Posts Tagged ‘Janet Fisher’

Selected Issues for Boards of Directors in 2013

Posted by Victor I. Lewkow, Cleary Gottlieb Steen & Hamilton LLP, on Monday January 28, 2013 at 9:29 am
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Editor’s Note: Victor Lewkow is a partner at Cleary Gottlieb Steen & Hamilton LLP. This post is based on a Cleary Gottlieb memorandum by Mr. Lewkow, Alan Beller, Mitchell Lowenthal, Janet Fisher, Arthur Kohn, David Leinwand, and Ethan Klingsberg.

In the years since the financial reporting scandals and the Sarbanes-Oxley Act of 2002, and in particular following the financial crisis and the Dodd-Frank Act of 2010, boards of directors have faced greater burdens and more intense scrutiny of their activities and performance. One manifestation of this has been pressure to change the role of directors from one of partnership with and oversight of management to one of an almost quasi-governmental watchdog directly responsible for monitoring management’s performance, including its compliance with increasingly complex and burdensome regulation. In addition, activist investors continue to publicly push some boards to pursue strategies focused on short-term returns, even in instances where those strategies are inconsistent with the directors’ preferred, sustainable long-term strategies for the corporation.

In recent years, we have advised that directors regularly work with their advisors to monitor and adapt to the continually changing landscape. Among other things, we have suggested more frequent, well-structured engagement with shareholders, a focus on the ability to communicate the corporation’s and board’s policies in a way that is understandable and convincing to the corporation’s constituencies, and that directors prepare to respond to increasing external pressures in a manner that both thoughtfully takes those pressures into account and fully reflects the director’s carefully considered view of the long-term interests of the corporation.

In addition to these general points, we also have seen developing during 2012 a series of additional specific issues, discussed below, on which we believe boards of directors and corporations should focus in 2013.

…continue reading: Selected Issues for Boards of Directors in 2013

Delaware Case Raises Question About Structuring Director Compensation

Posted by Arthur H. Kohn, Cleary Gottlieb Steen & Hamilton LLP, on Thursday August 30, 2012 at 9:14 am
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Editor’s Note: Arthur H. Kohn is a partner at Cleary Gottlieb Steen & Hamilton LLP. This post is based on a Cleary Gottlieb memorandum by Mr. Kohn, Janet Fisher and Samuel Bryant. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.

A recent opinion of the Delaware Chancery Court, Seinfeld v. Slager, [1] addresses the legal standard applicable to directors’ decisions about their own pay under Delaware law, an important topic as to which there is little prior law. In an opinion by Vice Chancellor Glasscock, the Court held that a derivative claim alleging that directors breached their fiduciary duties by granting themselves excessive compensation survived a motion to dismiss. [2] In so concluding, the Court also found that the directors’ action did not have the protection of the business judgment rule and was instead subject to “entire fairness” review.

The Court’s decision to require “entire fairness” review means that the claim of excessive compensation could proceed to a full evidentiary trial on the merits. Under Delaware law, a court will not second-guess business judgments of directors if the directors acted in good faith, exercised due care and were not conflicted in the matter. When the business judgment rule does not apply, the judgments may be subject to heightened scrutiny under the entire fairness standard. To meet this standard, the directors must demonstrate that both the process undertaken by directors and the amount of their compensation are fair to the company.

…continue reading: Delaware Case Raises Question About Structuring Director Compensation

Preparing for “Proxy Access” Shareholder Proposals

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Sunday October 23, 2011 at 9:27 am
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Editor’s Note: The following post is based on a Cleary Gottlieb Steen & Hamilton LLP memorandum by Victor Lewkow, Janet Fisher, and Esther Farkas.

Following the SEC’s decision not to seek a rehearing of the decision by the U.S. Court of Appeals for the District of Columbia Circuit vacating its “proxy access” rule (Rule 14a-11 under the Securities Exchange Act of 1934), the stay on the companion “private ordering” amendments to Rule 14a-8 was lifted and those amendments are now in effect. Companies can no longer exclude otherwise-qualifying shareholder proposals seeking to establish a procedure in a company’s governing documents to permit shareholder nominees to be included in the company’s future proxy statements. As with other shareholder proposals, in order to make an access proposal a shareholder need only own $2,000 of company stock and have held it continuously for one year.

While some companies may receive proxy access proposals because of their size or notoriety, or seemingly at random, others will receive them because of shareholder dissatisfaction with the company’s performance, strategic direction, compensation policies or general governance profile. We expect that larger institutional investors will focus their attention on a very small number of issuers where a relatively high level of dissatisfaction exists. Of course, the most important steps a company can take to reduce the risk of receiving a proxy access proposal (or, if one is received, it obtaining substantial support or even being approved) are the same ones that apply to other potential activism: knowing who the company’s major shareholders are and staying in touch with them, understanding their views and concerns, and considering what steps can be taken to address those concerns well before any proposal is received. Even if a company does not expect to be a target of a proposal in the near future, understanding the views of key shareholders on this important subject should be part of the agenda for any meetings it is planning with shareholders in anticipation of the 2012 proxy season.

…continue reading: Preparing for “Proxy Access” Shareholder Proposals

Action by Written Consent: A New Focus for Shareholder Activism

Posted by Scott Hirst, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Monday July 5, 2010 at 10:25 am
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Editor’s Note: This post comes to us from Ethan Klingsberg, a partner at Cleary Gottlieb Steen & Hamilton LLP focusing on mergers and acquisitions, leveraged buy-outs and corporate and SEC matters, and is based on a Cleary Gottlieb Steen & Hamilton client memorandum by Mr. Klingsberg, Laurent Alpert, Janet Fisher, Victor Lewkow and Lillian Raben.

Shareholder proposals advocating that corporations provide shareholders with the right to act by written consent in lieu of a meeting reappeared on ballots this proxy season after a hiatus of several years and have won average shareholder support of over 54%. While these proposals are nonbinding and the number of companies with such proposals on the ballot in 2010 is relatively small – a total of 16 companies, according to RiskMetrics – the level of shareholder support is striking and will likely encourage proponents to advance proposals at more companies next year.

…continue reading: Action by Written Consent: A New Focus for Shareholder Activism

Implications of Beneficial Ownership Distinctions for Shareowner Communications and Voting

Posted by Alan L. Beller and Janet L. Fisher, Cleary Gottlieb Steen & Hamilton LLP, on Thursday March 18, 2010 at 9:10 am
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Editor’s Note: Alan L. Beller and Janet L. Fisher are partners in the New York office of Cleary Gottlieb Steen & Hamilton LLP. This post is based on a white paper prepared by Mr. Beller and Ms. Fisher for the Council of Institutional Investors. The white paper is available here.

A shareowner’s right to vote on matters as allowed under state or federal law, stock exchange rules or otherwise is a key right. Shareowner voting has also become an increasingly important element in the consideration of public company corporate governance. Recent developments have spotlighted the nature and quality of the communication process and its impact on shareowner voting and governance. These developments include adoption by a number of public companies, especially larger companies, of majority voting in uncontested director elections, the amendment of New York Stock Exchange (NYSE) Rule 452 to prohibit broker discretionary voting in uncontested director elections and the increased influence of activist shareowners and proxy advisory firms. The confluence of these developments has heightened the likelihood of more meaningful, and contested, shareowner votes and elevated the importance of shareowner communications in the context of voting and governance.

…continue reading: Implications of Beneficial Ownership Distinctions for Shareowner Communications and Voting

 
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