The D&O Diary

The D&O Diary

A PERIODIC JOURNAL CONTAINING ITEMS OF INTEREST FROM THE WORLD OF DIRECTORS & OFFICERS LIABILITY, WITH OCCASIONAL COMMENTARY

Category Archives: Corporate Governance

Subscribe to Corporate Governance RSS Feed

Oklahoma Legislature Adopts Derivative Litigation Fee-Shifting Provision

Posted in Corporate Governance
One of the most interesting recent developments has been the onset of innovative litigation reform efforts in the form of bylaw revisions. Among the most intriguing of these efforts involves fee shifting bylaws, whereby an unsuccessful claimant in intracorporate litigation must pay the other party’s costs. As discussed here, earlier this year, the Delaware Supreme … Continue Reading

Who is an “Officer”? A Critical Inquiry for Indemnification and Insurance

Posted in Corporate Governance
Many companies provide advancement, indemnification and insurance benefits and protection for their officers and directors. However, it is not always clear who is an “officer” for purposes of claiming the benefits and protection. The long-running and high-profile saga of Sergey Aleynikov, the former Goldman Sachs computer programmer and company Vice President accused of stealing proprietary … Continue Reading

Delaware Chancery Court Upholds “North Carolina Only” Forum Selection Bylaw

Posted in Corporate Governance
  Following the Delaware Chancery Court’s June 2013 ruling upholding the facial validity of the bylaw of Chevron Corporation designating Delaware as the exclusive forum for intra-corporate disputes, the adoption of forum selection bylaws has become mainstream. But while a number of companies have now adopted forum selection bylaws, the circumstances surrounding the adoption by First … Continue Reading

Though Delaware Legislature Has Tabled Action, Upcoming Judicial Review of Fee-Shifting Bylaws Seems Likely

Posted in Corporate Governance
The Delaware Supreme Court stirred up quite a bit of controversy earlier this year in the ATP Tours, Inc. v. Deutscher Tennis Bund case when it upheld the facial validity of a fee-shifting by law. The bylaw provided that an unsuccessful shareholder claimant in intracorporate litigation would have to pay his or her adversaries’ cost … Continue Reading

Delaware Legislative Proposal to Restrict Fee-Shifting Bylaws Held Over to Next Year

Posted in Corporate Governance
As I noted in a recent post (here), in response to a recent Delaware Supreme Court decision upholding the facial validity of fee-shifting bylaws, proposed legislation was  introduced in the Delaware General Assembly to limit the Supreme Court’s ruling and to restrict the ability of Delaware corporations to utilize their bylaws to shift the costs … Continue Reading

A Call for Corporate Governance Reform in Spain

Posted in Corporate Governance
In an interesting June 11, 2014 Financial Times article entitled “Spain’s Renewal Must Include Governance Improvements” (here), financial journalist and commentator Tony Barber identifies corporate governance issues that he believes Spanish companies have been slow to address. According to Barber, while there may be historical explanations for many of the long-standing corporate governance practices in … Continue Reading

Delaware Corporate Bylaws: Even if the Company Can’t Fee Shift, it Can Still Forum Select

Posted in Corporate Governance
In light of the recent legislative initiative to restrict Delaware stock corporations’ use of fee-shifting bylaws, companies incorporated in Delaware have, as described in a recent Law 360 article (here, subscription required) a “smaller more defined toolbox” to reduce the burdens involved with shareholder suits.  As it stands, the article notes, the “sharpest tool in … Continue Reading

Delaware Legislative Revision Proposed to Restrict Fee-Shifting Bylaws

Posted in Corporate Governance
As discussed in a recent post (here), in a May 8, 2014 decision the Delaware Supreme Court upheld the facially validity of a nonstock corporation’s bylaw provision shifting attorneys’ fees and costs to unsuccessful plaintiffs in intra-corporate litigation. Because the court’s holding seemed to be equally applicable to stock corporations as well as to nonstock … Continue Reading

The Latest on Arbitration Clauses in Corporate Bylaw Provisions

Posted in Corporate Governance
In a recent post, I noted the Delaware Supreme Court’s ruling upholding the validity of  bylaw  provisions shifting the costs of litigation to an unsuccessful intra-corporate litigation claimant, which is the latest in a series of judicial decisions in which courts have recognized the authority of corporate boards to address shareholder litigation concerns in their … Continue Reading

Is a Remote Annual Meeting Venue an Indicator of Corporate Risk?

Posted in Corporate Governance
Those interested in trying to identify possible corporate risk indicators will want to take a look at a March 18, 2014 paper by Temple University finance professor Yuanzhi Li and New York University finance professor David Yermack entitled “Evasive Shareholder Meetings” (here). According to the authors’ research, there is a strong negative correlation between distant … Continue Reading

The Complex Conflicts Minerals Disclosure Challenge

Posted in Conflicts Minerals, Corporate Governance
The SEC’s conflicts minerals disclosure rules, promulgated as required under provisions of the Dodd-Frank Act, became effective on January 1, 2013, requiring companies to make their first conflict minerals disclosures on or before May 31, 2014 for the 2013 reporting year, as I detailed in a recent post. But though it is widely recognized that … Continue Reading

Time to Look at the Conflict Minerals Disclosure Requirements

Posted in Conflicts Minerals, Corporate Governance
Although I was aware that among the Dodd-Frank Act’s hundreds of pages are provisions relating to so-called “conflict minerals,” until recently I had not had to pay much attention to these provisions. But now, for whatever reason, the conflict minerals disclosure requirements suddenly have hit the center of my radar screen. I have had to do … Continue Reading

Nonprofit Board Members’ Statutory Immunity

Posted in Corporate Governance
Most states have adopted statutes providing individuals who serve as directors on nonprofit boards with limited immunity from liability. Among other issues that frequently arise is the scope of the protection provided under this statutory immunity. A recent decision from the Connecticut Appellate Court in a case involving a liability claim against the volunteer President … Continue Reading

Thinking About the Limits of Corporate Officials’ Defense Cost Advancement Rights

Posted in Corporate Governance
In addition to indemnification, corporate directors and officers also may have the right under applicable law and corporate by-laws to have their costs of defense advanced before the ultimate right to indemnification has been determined. A question that often arises is whether a corporation may withhold advancement. A recent decision from the Ontario Superior Court … Continue Reading

Employer Social Media Policies, Cyber Security and Other Web Notes

Posted in Corporate Governance
As the various forms of social media have become increasingly pervasive, employers have struggled with appropriate responses to employees’ use of the social media sites. One question in particular that has arisen is the extent to which employers can seek to regulate and even discipline employees’ use of social media to comment on the employer … Continue Reading

Corporate Officials’ Strict Liability Conviction Under the Responsible Corporate Officer Doctrine Can Have “Career-Ending” Consequences

Posted in Corporate Governance
Under the Responsible Corporate Officer Doctrine, corporate officials can be held liable for misconduct in which they did not participate and of which they have been entirely unaware, based on their responsibility for the corporation itself. As shown in a July 27, 2012 opinion from the District of Columbia Court of Appeals (here), a misdemeanor … Continue Reading

Director Protection: Advancement and Indemnification

Posted in Corporate Governance
One of the most important sources of director protection is corporate  indemnification. But as significant as indemnification is for the protection of directors, the directors’ first line of defense, literally, is their right to advancement of their costs of defense. All too often, these two terms – advancement and indemnification – are used interchangeably, but … Continue Reading

The Benefit Corporation Concept and Related Director and Officer Liability Issues

Posted in Corporate Governance
A fundamental tenet of corporate law is that a business corporation is organized and carried on for the benefit of its stockholders.  In recent times, an increasing number of for-profit organizations have formed in order to pursue social and environmental goals. There is a growing investor movement toward the financial support of organizations that have … Continue Reading

Second Time Around on Say-on-Pay

Posted in Corporate Governance
The advisory shareholder vote required under the Dodd Frank Act went through its first cycle in 2011, and by and large most companies’ shareholders approved the companies’ executive compensation plans. Only about 45 companies (less than 2%) received negative “say on pay” votes from a majority of investors. But that does not mean that the … Continue Reading