The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2020”.

SEC Disclosure and Reporting Developments

Recently, the US Securities and Exchange Commission continued to move forward with a number of disclosure effectiveness and simplification initiatives, the details of which are available in our Disclosure Simplification Tracker.

Although many of these changes are administrative in nature, collectively they represent an ongoing shift toward principles-based disclosure. In the coming year, we expect that the practical limits of principles-based disclosure will be tested as the SEC moves to implement its August 2019 proposal for the simplification of the narrative description of the business and risk factor items, and attempts to tackle simplification of the MD&A section, which they have included on their Fall 2019 regulatory short-term agenda.

While we expect these changes will give wider latitude for companies to customize their disclosures, the impact may be less than expected because they will do little to address the underlying legal judgments about litigation and reputational risk management that have shaped the form of current disclosure practices.

To read the full post, please click here.

For a PDF of the full memorandum, please click here.

The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2020”.

Last year at this time, companies and boards were wrestling with the impact of the new revenue recognition standard and the new lease accounting standard. The next big innovation in accounting standards is the new Current Expected Credit Losses (CECL) model for recognizing credit losses, which takes effect in 2020 for most public companies.

The significant impact will be mainly at financial institutions, but even companies with limited financial assets face challenges for implementation and related internal controls. In addition to the technical accounting considerations, major changes of this kind present disclosure and governance challenges, which most companies and boards have learned to address in revenue recognition and lease accounting exercises over the last two years.

To read the full post, please click here.

For a PDF of the full memorandum, please click here.

The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2020”.

According to a 2019 survey, Chief Legal Officers ranked data breaches as the most important issue keeping them “up at night.” Cybersecurity also remained top of mind for boards and other corporate stakeholders, particularly given the increasing reputational, regulatory and litigation consequences that often follow from a significant cybersecurity incident.

To read the full post, please click here.

For a PDF of the full memorandum, please click here.

The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2020”.

Increased regulation continues to be the trend in data privacy law, with 2019 bringing forth a host of new regulations and guidance on existing laws. This year, the pace will not likely slow, with January 1, 2020, having marked the official arrival of robust data privacy law in the United States as the California Consumer Privacy Act (CCPA) came into effect.

Boards and management will need to continue to monitor the evolving privacy compliance landscape to ensure that they are considerate of privacy obligations and attendant risks when implementing their business objectives and oversight going into 2020.

To read the full post, please click here.

For a PDF of the full memorandum, please click here.

The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2020”.

Investors and other stakeholders continue to focus on environmental, social and governance (ESG) issues at public companies, both as a driver of financial performance and as a factor of social importance.

The ESG landscape continues to evolve, both in the United States and in Europe, and boards should continue to consider ESG issues, particularly in connection with overall company strategy, and monitor new developments closely.

To read the full post, please click here.

For a PDF of the full memorandum, please click here.

The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2020”.

We foresee investors continuing to both refine and expand their demands on corporate boards in 2020. With the particular focus on board refreshment and diversity, significant pressure is placed on nominating and governance committees to play an increasingly prominent role.

Nominating and governance committees will also need to pay attention to the changing landscape of shareholder proposals, including changes to the SEC’s procedures for the 2020 proxy season and the SEC’s proposed changes to the Rule 14a-8 process.

To read the full post, please click here.

For a PDF of the full memorandum, please click here.

The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2020”.

The era of stakeholder governance and corporations with a purpose beyond profits is taking hold, with corporate directors expected to answer to more constituencies and shoulder a greater burden than ever before. At the same time, investors—both in the US and abroad—continue to expect corporations to deliver superior financial performance over both the short and long term.

This convergence of purpose and performance will not only shape discussions in the boardroom, but also the complexion of shareholder activism. As the nature of the activist threat has evolved it has created additional obstacles for directors to navigate. But at the same time, this environment has created additional opportunities for boards to level the activist playing field and lead investors and other stakeholders into this new era.

To read the full post, please click here.

For a PDF of the full memorandum, please click here.

 

The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2020”.

Enforcement of anti-bribery, sanctions and money laundering laws remains a top priority for US authorities. In 2019, the US Department of Justice and civil regulators issued new or updated policies aimed at increasing incentives for self-reporting by companies. Different agencies also provided additional guidance about compliance programs, including the role of officers and directors in supervising compliance programs.

To read the full post, please click here.

For a PDF of the full memorandum, please click here.

Recent changes in political climates, legal reforms and social norms have had varying (and sometimes conflicting) impacts on how companies are run; however, they have all contributed to a growing demand that companies expand their focus beyond shareholder value creation.

Environmental, social and governance concerns dominate shareholder proposals and engagement efforts, and discussions of corporate purpose have moved beyond the academic realm. The external threat of activism has evolved, with companies facing pressure from social activists and institutional investors as well as “traditional” activists. The disruption of business practices through advances in technology and societal shifts has raised new issues and questions from shareholders. The legal landscape is also shifting; for example, in the United States, state governments are increasingly pursuing their own agendas through legislation, litigation and enforcement on matters ranging from board diversity to antitrust.

As we start the new decade, companies will need to identify both the opportunities and the obstacles raised by these challenges. And as more is asked of companies in 2020, so too will more be asked of their directors. This memo highlights key issues for consideration by boards and management alike.

We invite you to review these topics by clicking here.

For a PDF of the full memorandum, please click here.

Section 162(m) of the Internal Revenue Code limits the deductibility of compensation paid by public companies to certain of their executives in any year to $1 million. The 2017 Tax Cuts and Job Act amended Section 162(m) to expand the number of executives at a public company whose compensation may be non-deductible by reason of its provisions, including as a result of mergers, acquisitions and other corporate transactions. This alert memorandum discusses the potential impact of the Internal Revenue Service’s recently proposed Section 162(m) regulations in the transactional context, which, if the proposed regulations are adopted as proposed, could be financially significant to some acquisitions, as well as acquisitive public companies.

Please click here to read the full alert memorandum.