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

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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

Should Former Directors of Failed Firms be Stigmatized?

Posted in Corporate Governance
In an August 2, 2011 post on the New York Times  Dealbook blog entitled “Ex-Directors of Failed Firms Have Little to Fear”(here), Ohio State University Law Professor  Steven Davidoff voices his consternation that the former directors of Bear Stearns and Lehman Brothers seemingly will be able to “continue their prominent careers.” Davidoff seems miffed that … Continue Reading

D.C. Circuit Vacates Proxy Access Rules, Blasts the SEC

Posted in Corporate Governance
For many years, one of the fundamental goals of shareholder rights activists has “proxy access,” which would require corporations to include shareholder nominated board candidates on the company’s proxy ballots. Last year, in the wake of the Dodd-Frank Act, the SEC promulgated rules facilitating shareholder director nominations under certain circumstances. However, on July 22, 2011, … Continue Reading

Corporate Governance Perspective: Where We Are Now, What Lies Ahead

Posted in Corporate Governance
Largely due to last summer’s enactment of the Dodd-Frank Act, we have entered a watershed period of corporate governance reform. Processes already underway have transformed the relations between corporate boards and corporate shareholders. Even further changes loom. In a July 2011 article entitled “Corporate Governance Perspective: Current Bearings, Future Directions”  in the latest issue of … Continue Reading

Corporate Governance Perspective: Current Bearings, Future Directions

Posted in Corporate Governance
Largely (although not exclusively) driven by last summer’s enactment of the Dodd-Frank Act, we have entered a watershed period of corporate governance reform. Processes already now afoot have wrought a transformation in the relations between corporate boards and corporate shareholders. Even further changes lie ahead. In this post, I take a look at where we … Continue Reading

Berkshire Board Audit Committee: Sokol Violated Policy, Lacked Candor

Posted in Corporate Governance, Warren Buffett
Berkshire Hathaway’s Audit Committee has determined that David Sokol’s trades in Lubrizol shares prior to Berkshire’s announced acquisition of the company “violated company policies.” It also determined that his “misleadingly incomplete disclosures” to Berkshire management “violated the duty of candor he owed the Company.”  The Audit Committee reported these findings in an April 26 report … Continue Reading

Thoughts About WikiLeaks and Executive Liability

Posted in Corporate Governance
Though it quickly recovered, Bank of America’s share price declined earlier this week on speculation that the company is the bank whose internal documents WikiLeaks intends to post on the Internet at some future date. According to news reports, the WikiLeaks  founder Julian Assange has asserted that he has five gigabytes of Bank of America documents, which … Continue Reading

Web Notes and Updates

Posted in Corporate Governance, Opt-Outs
NYSE Commission on Corporate Governance: On September 23, 2010, the NYSE Commission on Corporate Governance issued a report (here) following a two year review of governance issues and considerations. The Commission, chaired by Larry Sonsini of the Wilson Sonsini law firm, included more than two dozen members representing a broad range of constituencies, and its … Continue Reading

SEC Chair Mary Schapiro Addresses Stanford Directors’ College

Posted in Corporate Governance
In the opening keynote address on June 20, 2010 at the Stanford Directors’ College at Stanford Law School in Palo Alto, California, SEC Chair Mary Schapiro discussed the SEC’s "singular" mandate to address the needs of investors, noting the increasing challenges involved in "making sure the markets are fair and efficient."   Schapiro opened her speech … Continue Reading

Restatements Decline – Again

Posted in Corporate Governance
Both the number of restatements and the number of companies reporting restatements are declining according to a new study. The number of restatements has been declining for three years now, and the number has declined materially since the figures peaked in 2006, both because of better controls and changing standards.     The study, by … Continue Reading

More About the Responsible Corporate Officer Doctrine

Posted in Corporate Governance
Time-honored legal principles typically shield corporate officers and shareholders from direct personal liability for legal violations of the corporation itself, consistent with the notion that the corporation itself has a distinct and separate legal identity. However, as I noted in a prior post (here), courts have evolved a concept called "the responsible corporate officer doctrine," … Continue Reading