Maintaining a workplace environment free of discrimination, sexual harassment and other misconduct is critical to both the short-term productivity and long-term health of a business.  Reports of sexual harassment allegations at public corporations can have material negative effects on stock price, with some corporations seeing double digit single day drops after accusations are made public.  As we have written elsewhere, the primary obligation to manage these risks on a day-to-day basis falls to executive leadership.[1]  But the #MeToo movement also has raised questions about the role of boards of directors to provide oversight of management and, to the extent that senior management may be a source of the problem, the board’s obligation to take more direct action.

This note discusses some key issues for General Counsel to consider as they advise corporate boards about how to navigate their responsibilities in this environment.  Continue Reading Bringing The #MeToo Movement Into The Board Room

Forbes has published an interesting article that opens as follows:

Every CEO and every board member of every publicly traded company (and every thinking-about-being-publicly traded company) should drop whatever they are doing and read two short things right now:

  • This week’s annual letter to CEOs from BlackRock chief executive Larry Fink; and
  • The January 8 client bulletin from Cleary Gottlieb, “The Schizophrenic Investor Landscape: The Significance for Boards and Management of the JANA/CalSTRS Letter to Apple.”

BlackRock is the largest investor in the world, managing $6 trillion in assets. Cleary is one of the largest and most prestigious international law firms in the world. These are two of the most influential institutions that drive the behavior of the corporations that shape our society and our lives. . . . Let’s hope . . . that investors are beginning to see—and will begin to act—more “Cleary”-eyed.

Click here for the Forbes article and here for the original Cleary blog post by our partner Ethan Klingsberg.

In recent months, sexual harassment allegations against well-known figures across a growing number of industries have become a common feature in news headlines.  In the wake of these allegations, many companies have concluded that their current policies and procedures related to sexual harassment and discrimination are inadequate.  Against the backdrop of this rapidly evolving landscape, companies are considering how to improve their policies and procedures not only to appropriately and effectively respond to allegations of sexual harassment, but also to deter inappropriate behavior going forward and foster an environment of openness, diversity and inclusion in their workplaces.  To that end, we address 8 key questions that companies should be asking themselves in developing policies and procedures to confront sexual harassment and other forms of misconduct in today’s workplace.

Click here, to read the full memo.

In recent years, shareholder plaintiffs have brought a series of claims before the Delaware Court of Chancery alleging that directors of Delaware companies have abused their discretion in granting themselves excessive equity compensation for their board service.  These cases raised the threshold question of whether the plaintiffs’ challenges should be reviewed under the “entire fairness” standard, which requires the company to bear the burden of proving that the director awards were fair, or the more deferential “business judgment” standard, which grants considerable discretion to directors’ decisions, often resulting in dismissal of claims that fail to plead particularized facts indicating fiduciary lapses by the directors. Continue Reading New Year’s Resolutions For Director Compensation From <i>Investors Bancorp</i>

2017 began with a heightened level of uncertainty as the beginning of the year brought significant change in the legal environment, including a change in administration that promised to significantly alter the tenor of regulation. While certain changes did occur in 2017, in many respects, 2018 is setting itself up as the year to watch for continuing developments in areas that are likely to fundamentally transform how companies operate and interact with an increasingly larger number of vocal stakeholders. The trends discussed in each of the sections of this memorandum will increasingly be a focus of boards of directors and companies in the United States and across the globe, particularly as boards consider how best to assess and assist in mitigating associated risks. The role that the board and its oversight plays in guiding companies in these times will be critical and a strong understanding of the issues and challenges facing boards and companies over the next year and beyond will assist boards in addressing the issues and complexities that will undoubtedly arise in 2018.

We invite you to review these topics by clicking on the links below.

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

Selected Issues for Boards of Directors 2018 (Home Page)

Developments in Best Practices in the Boardroom

Significant Regulation and Reform Under the Trump Administration

Activism in 2018

Cybersecurity and Data Privacy Updates

The New DOJ FCPA Corporate Enforcement Policy Highlights the Continued Importance of Anti-Corruption Compliance

Evolution or Revolution for Companies with Multi-Class Share Structures

Corporate Governance in the Context of Brexit and Political Uncertainty in the United Kingdom and Europe


On December 5, 2017, the Financial Reporting Council launched a consultation on its proposal to significantly revise the UK Corporate Governance Code.

The amendments seek to encourage continued improvement in the quality of corporate governance in the UK and are centered around the themes of company culture and diversity, employee and other stakeholder representation, responding to significant shareholder opposition, independence of the chairman and other non-executive directors and executive remuneration. In this memorandum, we briefly explore the main proposed reforms.

Click here, to continue reading.

Over the past couple of years, we have seen traditional, actively managed funds, such as Neuberger Berman, borrow activist tactics and push for changes to accelerate increases in share prices.  In parallel with this arguable trend toward convergence between actively managed funds and activist funds, a chasm appeared to be developing elsewhere in the investor landscape as pension and passive strategy funds increasingly focused on “social good” issues, while brand name activist funds remained primarily focused on nearer term financial performance and returns.  But the activists desperately need the support of the pension and passive strategy funds, as evidenced by the proxy contests over the past year where support from these funds was neither predictable nor easily locked up.  The announcement on January 6, 2018 by JANA Partners, a high profile activist fund, and CalSTRs, an outspoken pension fund, that they have teamed up to accumulate a $2 billion equity position in Apple for the purpose of launching a specific “social good” campaign is the strongest indication to date that the magnitude of assets under management focused on social good matters cannot be ignored and that even a successful activist fund like JANA needs to burnish its reputation in this area.  Continue Reading The Schizophrenic Investor Landscape: The Significance for Boards and Managements of the JANA/CalSTRs Letter to Apple

On 29 August 2017, the UK Government published its response to its recent consultation on UK corporate governance reform. The Government has proposed 12 reforms to the UK corporate governance regime, centered around executive remuneration, employee and other stakeholder representation and corporate governance in large privately-held businesses. In this memorandum, we briefly explore each of the proposed reforms.

Click here, to continue reading.

  • The Impact of New Trends in Asset Management and Investor Expectations
  • The Relationship between the CEO and an Activist Director

The keynote presentation at the 2017 Tulane Corporate Law Institute featured a discussion among

  • Gerald Hassell, Chair and CEO of Bank of New York Mellon;
  • Ed Garden, CIO and Founding Partner of Trian Partners; and
  • Ethan Klingsberg, partner in Cleary Gottlieb’s New York office.

The discussion focused on:

  • How new trends in asset management and investor expectations are impacting boards of publicly traded companies – a topic on which the participants had insights in view of Mr. Hassell’s  experience leading not only a publicly traded issuer with engaged investors but also a business that hosts a growing stable of passive-strategy funds as well as actively managed funds, and Mr. Garden’s experience with asset managers and boards through his roles as a high profile shareholder and board member of publicly traded companies on behalf of Trian.  A transcript of this portion of the discussion was published in the new issue of The M&A Journal that is available here; and
  • Bank of New York Mellon’s experience engaging with and managing its relationship with Trian and Mr. Garden – featuring perspectives from both sides of the relationship and offering guidance useful for directors and executives preparing for or in the midst of handling activism.  A transcript of this portion of the discussion was published in the new issue of The M&A Journal that is available here.