.

Business leaders increasingly recognize the sustainability imperative. They understand that the companies they lead cannot expect to be successful in the long term without considering the communities they work in and with and the natural environment they operate in and depend on. They understand global trends will ultimately reward companies that successfully balance their natural, social, and financial capitals, and that companies that fail to adapt to these global trends risk becoming irrelevant. The challenge is converting this recognition into action. How can business leaders prepare and steer their organizations for leadership in sustainability?

The International Cyber Security Protection Alliance (ICSPA) reported that 69% of Canadian businesses experienced a cybersecurity incident in 2014, and a quarter of these cyber-attacks had a significant impact on their organization. Cyber attacks are not a new phenomenon, yet despite advancements in protection, many organizations are still underprepared to deal with increasingly complex cyber threats.

Mitigating the threat of cyberattacks is difficult, and equipping IT department with all the latest hardware and software security solutions is simply not enough. By building a strong cybersecurity governance framework, managers and board members are encouraged to think more holistically about solutions, and ensure that all employees play a collective role in promoting cybersecurity. A robust framework will also create processes for identifying breaches and implementing fixes, something that’s becoming increasingly difficult with each new threat. So how prepared is your organization?

Considerable disagreement exists on the merits of CEO-Chair duality. In recent years, there has been growing regulatory and investor pressure to split the titles of CEO and Chairman of the Board. In fact, there is a significant trend towards separation of the two titles. However, the empirical evidence in the literature is inconclusive on the impact of separating these roles. We argue that the inconclusive evidence arises from endogenous self-selection that complicates empirical identification strategies and the ability to recognize the correct counterfactual firms.

The decision to hold a referendum as to whether the United Kingdom (UK) should remain a member of the European Union (EU) introduced the term “Brexit” into the global political lexicon. Now that the UK has voted to leave the EU, the term has spawned new variations: will the UK’s departure be a “soft-Brexit” or a “hard-Brexit”?

In Appraisal of Dell Inc. (May 31, 2016), the Delaware Court of Chancery awarded an appraisal amount ($17.62) that was 30% higher than the price that was paid in the $25 billion merger ($13.75) in which Michael Dell (the founder, CEO, and 16% stockholder of Dell) and private equity firm Silver Lake Partners took Dell private. In the merger, Mr. Dell, having rolled over his equity and invested $750 million of cash, obtained 75% ownership of the company. The court utilized a discounted cash flow (DCF) analysis to appraise Dell’s “fair value” for appraisal purposes (i.e., the going concern value of Dell at the time of the merger, excluding the value of any expected synergies), having concluded that, in this case, the merger price was not a reliable indicator of fair value.