As widely reported, a vehicle formed by Pershing Square and Valeant Pharmaceuticals acquired just under 5% of Allergan’s shares after Allergan apparently rebuffed  confidential efforts by Valeant to get Allergan to negotiate a potential acquisition.  The Pershing Square/Valeant vehicle then crossed the 5% threshold and nearly doubled its stake (to 9.7%) over the next ten days, at which point it made the required Schedule 13D disclosures regarding the accumulation and Valeant’s plans to publicly propose an acquisition of Allergan.  The acquisition program has raised a number of questions.  Continue Reading The Schedule 13D Ten-Day Window and Other Issues: Will the Pershing Square/Valeant Accumulation of a 9.7% Stake in Allergan Lead to Regulatory or Congressional Action?

When the directors of a public company lose confidence in their chief executive officer and choose to remove him or her, the communication of that message is typically a highly choreographed affair.  A recent decision of the Delaware Supreme Court, sitting en banc in Klaassen v. Allegro Development Corp., provides the opportunity to review some basics of Delaware board process and highlights the need to be careful about both a Delaware law technicality involving the difference between regular and special board meetings, and what should be a more common sense aversion to the use of deception in the choreography.  Continue Reading Terminating the CEO: Some Practice Tips from the Delaware Supreme Court

On March 11, 2014, the Conference Board released results of its year-long multifaceted study of corporate/investor engagement.  The topic encompasses practical and systemic issues of critical importance to public companies and investors, which in the long term will impact U.S. macro-economic performance. Continue Reading The Conference Board Governance Center Task Force on Corporate/Investor Engagement

On March 10, 2014, Cleary Gottlieb partner Ethan Klingsberg served as a moderator for The Conference Board Governance Watch’s “Activism’s Chemistry with Non-Activist Investors and the Role of the Board” webcast.

For more information, please visit the event’s website.

It is now clear that, for Delaware companies, a charter or by-law forum selection clause (FSC) is a valid and promising response to the problems posed by multi-jurisdictional disputes involving claims based upon internal corporate affairs (such as M&A litigation and derivative actions).  Three recent rulings by “foreign” courts – each of which granted motions to dismiss based upon an FSC selecting Delaware as the exclusive forum – show that foreign courts will respect and enforce these clauses.  Continue Reading Forum Selection Clauses in the Foreign Court

Over the past year, boards of directors continued to face increasing scrutiny from shareholders and regulators, and the consequences of failures became more serious in terms of regulatory enforcement, shareholder litigation and market reaction. We expect these trends to continue in 2014, and proactive board oversight and involvement will remain crucial in this challenging environment. Continue Reading Selected Issues for Boards of Directors in 2014

(1) The problems posed by multi-jurisdictional disputes involving claims based on internal corporate affairs (such as M&A litigation and derivative actions) are pervasive and profound,

(2) Forum selection clauses (FSCs) offer a promising solution to these problems, and

(3) The efficacy of this solution is materially enhanced by the further adoption of a consent to jurisdiction clause that permits the defendants to enforce the FSC in the chosen forum.[1]  Continue Reading Further Enhancing the Promise of Forum Selection Clauses Through Stockholder Consent to Jurisdiction: The Edgen Lesson

To read this report, click here.

The Commissioners of the SEC voted 3-2 on September 18, 2013 to propose regulations (the “Proposed Rules”)[1] implementing the mandate of Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) [2] to require disclosure by a reporting company of the median annual total compensation of all its employees (excluding the company’s principal executive officer (“PEO”)) and the ratio of that median to the annual total compensation of the PEO.  This memorandum summarizes the requirements of the Proposed Rules. Continue Reading SEC Proposes Pay Ratio Disclosure Rule

In its first Regulation FD enforcement action in almost two years, the SEC on Friday filed a cease-and-desist order instituting a settled administrative proceeding against Lawrence D. Polizzotto, the former Vice President of Investor Relations of First Solar Inc.  Without admitting or denying the findings, Polizzotto paid $50,000 to settle the charges and agreed to cease and desist from further violations of Section 13(a) of the Securities Exchange Act of 1934 and Regulation FD.  Continue Reading SEC Charges Investor Relations Officer with FD Violation