Corporate governance - Vigil

This report discusses recent cases highlighting activist efforts to replace directors at target companies.

Press conference following the release of the Financial System Review.

In our paper, Out-of-the-Money CEOs: Private Control Premium and Option Exercises, forthcoming in the Review of Financial Studies, we examine the effects of proxy contests on CEOs’ option exercise policies. When faced with a challenge to insider control, we find that CEOs value company shares significantly more than the market due to the potentially decisive role their attendant voting rights could play in ex ante close proxy contests. By demonstrating that the strategic exercise of vested options is a potentially effective defensive tactic, we provide further support for the role of aggressive shareholder activism in market-based corporate governance.

Staff of the Ontario Securities Commission have reached a settlement agreement with the owner of day-trading company in the first case of alleged “spoofing” ever launched by the regulator.

Dow Chemical Co. and DuPont Co. announced a merger that would fuse two stalwarts of American industry into a giant worth more than $120 billion and would reshape the chemical and agricultural industries.

Yahoo Inc. is facing new pressure from investor groups who oppose giving Chief Executive Marissa Mayer more time to show progress on her turnaround.

We are legal scholars of corporate finance. We write because we are concerned by a proposed omnibus appropriations rider that would amend the Trust Indenture Act of 1939 without any legislative hearings or opportunity for public comment on the proposed amendment.

Earlier this year, the Department of Labor (“DOL”) released a proposed regulatory package impacting the way investment advisors and brokers are compensated. [1] Under the proposal, recommendations to an employee retirement benefit plan or an individual retirement account (“IRA”) investor will be considered “fiduciary” investment advice, thus requiring the advice to be in the “best interest” of the client rather than being merely “suitable.” As a result, insurance brokers and agents who provide investment advice will face limits on receiving commission-based (as opposed to flat fee) compensation. [2]

It is a pleasure to be here to speak to you about our shared and weighty responsibility to maintain high-quality, reliable financial reporting. This audience—preparers, auditors, audit committee members, and their advisors—is a very important one for the SEC. Investors, issuers, and the markets all depend on the work you do and the judgments you make—and how well you do both. You, together with the standard setters and the regulators, have a vital stake in ensuring that our capital markets remain the safest and strongest in the world—and we all share the responsibility.

Activist Hedge Fund Has a Plan to Revamp Yahoo!, Stocks: YHOO,BABA,GOOG,AAPL,FB, Warren Buffett, release date:Dec 15, 2015

Leo E. Strine, Jr., Chief Justice of the Delaware Supreme Court, the Austin Wakeman Scott Lecturer on Law and a Senior Fellow of the Harvard Law School Program on Corporate Governance, recently issued an essay that is forthcoming in the Southern California Law Review. The essay, titled The Soviet Constitution Problem in Comparative Corporate Law: Testing the Proposition that European Corporate Law is More Stockholder Focused than U.S. Corporate Law, is available here. The abstract of Chief Justice Strine’s essay summarizes it as follows:

The escalation of executive pay in Canada is reaching beyond the corner office and into the boardroom, with pay for corporate directors soaring by 41 per cent between 2011 and 2015.

Dow Chemical Co. and DuPont Co. announced plans to merge Friday in a transaction that combines two longtime rivals and heralds the arrival of a new era of activist investing.

The Federal Reserve has approved Bank of America Corp.'s revised plan for building a sturdy capital base, saying the bank has made progress in filling gaps in its plan.

The Sarbanes-Oxley Act (SOX) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) contain provisions protecting from retaliation individuals who provide information regarding a violation of U.S. securities laws. Various ambiguities in these statutory provisions have been adjudicated, most recently by the Northern District of California, which grappled with a new issue: whether directors who allegedly engage in retaliatory conduct may be liable under SOX and Dodd-Frank.