The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2021”.

The focus on environmental, social and governance (ESG) matters at public companies continues to grow despite, or perhaps in part because of, the COVID-19 pandemic. ESG continues to mean many things, including company considerations around sustainability, diversity, human capital, corporate purpose and governance. While best practices, disclosure requirements and ESG ratings are developing, boards should continue to prioritize ESG issues, particularly as they relate to long-term company strategy and risk.

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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 2021”.

In 2020, the COVID-19 pandemic, economic uncertainty, divisive politics and a historic social justice movement presented unprecedented challenges for boards. While the pandemic eliminated the concept of an in-person boardroom, as well as investor site visits, one-on-one meetings at conferences and strategy retreats, work did not slow, and most directors reported devoting significantly more time to their duties.

Boards stepped up to the challenge during the crisis, showing heightened awareness of and focus on environmental, social and governance (ESG) issues highlighted by the COVID-19 pandemic, such as company culture, human capital management, long-term strategy and executive compensation.

In 2021, maintaining and building shareholder relationships through effective engagement will be more important than ever as boards reflect on 2020 and plan for the future. Shareholders will likely be pushing companies to address strategy adjustments, changes in capital allocation and executive compensation in advance of the 2021 proxy season.

Below, we discuss what is motivating shareholders and considerations for companies and their board members in crafting and executing an effective strategy for communicating with investors and other constituents, during proxy season and the off-season.

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

In 2020, many directors and members of senior management faced their most challenging year ever. Maybe the lessons of such a turbulent year will prove sufficient for 2021, but that seems unlikely.

To prepare this memo, we asked our colleagues in a wide range of disciplines to boil down what we learned from last year, and to look around the corner for what to expect in 2021. The result is a compendium of the trends and topics that will dominate board meetings this year. The following pages touch on many topics – including themes of sustainability and diversity that are now at the top of every corporate agenda; continuing changes in investor engagement strategies, across the spectrum from stewardship to activism; the impact of a new federal administration; emerging threats arising from new litigation strategies; and much more.

We invite you to review these topics by clicking here.

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

At the end of last year, Institutional Shareholder Services (“ISS”) released a handful of updated FAQs on equity compensation plans and compensation policies as well as a slightly updated pay-for-performance mechanics statement; there were no substantive changes to the peer group FAQs.[1] In addition to providing the 2021 Burn Rate Benchmarks for ISS equity plan evaluation (which are effective for shareholder meetings on or after February 1, 2021), the updates address questions regarding the inclusion of a terminated equity plan’s existing share reserves in ISS’ Shareholder Value Transfer (“SVT”) analysis for new equity plan approval proposals, threshold passing scores for the Equity Plan Scorecard (“EPSC”) framework, quantitative pay-for-performance screens and how ISS will evaluate COVID-related pay decisions. Continue Reading ISS Issues 2021 Updates to Certain Compensation Related FAQs and Policies

Over a year ago, on December 29, 2019, the Sustainable Finance Disclosure Regulation entered into force. Just a few months remain before key provisions begin to apply and asset/fund managers and other financial services firms should not delay in preparing for new disclosure requirements.

The SFDR requires European financial firms to consider how sustainability risks are incorporated into their investment decision-making processes, and the extent to which their financial sector remuneration practices are consistent with sustainability concerns. In short, manufacturers of financial products and financial advisers need to consider and adapt how they operate their business before they can make the disclosures required under the SFDR.

This alert memorandum provides an overview of the SFDR (including as to status, scope and conceptual and technical framework), explores the upcoming regulatory implications of this initiative for European financial sector firms, and provides a comparative analysis of similar regulatory developments in other jurisdictions.

On December 18, 2020, the Internal Revenue Service (“IRS”) issued final regulations (the “Final Regulations”) under Section 162(m) of the Internal Revenue Code (the “Code”), as amended by the 2017 Tax Cuts and Jobs Act (the “TCJA”). Section 162(m) limits the deductibility of compensation paid in any year to certain public company executives to $1 million. The Final Regulations provide further guidance on the TCJA’s amendments to Section 162(m) and are generally consistent with the IRS’ 2019 proposed regulations (the “Proposed Regulations”). Key changes from the Proposed Regulations and other clarifications are discussed in more detail below. The Final Regulations will apply to tax years beginning on or after December 30, 2020, with special applicability dates for specified provisions.

Please click here to read the full alert memorandum.

 

In In re Nine West LBO Securities Litigation, Case No. 20-2941 (S.D.N.Y. Dec. 4, 2020), U.S. District Court Judge Jed Rakoff denied a motion to dismiss claims brought by the Nine West liquidating trustee against former directors of Jones Group (the predecessor to Nine West) for breach of fiduciary duty and aiding and abetting breach of fiduciary duty stemming from a 2014 going-private transaction with private equity sponsor Sycamore Group.  While it remains to be seen whether the defendant directors ultimately will be found liable for such claims, we highlight certain lessons learned and best practices that can be followed in light of the ruling. Continue Reading Lessons Learned and Best Practices in LBO Transactions Following the Nine West Decision

Last week, the Delaware Supreme Court affirmed the Delaware Court of Chancery’s decision in Lebanon Cnty. Emps. Ret. Fund v. AmerisourceBergen Corp.,[1] a closely watched appeal in which the court clarified the circumstances in which stockholders are entitled to demand books and records to investigate allegations of mismanagement pursuant to Section 220 of the Delaware General Corporation Law.  In a decision that will likely continue the recent trend of an increasing number of Section 220 demands being made, particularly in the wake of allegations of corporate wrongdoing, the Delaware Supreme Court ruled that: Continue Reading Delaware Supreme Court Clarifies Section 220’s “Proper Purpose” Test

In 2018, the Securities and Exchange Commission (the “SEC”) solicited comment on ways to modernize Securities Act Rule 701 (“Rule 701”), the registration statement on Form S-8 (“Form S-8”), and the relationship between the two regulations. Following up on this effort, the SEC recently published several amendments to Rule 701 and Form S-8 to simplify and redesign the manner in which issuers grant securities to employees in compensatory transactions. Separately, the SEC issued proposed temporary rules (the “Proposed Temporary Rules”) that would apply Rule 701 and Form S-8 to persons providing services in the “gig economy” on a temporary, trial basis. The principal proposed amendments to Rule 701 and Form S-8, and the Proposed Temporary Rules, are each summarized in turn below.

Please click here to read the full alert memorandum.