October 27, 2016
Paul Weiss discusses Applying the Business Judgment Rule to a Going-Private Transaction in Delaware
by Scott A. Barshay, Ariel J. Deckelbaum, Ross A. Fieldston, Justin G. Hamill, Stephen P. Lamb and Jeffrey D. Marell
In In re Books-A-Million, Inc. Stockholders Litigation, the Delaware Court of Chancery dismissed the fiduciary duty claims of former minority stockholders following a going-private, squeeze-out merger because the transaction satisfied the framework to invoke business judgment review as approved by the Delaware Supreme Court in Kahn v. M&F Worldwide Corp.
The plaintiffs brought fiduciary duty claims challenging the transaction pursuant to which the controlling stockholders of Books-A-Million, Inc. took the company private. The agreed price offered a premium to market, but was nevertheless lower than a competing offer from a third party to whom the controlling stockholders refused to sell. In addition, the controlling stockholders’ offer contained an appraisal condition pursuant to which the controllers could back out of the transaction if more than 10% of the minority stockholders sought appraisal. The transaction was designed to follow the framework of M&F Worldwide (discussed here). Under that framework, Delaware courts will apply the business judgment standard of review to a controlling stockholder transaction (instead of entire fairness review) if the following six elements are satisfied: (i) the controller conditions the transaction on the approval of both a special committee and a majority of the minority stockholders; (ii) the special committee is independent; (iii) the special committee is empowered to freely select its own advisors and to say no definitely; (iv) the special committee meets its duty of care in negotiating a fair price; (v) the vote of the minority is informed; and (vi) there is no coercion of the minority. Once business judgement review is invoked, the only claims that a court will entertain are those constituting waste and thereby bad faith.
The Court, expressly noting that the M&F Worldwide framework can be applied on a motion to dismiss, found that the transaction satisfied each element of the framework. In applying the framework, the Court focused on the requirement for special committee independence and the plaintiffs’ claims that the Books-A-Million special committee was not independent and had acted in bad faith.
The special committee did not act in bad faith when it approved the lower-priced offer from the controlling stockholder in the face of a competing, higher-priced offer from a third party.
The plaintiffs argued that the special committee had acted in bad faith because it was irrational for the committee to approve the lower-priced, controlling-stockholder offer over a higher, third-party offer.
The Court disagreed that the special committee’s action necessarily amounted to bad faith for several reasons.
First, the Court noted that "[i]f the independent directors facilitated a grossly inadequate offer," or accepted a price with an "extreme" minority discount, then it might be possible to infer that independent directors sought to serve the interests of the controllers and acted in bad faith. Here, however, the Court found that the price offered by the controlling stockholders, which applied a minority discount of approximately 23% to the offer by the third party, fell "within a rational range of discounts and premiums" when compared to the third party offer, and the difference between the two prices was "not so facially large as to suggest that the [special committee] was attempting to facilitate a sweetheart deal" for the controlling stockholders.
Second, the Court found that appraisal was a "further check on expropriation" by the controllers, as a court would not apply a minority discount in any appraisal proceeding. If a sufficient number of minority stockholders felt aggrieved by the controllers’ price (that applied a minority discount), they could exercise their appraisal rights and the controlling stockholders could use the appraisal condition to terminate the transaction. Thus, a minority of the minority stockholders could influence the outcome of the transaction.
Third, the special committee could have rationally believed that the stockholders preferred liquidity at a premium to market. The controllers’ offer represented a substantial premium to the market (93% higher than the trading price the day before the controller proposed the merger and 23% higher than the trading price the day before the merger was announced) and a 20% premium to the controllers’ initial offer.
The Court also found support for its analysis in the seminal case of Mendel v. Carroll.
Mendel involved a company entertaining an offer from controlling stockholders (who also refused to sell to a third party) and a higher offer from a third party. Mendel stated that it was "quite possible" that the lower controlling-stockholder offer was fair, and even generous, and that the higher third-party offer was inadequate because of the "fundamental difference" between the two deals: the third party had to buy control whereas the controlling stockholder already held it. According to Mendel, a board in these situations must act as a "protective guardian of the rightful interests of the public shareholders," including using "extraordinary steps to protect the minority from plain overreaching." A board is not authorized, however, to "deploy corporate power against the majority stockholders, in the absence of a threatened serious breach of fiduciary duty" by the stockholder. The board must respect the rights of the controllers (which include the right not to sell their shares), while assuring that the terms are also fair to the public stockholders and were the best available.
Applying the principles of Mendel to the case at hand, the Court found that there was no overreaching by the controlling stockholders and, in fact, effort was made to comply with the M&F Worldwide framework (including its protections for the minority stockholders). The Court stated that the Books-A-Million special committee could not have acted loyally if it had deployed corporate power against the controlling stockholders to facilitate a third-party deal. Instead, the special committee could use third-party offers to test the controllers’ buyer-only stance or to assess the value of the controllers’ bid, which is what the special committee did.
The prompt resignation of an interested director from the special committee and his presence at the fairness presentation to the committee did not taint the special committee’s independence.
Initially, the special committee was comprised of three directors, but one director resigned prior to the commencement of any negotiations due to his "social and civic relationships" with the controlling stockholders. Although this director resigned at an early stage and did not participate in negotiations, to avoid the need for the special committee’s financial advisor to make multiple fairness presentations, the resigning director was present for the fairness presentation to the special committee, which took place after negotiations had finished.
The plaintiffs argued that this director’s initial membership on the special committee and his presence during the presentation tainted the committee’s independence. The Court disagreed, noting that the director’s resignation was "commendable," as it was prompt and occurred before negotiations commenced. Also, the Court found that the director’s mere presence at the fairness presentation, after which he was excused and did not participate in deliberations, did not affect the committee’s independence.
This post comes to us from Paul, Weiss, Rifkind, Wharton & Garrison LLP. It is based on the firm’s memorandum, "Delaware Court of Chancery Applies Business Judgment Rule to Going-Private Transaction based on M&F Worldwide," dated October 13, 2016, and available here.
October 27, 2016
The Real Problem with Appraisal Arbitrage
by Richard A. Booth
In the controversial practice of appraisal arbitrage, activist investors buy shares of a corporation to be acquired by merger so as to assert appraisal rights challenging the merger price – which may already have been approved by the target’s stockholders. The practice is controversial because the appraisal remedy is widely seen as intended to protect existing stockholders who are forced to sell their shares in the merger and not to afford hedge funds a way to extract extra returns from the deal. But the puzzle is why appraisal arbitrage is profitable, since the remedy seeks to determine fair prices using the same techniques used by financial professionals who structure such deals.
Scholars have argued that the profit may derive from (1) a free option to assert appraisal rights at any time until target shares are cancelled (and indeed for a short time thereafter), (2) the use of a too-low supply-side discount rate (resulting in too-high multipliers) in the valuation of shares, and (3) the award of pre-judgment interest at a too-generous legal rate of 5 percent over the Fed discount rate.
None of these explanations is persuasive, but the second one may be on the right track.
As for why the discount rate matters, the basic formula for the value of a perpetual stream of returns (such as from a business) is:
VALUE = RETURN / DISCOUNT RATE
In this formula, the discount rate is the rate of return demanded by investors (the market) given the risk inherent in the business. The lower the discount rate, the higher the value. While the supply-side discount rate is indeed a bit lower than the historical rate used by many financial professionals, it has also become almost standard practice to reduce the discount rate even more by the projected rate of inflation and general economic growth (as measured by GDP), which may skew awards to the high side, as explained more fully below.
First, regarding the free option: It is almost impossible for information revealed after a merger is announced to have any effect on fair price as found by an appraisal court. Under the prevailing discounted cash flow (DCF) approach, valuation is based on cash flow projections prepared in the normal course of business and not for litigation. Similarly, the discount rate determined under the Capital Asset Pricing Model (CAPM) is based on historical rates of return as adjusted for risk and size. These factors are largely cast in stone before the deal happens. But an option has value because of the possibility that the underlying stock will increase in value. So an option increases in value in proportion to its duration in time. There is no such possibility in the context of an appraisal proceeding. This supposed appraisal option is just as valuable if it lasts for a day or a year. Moreover (and more important), although arbs can postpone tying up their own money, that does not change the amount of cash tied up by stockholders in the aggregate.
Second, regarding the discount rate: The supply-side rate reflects the belief of many finance scholars that future equity returns are unlikely to be as generous as they have been in the past (or at least since 1925 – the period for which we have reliable data based on the S&P 500). Given that growth in business returns (and thus stock prices) is the ultimate source of economic growth, slower economic growth going forward presupposes slower growth in stock prices and therefore less total return. Other scholars, who seem to be agnostic about the prospects for economic growth, note that about 1 percent of the 12 percent raw historical average equity return is attributable to an increase in price/earnings (P/E) ratios that is unlikely ever to be repeated.
While the former view is largely a matter of opinion, the latter argument for reducing discount rates is well taken. Some of the growth in stock prices since 1925 can be attributed to investor diversification (through mutual funds) and resulting reduction in risk without a concomitant reduction in return. As the Nobelist father of portfolio theory Harry Markowitz said, diversification is the only free lunch in the market. Thus, stocks became more valuable during this period as investors found new ways to reduce risk. So the supply of returns going forward is likely to be lower than the average historical rate. In other words, the market has already eaten the free lunch of diversification.
Although using the supply-side rate results in a roughly1 percent reduction in the benchmark discount rate (from about 12 percent to about 11 percent), the courts often reduce this figure still further – by as much as 5.5 percent – to adjust for projected inflation and GDP growth in returns during the terminal period. (Pay no attention to the irony behind the curtain.)
If returns are expected to grow at a steady rate, the valuation formula can be modified to account for such growth by reducing the discount rate by the growth rate:
VALUE = RETURN / (DISCOUNT RATE – GROWTH RATE)
To be clear, there is no need to make any such adjustment in the first few years (typically five), for which cash flow is projected year-by-year. Growth – as well as the diversion of funds to finance it (plowback) – is reflected directly in returns during this projection period. But it is also a mistake to adjust the terminal period discount rate for inflation and general economic growth unless return is reduced to reflect plowback. In most cases, growth comes from (re)investment of cash at ordinary rates of return. So the increase in value from a lower discount rate is exactly offset by the diversion of returns to new investment. A business that wants to increase sales may need to buy more inventory, rent a bigger warehouse, and hire additional employees. Growth does not grow on trees. To be sure, if a business finds opportunities that generate more return than its cost of capital, its value will grow. But such opportunities are rare and fleeting. As the Delaware courts have noted, the ability to generate returns in excess of the cost of capital will quickly be dissipated by competition. So it is fair to presume that growth of this sort is unlikely to persist beyond the projection period in the absence of positive evidence to the contrary.
On the other hand, if projected average cash flow for the terminal period builds in an implicit plowback rate – say a plowback rate based on the last year of the projection period – the discount rate should be adjusted accordingly. But there is no reason to assume that the company-specific plowback rate in combination with the company-specific discount rate will just happen to generate the projected rate of GDP growth. It is true that GDP growth ultimately comes from growth in returns from business. (At least that is how we measure it.) But it does not follow that growth in returns from business are spontaneously generated because the economy grows. The point is that if we know the company-specific plowback rate and discount rate, there is no reason to use a projected average GDP growth rate. Indeed, average GDP growth (about 3.4 percent in real terms since 1931) is significantly higher than average real growth in stock prices as measured by the S&P 500 (about 2.5 percent, and some of which is a one-time event). So even if GDP growth does ultimately derive from growth in returns, it appears to come disproportionately from small business, thus undercutting the rationale for using the GDP growth rate in appraisal where discount rates are derived from the S&P 500.
Finally, regarding pre-judgment interest: If investors expect 11 percent average annual returns, it is arguable that the interest rate should be the same or at least the compound rate – about 9.5 percent supply-side. If anything, the legal rate unduly discourages appraisal arbitrage.
Still, the question remains: Do we need appraisal arbitrage? Why should we permit new investors to buy into the claims of old investors – especially if the rationale is to compensate unwilling sellers who are forced to give up their shares in a merger? The answer is that arbs have bought the stock they hold from legacy investors. If the rights of arbs are curtailed, the result will be a bigger discount for stockholders who choose to sell. And that will raise the price of deals. It is certainly understandable that acquirers would want to curtail appraisal arbitrage ex post, but it serves them well ex ante.
Bargaining happens in the shadow of the law. Where there is a robust appraisal remedy, bidders will be induced to pay a fair price up front. Thus, appraisal may ultimately redound to the benefit of bidders as a sort of bonding mechanism that reassures target stockholders as to fairness of price. Indeed, this may explain why bidders continue to use the merger method rather than alternatives.
In the end, appraisal works best if appraisal arbitrage is possible. Otherwise bidders may reckon that many potential dissenters will decline to exercise their appraisal rights. If the bidder is thus required to pay a fair price only to some dissenting stockholders, the bidder comes out ahead. But appraisal arbitrage fixes this market failure. Thus, the problem with appraisal arbitrage (if any) appears to lie with valuation practice.
This post comes to us from Professor Richard A. Booth, the Martin G. McGuinn Chair in Business Law at Villanova University Charles Widger School of Law. It is based on his recent article, "The Real Problem with Appraisal Arbitrage," which is forthcoming in The Business Lawyer and available here.
October 27, 2016
2016 Annual Corporate Directors Survey
by Catherine Bromilow, Paul DeNicola, Paula Loop, Terry Ward, PricewaterhouseCoopers
Editor's Note: Paula Loop
is Leader of the Governance Insights Center at PricewaterhouseCoopers LLP. This post is based on a PwC publication by Ms. Loop, Catherine Bromilow
, Terry Ward
, and Paul DeNicola
Overseeing a company is no small task. Disruptive technologies are changing companies’ business models, geopolitical turmoil is impacting supply chains and investment opportunities, and increased regulatory complexity is affecting innovation. Institutional investors and shareholder activists are also playing a more powerful role shaping corporate governance. Boards of directors have to keep up with all of these changes in order to be effective.
Our 2016 survey uncovered 10 key findings that have a major impact on how boards perform. Diversity in the boardroom remains a topic of debate in the governance world, and male and female directors have differing opinions about its benefits. Directors are aware of their fellow board members’ performance—but not all are impressed. More than one-third of directors think someone on the board should be replaced. And despite their increasing oversight responsibilities and the many new issues boards have to understand, most directors say their workload is manageable. Investors are also a factor in corporate governance changes. They are pushing for changes to board composition and capital allocation strategy—and are often getting their way.
1. How do you measure up compared to your fellow board members?
Sitting on a board of directors requires preparation, attention to detail, and having the right skills for the job. But more directors are saying someone on their board isn’t measuring up. Thirty-five percent of directors say someone on their board should be replaced—a sentiment that directors have had since 2012. The most common reasons why: they’re not prepared for meetings and they lack the right expertise. Some directors also cite aging as the reason, while others say someone is overstepping the boundaries of his or her oversight role.
So what can boards do to right the ship? Self-evaluations are one tool boards can use to rethink their board composition and address a director’s poor performance. But 51% of directors say their boards didn’t make any changes as a result of their last self-evaluation process.
2. The search for new blood
Most board members don’t look far beyond the boardroom for new directors. In most cases, they still turn to what they know: themselves. In fact, the most common source is fellow board member recommendations. This likely contributes to the “same old, same old” criticism that some observers have of boards, as well as concerns about a lack of board diversity.
Some also use search firms and management recommendations as sources for recruiting efforts. But a shift is starting to happen. Calls for board diversity and investor influence on board composition have prompted some boards to use less traditional sources to find new directors.
3. How beneficial is diversity on the board? It depends on who you ask
Nearly all directors (96%) agree that diversity is important. But how important it is and how much it helps depend on whom you ask. Female directors have a much stronger opinion about the benefits of board diversity than male directors. One issue in the debate is disagreement about whether there are qualified diverse board candidates to tap for director service. Virtually all female directors say there are sufficient numbers of such people, while only about two-thirds of male directors say the same. A contributing factor cited by some is a lack of diversity in the C-suite, where many boards look for potential director candidates. So some boards are using public databases, many of which can highlight diverse candidates, in their search for new board members.
In 2015, women made up 20% of S&P 500 boards, up only 5 percentage points in a decade. The majority of directors today say anywhere from one-fifth to one-half of the board should be female. But 10% of directors—overwhelmingly male—believe that the optimal percentage should be what it is today or less. This seems to suggest that it may take much longer than the government’s estimate of 40 years to reach gender parity on boards.
4. Differing views on where to find good, diverse board talent
One of the main difficulties in adding diversity to the board is that many boards look to current or former CEOs as potential director candidates. But only 4% of S&P 500 CEOs are female, and only 1% of the Fortune 500 CEOs are African-American. So where can boards find qualified diverse candidates? First, the pool of potential director candidates needs to expand. And then boards will have to look in different places. There are often many untapped, highly qualified, and diverse candidates a few steps below the C-suite—people who drive strategies, run large segments of the business, and function like CEOs.
But female directors think there are far more qualified diverse potential directors out there than male directors do. Still, boards are starting to use public databases in their talent search—an indication that they may be looking for diverse qualities in those new candidates.
5. Directors are less concerned about their workload
For years, we have heard how overloaded directors were with their board work. That no longer seems to be the case. Directors aren’t concerned with their workload, according to the vast majority of respondents to our survey. The same goes for committee work. But directors still spent an average of 248 hours on their board work in 2015.
6. Challenges to CEO succession planning
CEO succession is arguably the most important responsibility of the board. The CEO develops the company’s strategy, drives execution, and sets the “tone at the top.” The board has oversight of all of this—and having the right person at the helm is critical. But not all boards prioritize CEO succession planning, and about half of directors say they want to spend more time on the topic.
Directors say that the current CEO’s performance is the biggest challenge to more timely and effective CEO succession planning—the CEO’s good performance. But complacency with performance should not be a barrier to succession planning. In fact, the CEO turnover rate at the world’s largest 2,500 companies was 16.6% in 2015, the highest in 16 years, according to our Strategy& CEO Success study. While some of that turnover was planned or due to M&A activity, some of it wasn’t. Emergency situations happen—a family crisis, a scandal, illness, or even death—so companies and boards need to be prepared.
7. Does dialogue with investors really matter?
Direct engagement between boards and investors has become much more commonplace over the past few years. In fact, 54% of directors said their boards engage directly with their investors. And more directors are open to discussing topics that, just a few years ago, might have been off-limits—including board composition and company strategy. But not all directors think the engagement is useful—21% of directors said they didn’t receive any valuable insights from directly engaging with investors. Directors are also skeptical that engagement actually impacts investor behavior.
8. Investors flex their muscles about board composition
Companies face many challenges and disruptions in today’s changing business environment. So having a board made up of the right people with the right experience and expertise is critical. Many investors have become more vocal about who’s sitting in the boardroom. They want more information about a company’s director nominees, and they want boards to think about tenure and diversity. Directors have paid attention, and many have changed their board composition as a result.
9. Companies respond to investor demands about capital allocation
A company’s capital allocation plan gets to the very center of the long- versus short-term investment debate. And most investors agree that companies need to have a balanced capital allocation plan. But when the $170 billion of activist assets under management combines with the more than $1.4 trillion in cash on companies’ balance sheets, the picture changes. Companies sitting on excess cash often find themselves a target of activism—with activists pushing them to return that cash to shareholders. Other investors are also starting to voice opinions about how companies use their resources.
Directors (67%) are also open to discussing the company’s use of cash with investors. Discussing this with investors can provide confidence that the company is appropriately focusing on long-term value creation.
10. Are activists good for business? Most directors actually say yes
No company is immune to shareholder activism. Some activists go after companies with financial performance vulnerabilities, such as missing quarterly numbers, a stagnant stock price, or comparatively weak revenue growth. Others might target the board’s corporate governance issues. While many companies look for strategies to stay out of activists’ cross hairs, they may not be able to stay under their radar. As of September 2016, there were 263 activist campaigns in the US. Some critics charge that activists are too focused on short-term results, and 96% of directors agree. Even so, many directors concede that shareholder activism can ultimately be good for business, compelling companies to evaluate strategy and improve capital allocation.
Boards are also responding to the threat of shareholder activism. About half of directors said their board regularly communicated with the company’s biggest investors and used a stock-monitoring service to get updates on ownership changes. Actively engaging with investors and understanding who owns the company’s stock can help companies and boards stay a step ahead of activists.
The full report is available here.
1Spencer Stuart, 2015 U.S. Board Index, November 2015.(go back)
2US Government Accountability Office, Dec. 3, 2015. (go back)
3Catalyst, Women CEOs of the S&P 500, February 3, 2016.(go back)
4“McDonald’s CEO to Retire; Black Fortune 500 CEOs Decline by 33% in Past Year,” DiversityInc, January 29, 2015.(go back)
5NACD, 2015-2016 Public Company Governance Survey, 2015.(go back)
6FactSet, Cash & Investment Quarterly, December 21, 2015.(go back)
7FactSet with PwC analysis, September 2016.(go back)
October 27, 2016
Gender Differences in Executives' Access to Information
by A. Can Inci, H. Nejat Seyhun, M. P. Narayanan
Editor's Note: H. Nejat Seyhun
is Professor of Finance at University of Michigan Ross School of Business. This post is based on a forthcoming article
authored by Professor Seyhun; A. Can Inci
, Professor of Finance at Bryant University; and M.P. Narayanan
, Robert Morrison Hoffer Professor of Business Administration at University of Michigan Ross School of Business.
As more women enter the upper echelons of large corporations (according to Catalyst, the proportion of CEOs in Fortune 500 firms has increased from 0.4% in 1998 to 4.6% in 2015 and the proportion of board members has increased from 9.6% to 19.9%), the natural question that arises is whether women executives have equal access to material and relevant information as their male counterparts. Clearly, establishing and comparing men’s and women’s access to relevant corporate information is difficult. We use a novel approach to explore this question. Our proxy for executives’ corporation-specific knowledge is the profitability of insider trading. To the extent executives have access to material, non-public information about their own corporation, they will be able to trade profitably.
Our article is the first to study gender differences in access to information by investigating insider trading behavior by top executives. The established fact that senior executives earn abnormal profits when trading in their own firm’s stock (Seyhun (1986), (1992), (1998)) implies they possess material information. They may have access to the information through formal (in the course of their normal responsibilities) or informal (by being part of networks within or outside the firm) means. We can, therefore, establish whether women executives in similar roles have equal access to formal and informal channels of information as male executives by examining the gender differences in profitability of insider trades.
Using insider trading data of top executives, board members, and other senior officers from 1975 to 2012, we find that male executives earn almost double the profit of female executives. Over the 50 days after a trade male executives earn 3.2% more than the market return while the corresponding figure for female executives is only 1.6%. We also find that on average male executives trade more (as measured by number of shares traded, dollar value of trades, or number of trades) in their firm’s shares than females. Significantly, the gender differences in trading activity and profitability hold regardless of the title of the executive.
The significant gender differences in the extent and profitability of insider trading could be due to dispositional factors (e.g., confidence, risk-aversion) or situational factors such as limited access to information arising from the dynamics created by structural issues, particularly the predominance of males in top corporate jobs. The literature on gender differences suggests that there are systematic dispositional differences between males and females: males are more overconfident and less risk-averse than females. The literature on trading behavior suggests that the more overconfident and the less risk-averse investors are, the more they will trade and the greater will be their expected profits. The implication, therefore, is that males will trade more and hence earn greater expected profits due to differences in dispositional factors. Using a theoretical model, we show that traders with superior information ought to earn greater profits once we adjust for trade size regardless of dispositional factors. We find evidence consistent with this implication thus ruling out the possibility that gender differences in trading and profitability are driven solely by dispositional factors and provide evidence of male executives’ informational advantage.
The conclusion that there are gender differences in access to information can be reconciled with the empirical finding that gender differences exist even within similar title categories only if formal titles are not accurate proxies of access to information. There is the view among researchers that female executives do not have the same access to information as males regardless of their titles and ranks, especially in firms where they are underrepresented (see Kanter (1977a), (1977b)) and Lyness and Thompson (2000), for example). These researchers argue that the difference in access to information by female executives of equivalent titles is driven by largely by their exclusion from informal networks of their male peers (Davies-Netzley (1988), Moore (1988), Kanter (1977b)) and in male-dominated work environments, females are excluded from informational networks. Since males are significantly over-represented in senior positions in general, this is a likely explanation for our results. To verify, we check if the gender difference is lower in firms in which males as are not as dominant in numbers, by using the proportion of trades by males as a measure of gender dominance. In firms in which the proportion of female trades is greater than the 90th percentile of the distribution of female trade proportions in all firms, gender differences in profitability are not significant, controlling for position. Thus we conclude that female executives suffer an informational disadvantage despite their titles in firms where they form a small minority, but that disadvantage is attenuated when their representation increases.
There are several implications of these results. First, we provide compelling evidence to support the need for a critical mass of females in decision making roles at the senior level in firms. Our evidence that the information gap is greatest at the board director level implies that token representation will not allow female directors to be very effective as corporate board members. Countries such as Norway, Spain, France, Iceland, Belgium, and Germany seem to recognize this and have instituted quotas ranging from 30 to 40% for female directors on corporate boards.
Second, our article suggests that lack of equal access to information combined with the informal network effect makes it difficult for even qualified female executives to vie with males when it comes to promotion, which in turn results in skewed representation of females in position of greater responsibility and power. This creates a vicious cycle by exacerbating the network effect. Our results suggest that the problem is greatest at the lowest title in our database, at the senior officer level, which is possibly why female representation is so low at the top executive level.
Finally, our results raise issues regarding another contentious topic, namely gender differences in compensation. If one views insider trading profits and direct compensation (salary and incentive compensation) as substitutes (Roulstone (2003), Denis and Xu (2013)), one might argue that it is not merely sufficient that there be gender parity in direct compensation, but that female executive of equivalent rank and responsibilities ought to be paid more. From this point of view female executives are at double disadvantage: the weaker informal networks not only prevent them from accessing material information to benefit from insider trading information, but also compromises their power to negotiate for higher direct compensation.
The full article is available for download here.
Davies-Netzley, S. A. “Women Above the Glass Ceiling: Perceptions on Corporate Mobility and Strategies for Success.” Gender and Society, 12 (1988), 339–355.
Denis, D., and J. Xu. “Insider Trading Restrictions and Top Executive Compensation.” Journal of Accounting and Economics, 56 (2013), 91–112.
Kanter, R. M. Men and Women of the Corporation. New York, NY: Basic Books (1977a).
Kanter, R. M. “Some Effects of Proportions on Group Life: Skewed Sex Ratios and Responses to Token Women.’ American Journal of Sociology, 82 (1977b), 965–990.
Lyness, K. S., and D. E. Thompson. “Climbing the Corporate Ladder: Do Female and Male Executives Follow the Same Route?” Journal of Applied Psychology, 85 (2000), 86–101.
Moore, G. “Women in Elite Positions: Insiders or Outsiders?” Sociological Forum, 3 (1988), 566–585.
Roulstone, D. “The Relation Between Insider-Trading Restrictions and Executive Compensation.” Journal of Accounting Research, 41 (2003), 525–551.
Seyhun, H. N. “Insiders’ Profits, Cost of Trading, and Market Efficiency.” Journal of Financial Economics, 16 (1986), 189–212.
Seyhun, H. N. “The Effectiveness of the Insider Trading Sanctions.” Journal of Law and Economics, 35 (1992), 149–182.
Seyhun, H. N. Investment Intelligence from Insider Trading, Cambridge, MA: MIT Press (1998).
October 27, 2016
Responding to a Negative Say-on-Pay Outcome
by David Whissel, MacKenzie Partners
David Whissel is Vice President and Director of Corporate Governance at MacKenzie Partners, Inc. This post is based on a MacKenzie Partners publication.
In the fifth full season of the advisory vote on executive compensation (“say-on-pay”), average shareholder support for these proposals remains high—in excess of 91% so far in 2016, according to our research. However, although there have been slightly fewer “failed” votes this year, more than 10% of issuers receive a negative recommendation from at least one of the proxy advisors, and many more spend the early part of the proxy season scrambling to deal with executive compensation issues preemptively to ensure that they do not develop into a negative outcome.
For those companies that believe historical high levels of say-on-pay proposal support makes them less susceptible to shareholder opposition, consider this: More than 25% of the companies with “failed” say-on-pay votes in 2016 received support in excess of 90% the previous year, suggesting that performance issues, substantial one-time awards, and other unique circumstances can strain the patience of investors even if the underlying compensation plan is sound. As institutional investors and proxy advisory firms continue to enhance their scrutiny on executive compensation, it is important for issuers to be prepared for a potential negative outcome and to have a plan in place to respond accordingly.
Fortunately, while there is no one-size-fits-all playbook for navigating a potential negative outcome, our experience in advising clients on corporate governance and executive compensation issues suggests that there is a core set of tried-and-true response tactics that tend to be effective with shareholders and the proxy advisory firms. By planning ahead and tailoring the appropriate response to the particular facts and circumstances of each situation, issuers can overcome the setback of a negative recommendation and earn the support of their investors.
Preparing for Say-on-Pay
Run the Numbers. Because of the sheer volume of say on pay proposals that they have to deal with, proxy advisors and many investors lean heavily on quantitative tools to promote efficiency. Though the mechanics of each screening tool will vary, they often reference substantially similar data points (e.g., total shareholder return).
Issuers should work with their compensation consultants, lawyers, in-house HR and proxy solicitors/corporate governance advisors to determine whether they are at risk of triggering any of the proxy advisory firms’ pay-for-performance alignment tests. Be advised, however, that passing a proxy advisor’s quantitative screen does not necessarily guarantee a favorable recommendation. From 2012 through 2016, 3% of issuers that received a “Low Concern” rating on ISS’ P4P Alignment Test ultimately received an “Against” recommendation; for companies that registered “Medium Concern,” that figure jumped to 22%. Once a company knows that its pay practices will likely be subject to heightened scrutiny, it can begin crafting an investor communications strategy that addresses these potential concerns.
Prepare Your Proxy. Despite an increase in one-on-one dialogue between issuers and shareholders, the proxy statement remains an important communication tool. For some issuers, it is the primary means of showcasing their executive compensation philosophy to shareholders. As a result, issuers are increasingly using innovative features, such as eye-catching executive summaries and infographics. On the other hand, some companies still treat the proxy as a compliance document, and miss the opportunity to sufficiently tell their executive compensation story.
When used effectively, the proxy statement can draw a link between pay and performance, and can explain how a company’s compensation plan furthers its strategic goals. It can serve as a foundation for ongoing dialogue, and can also preempt shareholder concerns by putting potentially problematic pay practices in the right context. And for some smaller companies who may not have the same level of access to shareholders as their larger counterparts, it may represent the primary form of communication with the investor community on compensation issues.
Tell Your Story. The ubiquity of say-on-pay has engendered significant convergence of executive compensation practices over the past several years such that many plans now adhere to a familiar template. The fact remains, though, that the universalized analysis employed by the proxy advisory firms is somewhat at-odds with the notion that each issuer is uniquely positioned to develop an executive compensation structure that is appropriate for its particular long-term strategic plan.
For those issuers whose circumstances render them an outlier—a leadership change, for instance—it is important to craft a message that will resonate with shareholders. In most cases, simpler is better when it comes to corporate messaging, as investors often have limited time to digest arguments and cast their votes accordingly, particularly during the busy proxy season.
Start Shareholder Outreach Early. While the recommendations of the major proxy advisory firms often come in approximately three weeks before an annual meeting, that timeframe is frequently shorter during the busy proxy season, leaving unprepared issuers scrambling to respond to an “Against” recommendation. Fortunately, many potential executive compensation issues and negative recommendations can be anticipated, allowing issuers to plan ahead and begin their shareholder outreach early.
Leading up to an annual meeting, some shareholders prefer not to engage with issuers until the proxy advisory firms come out with their reports. Others, however, are more than willing to have a dialogue during the proxy solicitation period as long as the proxy statement has been filed, and many of the big funds are happy to speak with issuers during the off-season.
By understanding their shareholder base, companies can plan their engagement efforts accordingly, allowing for greater flexibility in the event of a negative recommendation. Developing relationships with investors in the off-season can be critical, as it allows issuers to communicate their pay-for-performance philosophy without being defensive or reactionary. And, by planning ahead and staggering in-season engagement over the course of a month (or more) rather than a couple weeks, issuers can avoid the “last minute shuffle” and ensure that all shareholders receive adequate time and attention from the board and senior management.
Responding to an “Against” Recommendation
Gauge Appropriate Volume, Tone, and Audience of Response. A negative recommendation from a proxy advisory firm can be frustrating, particularly if that recommendation is predicated on a factual error or a misunderstanding. However, issuers should generally avoid adopting a defensive or accusatory posture and openly criticizing the proxy advisory firm and its compensation evaluation model. Instead, it is better to counter the proxy advisory firms’ arguments through the careful presentation of countervailing evidence and/or a compelling “story.”
Issuers should also consider the audience of the response. The proxy advisory firms are reluctant to change their initial recommendations unless they are based on material factual or interpretive errors, which are relatively rare. Companies are usually better off spending time engaging with shareholders and addressing the issues directly in these conversations. Though the proxy advisory firm recommendations are influential, most large institutional shareholders have their own guidelines and are tired of hearing why the proxy advisors got it wrong.
Consider a Supplemental Filing. A supplemental proxy filing can be useful in responding to a negative proxy advisory firm recommendation for a variety of reasons. The filing can clarify or draw attention to issues that may not have been adequately explained in the CD&A. Some of these reasons, however, are more subtle. A supplemental filing can provide “cover” and a public record for proxy voting personnel or portfolio managers to override a proxy advisory firm’s recommendation or make their case before a proxy committee. And, a supplemental filing can provide a foundation for shareholder engagement by providing the appropriate context and focusing the discussion on the core compensation issues.
An additional reason for drafting a supplemental filing is that it can be helpful in preparing for next year’s say-on-pay vote. The simple act of looking at your executive compensation plan with a hyper-critical eye and responding to criticism can help uncover possible deficiencies and identify strengths. The information learned during this exercise can then be applied in the future to optimize plan structure, refine presentation in the proxy statement, and guide interactions with shareholders.
Decide Whether to Emphasize Facts or Philosophy. When opting to respond directly to the criticisms of the proxy advisors, there are two general paths an issuer can take: i) a facts-based approach, which seeks to counter the arguments of the proxy advisors though the use of data; or, ii) emphasize its “story,” explaining why its pay-for-performance philosophy aligns with its business strategy.
Either or both approaches may be appropriate depending on the specific facts and circumstances facing the company. For example, a company undergoing a leadership change might adopt a story-based approach, emphasizing the fact that theirs is a special case and carefully explaining why each compensation decision made with respect to the former and new CEO is consistent with its overall pay-for-performance philosophy. On the other hand, a company that disputes its inclusion in a proxy advisory firm’s GICS code-based peer group might do so on the basis that only a small portion of its revenue is derived from a particular segment, or that certain unique factors justify its selection of an “aspirational” peer group.
In order to ensure consistency, the proxy advisors’ policies are generally inflexible by necessity, so issuers should not expect to change their conclusions even with the most convincing and artfully written supplemental proxy filing. Issuers should generally focus their efforts on their shareholders instead.
Highlight the Positives. A point-by-point refutation of the proxy advisory firms’ criticisms can be helpful in correcting misinformation, but should not be the sole focus of supplemental filings. Instead, much of an issuer’s response strategy should emphasize the positive elements of its executive compensation plan and explain how they contribute to a healthy pay-for-performance culture. This should involve a discussion of adherence to compensation “best practices,” such as a robust clawback policy, as well as an explanation of why an issuer’s compensation plan is the optimal one for its particular industry and is aligned with long-term shareholder value.
Some of the practices commonly highlighted include:
- A track record of consistently high (95% or more) shareholder support;
- A significant majority of pay at-risk;
- A close link between pay and performance, as demonstrated through objective performance metrics;
- A long-term perspective, through the use of equity awards;
- Rigorous minimum executive stock ownership guidelines;
- A robust clawback policy;
- Anti-hedging and anti-pledging policies;
- Restrictions on option repricing without shareholder approval;
- Lack of tax gross-ups upon a change in control; and
- Double-trigger change in control provisions.
This list is not exhaustive by any means, but encompasses the basic “best practices,” many of which have become commonplace over the past five years.
Engage Effectively. While the negative proxy advisory firm recommendation may sting, the shareholder vote is what matters, so getting your message in front of investors is critical. Proxy solicitors can be instrumental in these situations, helping to identify which shareholders can be swayed, crafting a communications strategy based on the preferences and policies of each shareholder, arranging meetings with proxy voting personnel and portfolio managers, and projecting potential voting outcomes.
In preparing for shareholder engagement, it’s important for issuers to determine in advance the personnel that will spearhead the outreach efforts. Different shareholders and topics of discussion will require different representatives and different skill sets. For example, an issuer that has received a negative recommendation from the proxy advisory firms will generally be expected to include the chair or a member of the Compensation Committee in dialogue with shareholders, as investors will want to discuss the thought process behind certain compensation decisions.
It is likewise important to determine who to engage with. At some institutions, portfolio managers make the bulk of the proxy voting decisions. Other institutions rely on a proxy voting committee, and the larger institutions may have specific in-house corporate governance personnel to analyze and cast votes. Every investor has a slightly different approach to proxy voting, and it is important for issuers and their advisors to be mindful of these differences to ensure that engagement efficiently reaches the key decision-makers at each firm.
Planning Ahead for Next Year
Make Changes, If Necessary. The shareholder communications feedback loop would be incomplete without responsive action, and it’s easy to see why. It would likely reflect poorly on management and the board if they listened to investors’ and proxy advisory firms’ concerns, but did nothing. Issuers that fail to generate an adequate response to a negative outcome are likely to face similarly low levels of shareholder support the following year, and also risk having shareholders vote against the reelection of Compensation Committee members.
What exactly the appropriate action should be will vary by issuer. For some, additional disclosure and clarification will be enough. For issuers faced with a negative proxy advisory firm recommendation and/or voting outcome, deeper structural changes to executive compensation may be necessary to avoid a similar issue in the future. Issuers should carefully consider which shareholder-driven changes align with its executive compensation philosophy and thoughtfully discuss the consequences of those changes with their outside counsel, compensation consultant, proxy solicitor, and other advisors.
Don’t Forget the Proxy Advisors. Direct dialogue with shareholders should be the focus of any off-season engagement efforts. However, some issuers use the off-season as an opportunity to engage with the proxy advisors as well. The research teams of the proxy advisory firms are inundated during proxy season, and it can be nearly impossible for even the largest corporate issuers to secure an audience during the traditional proxy solicitation period in the spring. During the off-season, however, the major proxy advisory firms generally welcome the chance to engage on a variety of compensation and governance issues. This can represent an important opportunity for companies to develop relationships with the analysts at proxy advisory firms, and to gain additional perspectives on their policies.
Disclose Engagement. An effective shareholder outreach program is, to some extent, its own reward, as the benefits gained (i.e., insight into investors’ policies and concerns) can be invaluable. But in order to receive “full credit” for off-season engagement efforts, issuers should carefully disclose the details of the program in the following year’s proxy statement.
The most fulsome disclosures typically describe how many shareholders the company contacted, how many responded, the topics of discussion, and any actions taken in response. For investors, the general rule around disclosure is, “The more, the better,” so companies should consider adding a detailed description of shareholder concerns (“What We Heard”) and any corporate governance enhancements that followed (“What We Did”), particularly if the previous year’s say-on-pay support was less than 75%.
For issuers and their boards that devote a significant amount of time every year to calibrating their executive compensation plan, a negative recommendation from one of the proxy advisory firms can be demoralizing, but a failed vote should not necessarily be viewed as a foregone conclusion. Our research suggests that the average impact of a negative recommendation from ISS is approximately 25%, but that the overwhelming majority of say-on-pay proposals that receive an “Against” recommendation from ISS still pass.
A winning shareholder communications strategy can and often does overcome a negative proxy advisory firm recommendation and prevent a weak or failed say-on-pay vote. A strong shareholder engagement plan enables issuers to convey their executive compensation philosophy to investors in a compelling manner and, importantly, understand concerns that they can address in the off-season.
Ultimately, consistent and meaningful dialogue is the best way to strengthen relationships between issuers and shareholders, and these outreach efforts can pay dividends in the event of a negative proxy advisory firm recommendation or other contentious voting situation.
1 “2016: United States Proxy Season Review—Compensation.” Institutional Shareholder Services. September 22, 2016. Available for ISS subscribers here.(go back)
October 27, 2016
SEC Proposes "Universal Ballot"!
by John Jenkins
Yesterday, the SEC proposed amendments to the proxy rules that would require parties in a contested election to use universal proxy cards that would include the names of all director nominees. The proposal would permit shareholders to vote by proxy for their preferred combination of board candidates – as they could do if they attended the meeting & voted in person. Here’s the 243-page proposing release.
The proposed rules would:
– Allow shareholders to vote for the nominees of their choice by requiring proxy contestants to provide shareholders with a universal proxy card including the names of both management & dissident nominees.
– Enable parties to include all nominees on their universal proxy cards by changing the definition of a "bona fide nominee" in Rule 14a-4(d).
– Eliminate the Rule 14a-4(d)(4)’s "short slate rule," since dissidents would no longer need to round out partial slates with management’s nominees.
– Require proxy contestants to notify each other of their respective director candidates by specific dates.
– Require dissidents to solicit shareholders representing at least a majority of the voting power of shares entitled to vote on the election of directors.
– Require proxy contestants to refer shareholders to the other party’s proxy statement for information about that party’s nominees and inform them that it is available for free on the SEC’s website.
– Require dissidents to file their definitive proxy statement with the SECby the later of 25 calendar days prior to the meeting date or five calendar days after the registrant files its definitive proxy statement.
The SEC also proposed amendments to Rule 14a-4(b), which would require proxy cards to include an "against" voting option for director elections when that vote has a legal effect, & also enable shareholders to "abstain" in a director election governed by a majority voting standard.
The ability to provide a "withhold" voting option when an "against" vote has legal effect would be eliminated. In addition, the proposed amendments to Item 21(b) of Schedule 14A would require disclosure about the effect of a "withhold" vote in an election of directors.
SEC Modernizes Rule 147 – & Rule 505 of Reg D Goes Poof!
The SEC also adopted amendments to Rule 147’s safe harbor for intrastate offerings & to Rule 504 of Regulation D. Here’s the 212-page adopting release.
The changes to the Rule 147 safe harbor include amendments updating Rule 147 & adoption of a new Rule 147A.
Amended Rule 147 will remain a safe harbor under Section 3(a)(11) of the Securities Act, so that issuers may continue to use the rule for offerings relying on current state securities law exemptions.
New Rule 147A – which is based on the SEC’s general exemptive authority under Section 28 of the Act – will be identical to Rule 147, except that it would not condition the safe harbor on Section 3(a)(11)’s requirement that offers be made only to in-state residents & would permit companies to be organized out-of-state. Sales would continue to be permitted only to in-state residents.
The amendments to Regulation D are intended to facilitate regional offerings. The final rules amend Rule 504 to increase the amount of securities that may be offered and sold from $1 million to $5 million. The rules also apply "bad actor" disqualifications to Rule 504 offerings. In light of the changes to Rule 504, the final rules repeal Rule 505 of Regulation D.
Amended Rule 147 and new Rule 147A will be effective in 150 days; revised Rule 504 will be effective in 60 day; and the repeal of Rule 505 will be effective in 180 days – all timed from publication in the Federal Register.
My Favorite Deal: Take Me Out to the Ballgame
Watching the Indians and Cubs in the World Series brings back a lot of memories – not only of baseball, but of my favorite deal. Most sports fans would give a kidney to spend a couple of months hanging out with – or just around – their favorite teams. I had that chance in 1998, when I was part of the underwriters’ counsel team for the Cleveland Indians’ initial public offering.
Working on that deal is still the most fun I’ve ever had practicing law – and there were plenty of legal challenges as well. The best part of the deal was that we were in the loop on trades, contract extensions, etc. well before everybody else was. You can keep your million dollar stock tips – this is the kind of material non-public information that I want!
Corp Fin took an interest in our deal too – or at least a couple of the reviewers did. On the day the deal priced, we’d asked to go effective at 4:00 pm, but by 4:30, we still hadn’t heard from the reviewer. I called my counterpart at company counsel, and she placed a couple of calls to the Staff to check on the status.
Finally, she called me around 4:45 to let me know that she’d spoken with the SEC, and we were effective. She was laughing when she told me this. When I asked why, she said the reviewers were apologetic for not calling sooner – but they had been distracted arguing about who was the best right hand power hitter in the American League.
The deal was criticized at the time, but investors got a pretty good return when the Dolan family purchased the team less than two years later – the 1998 IPO price was $15.00, and the team sold in early 2000 for more than $22.00 per share. However, there was another investment angle to the IPO – the memorabilia factor. I confess to setting aside some prospectuses for myself – and that turned out to be a pretty good investment too.
– John Jenkins
October 27, 2016
Derivative Suit Against Wynn Resorts for Alleged Quid Pro Quo Bribe Dismissed
by John Ikard
In La. Mun. Police Emps.’ Ret. Sys. V. Wynn, 829 F.3d 1048 (9th Cir. 2016) the United States Court of Appeals for the 9th Circuit affirmed the district court’s holding, dismissing the shareholders (“Plaintiffs”) complaint against Wynn Resorts, Limited, a Nevada Corporation (“Wynn Resorts”) and eleven individuals who sit or sat on the board of directors (“Board”) (collectively, “Defendants”). The 9th Circuit ruled the district court found Plaintiffs failed to show why a demand to the Board to bring a derivative suit on behalf of the corporation would be futile.
According to the allegations in the complaint, Wynn Resorts attempted to execute a lease for a new resort and casino with the city of Macau, China (“Government”), but the lease application sat idle for five years. At this time, the Board authorized a donation to the University of Macau and its Development Foundation totaling $135 million over a ten-year period (“Donation”). The Development Foundation “is presided over by many of the same government officials who have substantial control over gaming matters and real estate in Macau.” Following the Donation, the Government accepted Wynn Resorts’ application for a second lease.
Both the Securities and Exchange Commission and the Nevada Gaming Commission Board investigated the Donation, but neither brought an action or found a violation of the law. Meanwhile, a former Director, Kazuo Okada, demanded a separate investigation into the Donation. An investigator retained “hired” by Stephen Wynn, the Chairman and CEO (“Wynn”), concluded that Okada was “unsuitable” to own shares in Wynn Resorts. As a result, the Wynn Resorts redeemed his shares.
Plaintiffs considered the Donation as a “quid pro quo“ bribe. Specifically, they alleged the Board breached its fiduciary duties and committed corporate waste by approving the Donation. In doing so, the Donation caused Wynn Resorts to “incur legal expenses and be exposed to potential liability.” Plaintiffs further alleged Defendants breached their fiduciary duties by redeeming Okada’s shares because such action had no legitimate purpose and merely encumbered Wynn Resorts with a higher debt load.
Before a derivate suit can be brought, the shareholders must either make a demand on the board of directors or explain why such demand would be futile. “Demand futility” must meet the heightened pleading standard set out in the Federal Rules of Civil Procedure. Shareholders must state with particularity the efforts to obtain make demand or the reasons for not doing so. Plaintiffs made no demand and argued futility for three reasons: (1) a majority of the Board was “beholden” to Wynn; (2) the Board could not be impartial because they were subject to personal liability for approving the Donation; and (3) the Board could not be impartial due to a reasonable doubt as to whether its decision to redeem Okada’s shares would be given the benefit of the business judgment rule.
First, the court addressed whether the non-interested directors lacked sufficient independence. To lack Independence, a director must have material ties to the interested party such that the director cannot objectively fulfill his or her fiduciary duties. The material relationship may be personal or financial. In examining the relationships between Wynn and the non-interested directors, the court found that none were sufficient to deprive the directors of their independence. The allegations included, among other things, assistance by Wynn of a director in his political campaigns, various business connections between a director and Wynn and Wynn’s family (with the court noting that the social ties failed to show that the relationships were “as thick as blood relations”), and the receipt by a director of an ownership stake in Wynn Resorts.
Second, the court rejected the allegation that the directors feared that they would face personal liability for the Donation. Under Nevada law, to be subject to liability, the circumstances required the “intentional misconduct, fraud or a knowing violation of law” on the part of the director. The court noted that the complaint acknowledged that the Board had obtained a “legal opinion blessing” for the transaction and that the Nevada and SEC investigations ended without any enforcement proceedings. Moreover, to the extent the complaint could be read to allege negligence, “Nevada law required “knowledge or intent before directly liability” could attach.
Third, the court concluded that shareholders had not sufficiently alleged reasonable doubt about the availability of the business judgment rule. With respect to the redemption of the Okada shares, Plaintiffs alleged that the conversion of Okada from an equity to a debt holder provided no protection for the company’s gaming license. The court disagreed and pointed to state law which treated equity and debt holders differently. “As a consequence, it does not follow logically, and it is not reasonable to infer, that the board was acting dishonestly, in bad faith, or without an informed basis—or otherwise had no legitimate business purpose—when it voted to convert Okada's shares from equity to debt in response to the report of former FBI director Freeh.”
Accordingly, the court affirmed the district court’s holding dismissing the complaint.
The primary materials for this case may be found on the DU Corporate Governance website.
CLS Blue Sky Blog: Paul Weiss discusses Applying the Business Judgment Rule to a Going-Private Transaction in Delaware
CLS Blue Sky Blog: The Real Problem with Appraisal Arbitrage
The Harvard Law School Forum on Corporate Governance and Financial Regulation: 2016 Annual Corporate Directors Survey
The Harvard Law School Forum on Corporate Governance and Financial Regulation: Gender Differences in Executives' Access to Information
The Harvard Law School Forum on Corporate Governance and Financial Regulation: Responding to a Negative Say-on-Pay Outcome
CorporateCounsel.net Blog: SEC Proposes "Universal Ballot"!
Race to the Bottom: Derivative Suit Against Wynn Resorts for Alleged Quid Pro Quo Bribe Dismissed