Corporate governance - Vigil

The e-commerce start-up’s new product could let small-business founders avoid some bureaucratic steps and end up incorporated in Delaware.

In the 2015 proxy season, most of the technology and life sciences companies included in the Silicon Valley 150 Index (SV 150) and the public companies in other industries included in the Bay Area 25 Index (BA 25) held annual meetings that included voting for the election of directors, ratifying the selection of auditors of the company’s financial statements and voting on executive officer compensation (“say-on-pay”). Increasingly in Silicon Valley annual meetings also include voting on other matters, such as proposals in compensation, governance, policy and other general business issues. All told, stockholders voted on 551 matters at the 144 annual meetings held by SV 150 companies (compared to 95 matters at 24 annual meetings of BA 25 companies). [1]

Equity funds that can profit from both rising and falling markets and rivals betting on macroeconomic trends are expected to outperform in 2016, a Deutsche Bank survey of investors managing $2.1 trillion in assets showed.

Board refreshment and director succession planning are key board tasks and the foundations of a well-functioning board. A board should remain relevant and diverse in terms of perspective, experience and skill sets. This ensures that the board can respond to risks and opportunities in order to sustain profit growth, maximize long term returns and guide the company successfully into the future.

In the paper, The Effects of Takeover Defenses: Evidence from Closed-End Funds, forthcoming in the Journal of Financial Economics, I use a sample of closed-end funds to show that takeover defenses reduce firm value and promote entrenchment, allowing managers and directors to earn excess levels of compensation while protecting them from shareholder action. The defenses used by these funds are a subset of defenses available to general corporations; there are no “fund-specific” defenses. These funds have several unique characteristics, however, that make them an ideal setting for testing the implications of the use of defenses.

M&A practitioners are well aware of the several standards of review applied by Delaware courts in evaluating whether directors have complied with their fiduciary duties in the context of M&A transactions. Because the standard applied will often have a significant effect on the outcome of such evaluation, establishing processes to secure a more favorable standard of review is a significant part of Delaware M&A practice. The chart below identifies fact patterns common to Delaware M&A and provides a preliminary assessment of the likely standard of review applicable to transactions fitting such fact patterns. However, because the Delaware courts evaluate each transaction in light of the transaction’s particular set of facts and circumstances, and due to the evolving nature of the law in this area, this chart should not be treated as a definitive statement of the standard of review applicable to any particular transaction.

Adidas has the former chief executive of Lululemon Athletica as part of the sportswear maker’s effort to improve its performance in the women’s athletic business.