Corporate Governance

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As the phenomenon of ESG-related litigation has developed and evolved in recent months, it has unfolded that the lawsuits are not, as was expected, being filed against ESG laggards, but instead are being filed against companies that were proactive on ESG-related issues. One of the cases illustrating this development is the securities lawsuit filed against the consumer products company Unilever, based on allegations that the company had failed to disclose a resolution passed by the independent board of its Ben and Jerry’s subsidiary to end ice cream sales in occupied Israeli territories. On August 29, 2023, In a ruling that suggests that these kinds of ESG-related cases could face challenges, Southern District of New York Judge Lorna Schofield granted the defendants’ motion to dismiss the lawsuit, on the grounds that the plaintiff had failed to sufficiently plead scienter. A copy of the August 29 opinion and order can be found here.Continue Reading ESG-Related Suit Against Unilever Based on Ben & Jerry’s Board’s Resolution Dismissed

ESG has for some time now been a hot button issue for companies. More recently, an anti-ESG backlash has emerged, further complicating the ESG environment for companies and sometimes putting them in a “damned-if-you-do-and damned-if-you-don’t” dilemma. How are companies to navigate these complicated conditions? In a May 23, 2023 post on the Harvard Law School Forum on Corporate Governance entitled “Navigating the Current ESG Landscape: Recommendations for the Board and Management” (here), veteran and respected corporate attorney Martin Lipton of the Wachtell, Lipton law firm provides guidance for companies as they navigate these difficult circumstances and describes the principles companies should follow in trying to make their way on these issues.Continue Reading Navigating the Challenging ESG Landscape

ESG is of course one of the current hot button topics, in the corporate, legal, and financial world. One of the many issues surrounding ESG is the question of how ESG initiatives fit with traditional notions surrounding corporate purposes. In the following guest post, Greg Markel, Giovanna Ferrari, and Sarah Fedner of the Seyfarth Shaw law firm take a comprehensive look at the ways in which ESG fits within the basic principles of corporate governance and corporate purpose . I would like to thank the authors for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics to the readers of this blog. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.Continue Reading Guest Post: ESG and Corporate Purpose:  Their Current Status and How They Relate

In prior posts on this site (for example here), I have expressed my concern that the current hot topic of ESG has a fundamental underlying flaw in that the term lacks definition and that this lack of precision has led to a great deal of sloppy thinking. A recent post on the Harvard Law School Forum on Corporate Governance provides a good examination of these ESG-related concerns. In an October 14, 2022 post (here), Douglas Chia of Soundboard Governance LLC, shows, using cybersecurity as an example, that one of the “biggest flaws” of ESG is “the subjective open-endedness of what counts as E, S, or G.”
Continue Reading ESG’s “Biggest Risk”?

On March 9, 2022, the SEC finally released its long-anticipated updated cybersecurity disclosure requirements. The proposed rules, inclusive of specifications both for incident reporting and for risk management and governance disclosure, were adopted by a 3-1 vote and are now subject to a public reporting period. The new rules, which the Commission’s press release says are “designed to better inform investors about a registrant’s risk management, strategy, and governance and to provide timely notification of material cybersecurity incidents,” underscore the Commission’s emphasis on cybersecurity reporting and disclosure issues.

The SEC’s March 9, 2022 press release about the proposed new rules can be found here. The Commission’s two-page “fact sheet” about the new rules can be found here. The Commission’s 129-page proposing release can be found here. Cydney Posner’s March 9, 2022 post on the Cooley law firm’s PubCo blog about the proposed rules can be found here.
Continue Reading SEC Proposes New Rules for Cybersecurity Disclosure and Incident Reporting Rules

Michael W. Peregrine

In an October 28, 2021 speech, Deputy Attorney General Lisa O. Monaco announced important changes to the U.S. Department of Justice’s corporate criminal enforcement policies. Among other things, Monaco laid out changes to the agencies’ corporate cooperation expectations and an increased emphasis on individual accountability. In the following guest post, Michael W. Peregrine, a partner at McDermott Will & Emery LLP, takes a look the corporate governance implications of the new policies announced in Monaco’s speech. I would like to thank Michael for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Michael’s article.
Continue Reading Guest Post: Governance Implications of New DOJ Focus on Corporate Crime and Individual Accountability

Among the companies with D&O litigation in recent years arising from sexual misconduct allegations was the clothing and consumer products company L Brands. The parties to the various legal proceedings arising out of the allegations have reached a settlement in which L Brands has agreed to adopt a number of management and governance measures; in order to fund these initiatives, the company has committed to funding of $90 million over the course of five years. As discussed below, the settlement has several interesting features. The parties’ July 30, 2021 stipulation of settlement can be found here.
Continue Reading L Brands Establishes $90 Million Fund in Sexual Misconduct Derivative Suit Settlement

Having observed and commented on the D&O insurance industry for many years, I am accustomed to periodic proclamations from non-industry-based observers about how the D&O insurance industry ought to work, based on various social, behavioral, or economic notions. These periodic declarations usually start with a series of vexed observations that the D&O industry does or does not do things that economic or behavioral models suggest the industry should or should not do, and then the declarations move on to a series of proposed prescriptions that would mandate how the D&O insurance business ought to work, for the supposed greater good of all.

The latest example of this literary genre is the academic paper “Changing the Guard: Improving Corporate Governance with D&O Insurer Rotations” written by UCLA Law Professor Andrew Verstein. Based on his construct of the way D&O insurance business works and his belief that D&O insurance business ought to work differently, Professor Verstein proposes that corporations ought to be forced to rotate D&O insurers every five years. I discuss my concerns with Professor Verstein’s proposal below. Professor Verstein’s paper can be found here. His August 19, 2020 summary of the paper on the CLS Blue Sky Blog can be found here.
Continue Reading Mandating D&O Insurer Rotation? A Critique

In the following guest post, Ulrike Binder, a corporate partner in Mayer Brown’s Frankfurt office, Jan Kraayvanger, a partner in Frankfurt office of Mayer Brown’s Litigation & Dispute Resolution practice, Burkhard Fassbach, Legal Counsel to Howden Germany, take a look at recent corporate governance and executive liability developments in Germany. A version of this article previously was published as a White Paper by Mayer Brown written in cooperation with Howden Germany. The original version also contains a chapter about D&O-Insurance in Germany authored by Marcel Armon, CEO Howden Germany, which can be found here. I would like to thank Ulrike, Jan, and Burkhard for allowing me to publish their article on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.
Continue Reading Guest Post: Compliance-Hype in Germany

us capitolIn a post last week, I wrote about the proposed revised Financial Choice Act (H.R. 10) now pending before Congress and the potential impact that the bill could have on the SEC’s enforcement program. In this post, I address the potential impact that the bill’s provisions could have on public company disclosure requirements and corporate governance. If the bill’s provisions are enacted into law, the measures could significantly alter or eliminate many of the Dodd-Frank Act’s disclosure and corporate governance requirements.
Continue Reading Proposed Disclosure and Corporate Governance Reforms in the Financial Choice Act 2.0