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.

Cleary Gottlieb’s “2017 Developments in Securities and M&A Litigation” discusses major developments from 2017 and highlights significant decisions and trends ahead.

The trend of increased securities class action filings in federal courts continued from 2016 to 2017. The Supreme Court was particularly active in the securities field, ruling in CalPERS that the Securities Act’s repose period is not subject to class action tolling, holding in Kokesh that disgorgement in SEC proceedings is subject to the five-year statute of limitations for penalties, and granting three additional cert petitions to address important issues in the securities laws, with decisions expected in 2018. With respect to M&A litigation, the Delaware Supreme Court issued key rulings on appraisal issues in DFC Global and Dell, and is expected to provide further guidance in the coming months.

Please click here for a PDF version of 2017 Developments in Securities and M&A Litigation.

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 Investors Bancorp

Our 4th annual “M&A, Antitrust and the Board Room: Challenges and Conundrums for the West Coast” conference will occur in San Francisco on February 15. For a listing of confirmed topics, participants and speakers, click here.  If you are interested in attending or would like additional information, contact RSVP@cgsh.com.

Following the enactment of the Tax Cuts and Jobs Act (the “TCJA”) in late December 2017, which introduced significant reforms to the U.S. tax system, the Internal Revenue Service (“IRS”) issued new withholding guidance in January 2018.[1]  Recently, two Democratic legislators have openly questioned whether the IRS’ 2018 withholding tables may result in systematic under-withholding of W-2 earnings.  Companies will need to comply with the IRS withholding guidance, through administrative procedures that are typically the responsibility of payroll departments and outside payroll service providers.  Companies may also be concerned about the consequences of under-withholding from an employee-relations perspective. Continue Reading Withholding Judgment

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 November 1 2017, the Securities and Exchange Commission (“SEC”) released guidance (Staff Legal Bulletin No. 14I (“SLB 14I”)) clarifying the scope and application of the ordinary business and economic relevance grounds for excluding a shareholder proposal under Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) from a company’s proxy statement.[1]  On November 20, Apple Inc. became the first corporation to attempt to use this guidance in a request for no-action relief from the staff of the SEC’s Division of Corporation Finance (the “Staff”), in response to governance activist Jing Zhou’s proposal that Apple create a board committee focused on human rights (the “Proposal”).  On December 21, 2017, the Staff responded, denying Apple’s request to exclude the Proposal from its proxy materials.

Continue Reading Apple’s Unsuccessful Test of the SEC’s Recent Guidance on Shareholder Proposals

The German M&A market has remained robust in 2017.  While the number of transactions has fallen, transaction volumes remain significant.  Testament to this were the agreed merger of Siemens’ rail operations with Alstom, the acquisition of Bayer’s seeds and herbicides business by BASF, the Stada takeover, General Motors’ sale of Opel to PSA or the merger between Linde and Praxair, which finally appears to be nearing a successful conclusion.  The steel JV between ThyssenKrupp and Tata is still in the works, as is the takeover of Uniper by Fortum.  However, yet another attempt at a London Stock Exchange and Deutsche Börse merger failed in 2017.

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