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

As the 25th anniversary of the seminal Delaware Court of Chancery decision In re Caremark Int’l Inc. Deriv. Litig. (Caremark) approaches, there has been a notable rise in the number of cases in which Delaware courts are allowing Caremark claims against company directors to survive motions to dismiss. Significant drivers of this trend appear to be plaintiffs’ increased use of books and records demands under Section 220 of the Delaware General Corporation Law and the expanding boundaries of stockholder inspection rights resulting from recent Delaware court decisions interpreting that statute. Often armed with considerable amounts of information gleaned from a corporation’s books and records with which to draft a complaint, and with the benefit of the inferences afforded to plaintiffs at the pleading stage, plaintiffs have, in some recent cases, been able to plead Caremark claims that have overcome the courts’ traditional reluctance to sustain such claims.

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

Over the past few years, many boards have expanded their oversight and consideration of human capital management (HCM) to encompass issues beyond executive hiring and compensation. Before the COVID-19 pandemic, technology and the culture change brought by a new generation of workers had already commenced an irreversible shift in paradigm that established HCM as a board-level issue with vital strategic and risk oversight implications.

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

Stakeholder attention to environmental, social and governance (ESG) issues continued to grow throughout 2020 driven by the COVID-19 pandemic (health and safety), the Black Lives Matter movement (diversity and inclusion) and worldwide wildfires (climate change), to name a few. Prodded by investors and other stakeholders, companies have increasingly realized the importance to their businesses of managing human capital and monitoring human rights, whether in respect of their own workforces or their supply and customer chains. Further, disclosure and engagement around companies’ human capital management (HCM) practices have become more important and even the Securities and Exchange Commission, which had in the past largely avoided specific ESG disclosure mandates, has weighed in and now requires disclosure regarding human capital resources in annual reports on Form 10-K.

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

A curious feature of the past three years has been the intertwined controversies over earnings guidance, corporate “short-termism” and the quarterly disclosure system. The discussion has been illuminating, and, while further regulatory attention now seems unlikely, the perils of neglecting the long-term will likely continue to color how analysts, regulators and investors view public companies and their disclosures.

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

Diversity has long been a focus for both companies and stakeholders, but 2020 in particular saw diversity come to the forefront of stakeholders’ agendas. Against the backdrop of the ongoing COVID-19 pandemic and its disparate impacts on human capital, alongside increased focus on racial equity and justice and related unrest, we have seen key players across the board push to broaden the scope and impact of diversity issues in the corporate space.

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

Corporate sustainability has in a few short years become a mainstream capital allocation and voting criterion for many institutional investors. As a consequence, those investors are calling for consistent, comparable and reliable sustainability disclosure capturing the risks and opportunities faced by the businesses in which they invest.

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

Following the celebration of the five-year anniversary of the Paris climate conference (COP21) in December 2020, Europe stands out as one of the leaders in developing policies that support the goals of the Paris Agreement, providing frameworks for companies and investors alike to redirect capital flows toward environmentally sustainable activities, as well as various mechanisms to alleviate the social impact of the transition to a greener economy.

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

For companies and boards managing crises or cross-border matters, the COVID-19 pandemic has brought unprecedented challenges that in many ways fundamentally change how we think of crisis management. However, managing through COVID-19 has illustrated the importance of many of the fundamentals that underpin good crisis planning and management in any environment: preparedness, transparency, engagement with regulators, clear and timely communications and proactivity.

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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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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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