On April 4, 2024, the Delaware Supreme Court issued its decision on a stockholder suit challenging the fairness of IAC/InterActiveCorp’s separation from its controlled subsidiary, Match Group, Inc.[1] In this decision, the Delaware Supreme Court provided clarity and guidance on two important issues involving the application of the MFW framework.Continue Reading Delaware Supreme Court Provides Important Guidance on Application of MFW Framework to Controlling Stockholder Transactions
Boards of Directors
It’s Not DE, It’s You: 55 Billion Reasons Tesla is Not ‘Your Company’
On January 30, 2024, the Delaware Court of Chancery struck down Tesla CEO Elon Musk’s $55 billion performance-based stock option package, ruling that Tesla’s directors did not satisfy the stringent “entire fairness” standard in approving his compensation. This case comes on the heels of a $735 million settlement in which Tesla directors disgorged previously-received compensation following shareholder claims of unjust enrichment and breach of fiduciary duty.[1] The court applied the entire fairness standard because of Musk’s enormous control over the transaction, referring to him as a “Superstar CEO”[2] who wielded maximum possible influence over the board. While the compensation package was approved by a majority of disinterested shareholders, the court concluded proxy disclosure was deficient and therefore shareholders were not fully informed.[3] Ultimately, the Tesla board was not able to prove the benefit received from Musk’s leadership was worth the $55 billion Tesla paid for it.Continue Reading It’s Not DE, It’s You: 55 Billion Reasons Tesla is Not ‘Your Company’
Hot Tax Topics for Multinational Groups, in the US, the EU and Beyond
The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”
Impact of “Pillar Two” Global Minimum Taxation
The push for global tax reform will continue to have a significant impact on large multinational groups in 2024. Since broad international consensus was reached through the Organisation for Economic Co-operation and Development (OECD) in 2021 on the principles of a “two-pillar solution” to tax challenges arising from the digitalization of the world economy, many of the countries that support the plan (of which there are now over 140) have rushed through legislation to implement the second pillar (a global minimum rate of effective taxation) by the end of 2023. Many of the new “Pillar Two” rules will accordingly apply for the first time in 2024, and companies should be sure they understand both the overall global impact and how local nuances create differences between jurisdictions.Continue Reading Hot Tax Topics for Multinational Groups, in the US, the EU and Beyond
Privacy and Data Protection Compliance Will Become More Fragmented in 2024
The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.
Continuing global trends to protect consumer privacy and rein in the exploitation of personal data by organizations, 2023 saw an explosion of comprehensive privacy laws, amendments to existing laws and a proliferation of targeted regulations around the world. Continue Reading Privacy and Data Protection Compliance Will Become More Fragmented in 2024
FDI Review Regimes are Well-Established and Active; Outbound Investment Regimes are on the Horizon
The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.
In 2024, boards of directors face a well-established, complex and active global foreign direct investment (FDI) landscape in which transactions will regularly trigger multijurisdictional FDI filing and approval processes. This is the case not only with respect to well-known FDI review regimes such as the Committee on Foreign Investment in the United States (CFIUS), but also with newly established, modified, and/or expanded non-U.S. FDI review regimes, particularly in Europe. Indeed, as governments around the world have become increasingly empowered and willing to scrutinize, and in some cases prevent, transactions they deem objectionable, FDI approvals have become a significant regulatory issue for many cross-border transactions.Continue Reading FDI Review Regimes are Well-Established and Active; Outbound Investment Regimes are on the Horizon
Regulatory Developments to Watch: Non Competes and ERISA
The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.
Though perhaps not top of the agenda for boards of directors in 2023, there have been significant developments in two unrelated but important areas that boards should be mindful of heading into 2024—the increasing efforts to eliminate (or at least weaken) employee non-competition restrictions and regulatory developments in the ERISA pension plan fiduciary space.Continue Reading Regulatory Developments to Watch: Non Competes and ERISA
2024 Antitrust Update: Agencies Sharpen Their Teeth, But Is It All Bark and No Bite?
The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.
Antitrust in 2023 was marked by a series of policy developments—some still nascent, some ripe for enforcement for the first time. In the U.S., the FTC and DOJ finalized their drastically transformed merger guidelines. In the EU, landmark new digital regulations became applicable for the first time. And the UK government introduced a bill promising major new digital and consumer protection rules. Continue Reading 2024 Antitrust Update: Agencies Sharpen Their Teeth, But Is It All Bark and No Bite?
Economic Sanctions: Developments and Lessons for Boards in 2024
The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.
Continued volatility in geopolitical events this past year and corresponding responses in sanctions policies highlight the importance of integrating economic sanctions considerations in board agendas for 2024. In particular, boards of directors should be aware of the increasing global collaboration among sanctions authorities as well as the continuing expansion and application of sanctions in new domains such as digital assets. Sanctions developments can be expected to be particularly fluid in 2024 with respect to China, Russia and Venezuela.Continue Reading Economic Sanctions: Developments and Lessons for Boards in 2024
Delaware Courts Beef Up Caremark Claims Involving Corporate Misconduct While Leaving Hot-Button Political and ESG Issues to the Boardroom
The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.
In 2023, Delaware courts continued to vigorously apply Caremark’s duty of oversight in cases involving corporate misconduct, expressly recognizing for the first time that such claims can be brought against officers in addition to directors. While a Caremark claim does not necessarily require illegal conduct, Delaware courts continue to make clear that knowing inaction when confronted with illegal conduct is often enough to satisfy its bad faith requirement. This emphasis on bad faith and misconduct may suggest a more functional approach to Caremark claims by Delaware courts, and a departure from the more formal categories of Caremark claims that Delaware courts relied on in the past. At the same time, we saw Delaware courts sidestep hot-button issues related to corporate political advocacy and defer to the business judgment of boards in order to navigate those sometimes controversial issues. Finally, we ended 2023 with an uncertain understanding of the scope of MFW review, which has expanded beyond the squeeze-out context in recent years. The Delaware Supreme Court is currently considering whether to cut back on such “MFW creep.”Continue Reading Delaware Courts Beef Up Caremark Claims Involving Corporate Misconduct While Leaving Hot-Button Political and ESG Issues to the Boardroom
2023 Year-in-Review: Developments and Trends in White Collar Enforcement Litigation
The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.
The Securities and Exchange Commission (SEC) and Department of Justice (DOJ) both accelerated their enforcement efforts in 2023, and seem poised to further intensify these efforts in 2024. At the same time, the SEC disseminated new disclosure requirements across sectors, including disclosures related to cybersecurity and artificial intelligence (AI), and renewed its focus on the corporate and social aspects of environmental, social and governance (ESG) guidance. Its Enforcement Division remained focused on litigating high-stakes cases in the digital assets space and expanded its sweep related to off-channel communications. Continue Reading 2023 Year-in-Review: Developments and Trends in White Collar Enforcement Litigation