Glass Lewis recently released its 2020 proxy voting guidelines and shareholder initiatives.[1]  The following is a summary of Glass Lewis’ proposed changes and updates for 2020.  Most significantly, the updated guidelines reflect a response to the Securities and Exchange Commission’s recent announcement that it may decline to take a view or may respond orally to no-action requests for shareholder proposals under Rule 14a-8 of the Exchange Act.[2]  Starting in 2020, Glass Lewis generally will recommend a vote against members of a company’s governance committee if a company omits a shareholder proposal from its proxy statement without evidence of receiving no-action relief from the SEC, as described in more detail below. Continue Reading Glass Lewis Updates Its 2020 Proxy Voting Guidelines

On November 5, the SEC released its widely anticipated proposed changes to some of the procedural requirements for shareholder proposals to be included in management’s proxy statement under Exchange Act Rule 14a-8. In this latest release, the SEC addresses procedural requirements that it has not revised in more than 20 years. The release proposes five changes to Rule 14a-8 that we discuss in further detail in the attached memo.

Please click here to read the full alert memorandum.

On November 5, a divided Securities and Exchange Commission (“SEC”) proposed new rules about proxy advisory firms. The proposed rules would, if adopted, have three principal effects:

  • Before a proxy advisory firm distributes its recommendations for a particular shareholder vote to its clients, it would be required to give a company an opportunity to comment on the recommendations. The proposed rules provide specific choreography for this interaction between the firm and the company.
  • In the proxy voting advice that a proxy advisory firm distributes to its clients, the firm would be required, if the company so requests, to include a hyperlink to a company statement responding to the firm’s recommendations.
  • The proxy voting advice would also be required to include disclosures on conflicts of interest, including between the proxy advisory firm and the company. The firm would also have a strong incentive, under revised antifraud provisions, to include disclosure on its methodology and sources.

The proposed rules would also codify the view that proxy voting advice, as it is currently provided by ISS and Glass Lewis, constitutes a proxy solicitation. This view underpins the SEC’s attempt to regulate the proxy advisory firms, and it is hotly contested, including in a lawsuit filed by ISS in late October.

Please click here to read the full alert memorandum.

Vice Chancellor Slights, of the Delaware Court of Chancery, included a slightly self-effacing, and only slightly humorous, note in his recent opinion in a fiduciary claim against the directors of Tesla, Inc., to the effect that the defendants have reason to believe that they drew the wrong judge in the case.  The case relates to the 2018 incentive compensation award to Tesla’s CEO, Elon Musk, that caps out at about $55 billion (that “b” is not a typo).  The footnote concerns, in part, Vice Chancellor Slights’ determination, in a separate recent claim alleging fiduciary breaches by the Tesla board, that members of Tesla’s board were not independent.[1] Continue Reading Update on Director Independence

The CEOs of 150 major US public companies recently pledged to act for all of their “stakeholders” – customers, employees, suppliers, communities and yes, even stockholders.[1] Much commentary ensued. But before we get too excited about whether these CEOs are grasping the mantle of government to act on behalf of the citizenry and other people who aren’t paying them, there is the prior question of whether, as a matter of Delaware law, they can. Continue Reading Outlaws of the Roundtable? Adopting a Long-term Value Bylaw

On September 21, 2019, Cleary Gottlieb partners Ethan Klingsberg and Jim Langston, along with moderator Paul Washington, executive director of The Conference Board, Anu Aiyengar, Head of North American M&A at J.P. Morgan and Anthony Kim, Partner at Centerview Partners, discussed M&A risks for boards and management teams arising in connection with:

  • internal forecasts
  • the roles of insiders
  • fundless, LP and lesser-known sponsors

Continue Reading M&A Risks for Boards and Management Teams in 2019-20 – Takeaways from Conference Board Panel Discussion among Cleary Gottlieb, J.P. Morgan and Centerview M&A Advisors

Last week, the Securities and Exchange Commission adopted a rule under which any issuer can “test the waters” for a securities offering before or after filing a registration statement. This new rule extends an accommodation previously available only to emerging growth companies.

Please click here to read the full alert memorandum.

On September 17, 2019, the Department of the Treasury proposed regulations implementing most of the remaining provisions of the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), which updated the statute authorizing reviews of foreign investment by the Committee on Foreign Investment in the United States (“CFIUS”). Continue Reading Proposed CFIUS Regulations Expand Its Jurisdiction

Bayer enjoys summertime. Bayer brings this summer’s M&A highlight with the sale of its veterinary medicine division to Elanco for approx. USD 7.6 billion. Together with Lanxess, Bayer also sells chemical park operator Currenta to Macquarie for a transaction volume of approx. EUR 3.5 billion. Finally, Bayer lets go of Dr. Scholl’s foot treatment articles to financial investor Yellow Wood for approx. USD 585 million. Japanese speciality chemicals company DIC cinches BASF’s pigment business for approx. EUR 985 million. Volkswagen and Northvolt establish a joint venture to manufacture lithium-ion batteries and China Railway Rolling Stock Corporation succeeds in entering the European market with its acquisition of Vossloh’s European locomotive business. Continue reading.

Standardization can be a virtue and one that M&A lawyers, likely due to self-interest and ego, sometimes resist.  If venture financing and derivatives practices can have widely accepted forms of legal documentation as a starting point, why should M&A be an exception?  Ironically, agreements for takeovers of publicly traded companies – once revered as a rarified realm that only an elite group huddled in skyscrapers in Manhattan could navigate – has evolved considerably toward standard forms thanks to enhanced attention to these publicly filed agreements and an effort by Delaware courts to draw clearer guidelines about precisely what will and will not fly in the world of “public M&A.”  Continue Reading Guidance on Navigating the Atlassian Term Sheet: Understanding the Substantive Implications Behind the Virtues of Standardization in M&A