Corporate Governance

WOMEN IN CORPORATE GOVERNANCE: HALFWAY UP FROM NOWHERE?

Posted on February 04, 2010
WOMEN IN CORPORATE GOVERNANCE: HALFWAY UP FROM NOWHERE?  Not quite.  Halfway?  Try 3 percent.  As late as 1997, there were no female CEOs in the Fortune 500.  Jill Barad at Mattel Toy was the first. Women are, or are soon to be, over 50 percent of our nation's workforce...

Doug Branson Contributes

Posted on February 04, 2010
We are happy to have a post today from Douglas Branson, W. Edward Sell Chair in Business Law, University of Pittsburgh.  Doug received his B.A. from the University of Notre Dame and his J.D. from Northwestern University. He has also earned an LL...

Bader v. Blankfein: The Demand Requirement Under the Proxy Rules

Posted on February 03, 2010
In Bader v. Blankfein, No. 09-0309-cv (2d Cir. Dec. 14, 2009), Bader brought a derivative action on behalf of nominal-defendant Goldman Sachs Group, Inc. ('Goldman') against Blankfein and other named director-defendants (collectively 'Blankfein').  Bader alleged Blankfein violated section 14(a) of the Securities and Exchange Act of 1934 ('1934 Act') and SEC regulations by negligently issuing a proxy statement that lacked requisite disclosures and contained materially false statements and omissions...

The SEC and Climate Change Disclosure: Part 3

Posted on February 03, 2010
The other dissenting voice on the interpretive release about climate change disclosure came from Commissioner Casey.  Her objection foremost was little more than a sop to special interests.  She questioned "the timing of this release and the priorities underlying our dedication of valuable staff resources to this release...

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The SEC and Climate Disclosure: Part 2

Posted on February 02, 2010
Requiring disclosure of climate change matters when they will have a material effect on the company would ordinarily seem uncontroversial.  Yet the release drew two dissents, one from Commissioner Paredes and the other from Commissioner Casey. Paredes objected to several things (including his belief there were more pressing priorities before the Commission and, as a result, "now is not the time for this agency to consider climate change disclosure...

The SEC and Climate Disclosure: Part 1

Posted on February 02, 2010
The Commission approved interpretive guidance on disclosure related to climate change.  The release hasn't yet been issued but the notice of the development provided some insight into the guidance.  The examples set out in the press release include: Impact of Legislation and Regulation: When assessing potential disclosure obligations, a company should consider whether the impact of certain existing laws and regulations regarding climate change is material...

Nacchio Motion for New Trial Dismissed: Szeliga Deposition Brings Nothing New to the Table

Posted on February 01, 2010
The Race to the Bottom covered the criminal trial of ex-Qwest CEO Joseph Nacchio ('Nacchio').  Since his conviction, this blog has covered the appeal which overturned his conviction, the replacement of Judge Nottingham, the en banc rehearing which reinstated his sentence, and Nacchio's petition for certiorari to the Supreme Court...

The SEC and the Consequences of Divisiveness

Posted on February 01, 2010
Anyone who studies the history of the SEC knows that most decisions are made by consensus.  Those days are over. The difficulty in reaching consensus can be worsened by the existence of representation of both parties on the body.  The five person commission is prohibited by law from having more than three persons of the same party...

Shock and Awe: From Massachusetts to the Obama ?Volcker Rule? (Part 10 of 10)

Posted on January 30, 2010
Given that this is the final part of this 10 part series, it is appropriate to summarize the key take-aways from the visits with Senate Banking Committee members and staff.  They are organized by the encouraging observations, causes for concern, and the open questions...

Shock and Awe: From Massachusetts to the Obama ?Volcker Rule? (Part 9 of 10)

Posted on January 30, 2010
Meeting with Staff for Tennessee Senator Bob Corker (R) Defensive Posture: Darlene Rosenkoetter was mostly answering our questions, not inquisitive, not engaged in thinking through the issues. Obviously a smart person, it appeared she was only behaving this way because she was in defensive mode...

Shock and Awe: From Massachusetts to the Obama ?Volcker Rule? (Part 7 of 10)

Posted on January 29, 2010
Meeting with Oregon Senator Jeff Merkley (D) and Andy Green: Proprietary Trading: As Senator Merkley had only 15 minutes (before leaving for a press conference), we addressed what interested him. This was proprietary trading. He wanted to understand how this was central to the financial crisis...

Shock and Awe: From Massachusetts to the Obama ?Volcker Rule? (Part 8 of 10)

Posted on January 29, 2010
Meeting with Michelle Maiwurm, Staff for Virginia Senator Mark Warner (D): Less Engagement: Unlike the first two meetings where the staff proactively began the discussion with pointed questions and were very prepared to engage in this issues, Michele made clear that she was either not authorized to say much or that she was not knowledgeable of the details...

Shock and Awe: From Massachusetts to the Obama ?Volcker Rule? (Part 4 of 10)

Posted on January 28, 2010
Early in the morning of January 21, news appeared that President Obama was prepared to announce a plan to get tough on the banks. At a press conference in the late morning, the President announced his plan, known as the "Volcker Rule." Battle in the White House:According to my around-the-Capitol sources, the President named his approach after economic adviser and former Federal Reserve Chair, Paul Volcker after a fierce debate in the White House...

Shock and Awe: From Massachusetts to the Obama ?Volcker Rule? (Part 3 of 10)

Posted on January 28, 2010
Prior to our visit, financial regulatory reform had progressed in the House, but stalled in the Senate. House Reform Bill Passed in DecemberIn December of 2009, the full House of Representatives passed by a vote of 223- 202, H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009...

Shock and Awe: From Massachusetts to the Obama ?Volcker Rule? (Part 6 of 10)

Posted on January 28, 2010
What follows is a more detailed synopsis of the content of our discussions during our January 21st meetings with members of the Senate Banking Committee: Massachusetts Senate Election: The meeting began with Harry describing the financial reform legislation as being in a "weird holding pattern due to Massachusetts"- meaning Tuesday's special election of Scott Brown...

Shock and Awe: From Massachusetts to the Obama ?Volcker Rule? (Part 5 of 10)

Posted on January 28, 2010
is Anyone Listening to Ed Yingling?

Shock and Awe: From Massachusetts to the Obama ?Volcker Rule? (Part 1 of 10)

Posted on January 27, 2010
On Thursday January 21st, we met with members of the Senate Committee on Banking, Housing and Urban Affairs (referred to herein as the 'Senate Banking Committee.')  The purpose was to gather information on the status of financial reform legislation and to provide expertise and analysis where asked...

Shock and Awe: From Massachusetts to the Obama ?Volcker Rule? (Part 2 of 10)

Posted on January 27, 2010
The Need for Financial Regulatory ReformBoom and bust cycles are not necessary attributes of a healthy, stable economy. After the New Deal legislation was enacted following the Great Crash of 1929, the United States managed to exist for nearly 50 years without a major panic or crash...

Chiquita Reaches Proposed Settlement

Posted on January 26, 2010
We have been following the Chiquita Brands International, Inc. ('Chiquita') case since August 2007.  The last post concerned plaintiffs' opposition to Chiquita's motion to dismiss.  The parties to the suit recently informed the court that they have settled the case...

The Securities Litigation Uniform Standards Act: The Sixth and Ninth Circuit?s Adopt a Broad Reading (Securities Issues)

Posted on January 26, 2010
In Proctor v. Vishay Intertechnology Inc., 581 F.3d 305 (6th Cir. 2009) and Segal v. Fifth Third Bank, N.A., No. 07-16527, 2009 WL 3260535 (9th Cir. Oct. 9, 2009), two Federal Court of Appeals addressed the scope of the Securities Litigation Uniform Standards Act (the  'SLUSA'), each holding that the statute precludes class action law suits brought in state court...

City of Westland Police v. Axcelis Technologies: The Appeal (Part 4) (The Prospect of Federal Preemption)

Posted on January 25, 2010
The brief filed by shareholders also noted the risk of preemption should the Supreme Court affirm the Chancery decision.  Shareholders will be forced either to compel companies to eliminate the policies, or to look elsewhere for authority to get corporate directors to justify their decisions...

City of Westland Police v. Axcelis Technologies: The Appeal (Part 3) (A Guest Appearance of TheRacetotheBottom)

Posted on January 23, 2010
TheRacetotheBottom was mentioned in the appeal.  As the brief states: This Court has described the 'credible basis' standard as 'the lowest possible burden of proof.' Seinfeld, 909 A.2d at 123. Nevertheless, the standard has been harshly criticized as eliminating Section 220 as a viable option for shareholders seeking to investigate corporate mismanagement...

City of Westland Police v. Axcelis Technologies: The Appeal (Part 1)

Posted on January 22, 2010
Axcelis ought to have been a simple case that generated little controversy.  Shareholders defeated three directors under a majority vote provision.  The three directors dutifully submitted their resignation letter which the board declined to accept...

City of Westland Police v. Axcelis Technologies: The Appeal (Part 2)

Posted on January 22, 2010
Plaintiffs in their brief have made a very straightforward argument.  First, plaintiffs challenged the standard used by the Chancery Court in dismissing the inspections request. By rejecting Plaintiff's 220 demands because it did not feel that the Plaintiff presented sufficient 'evidence' of the Axcelis Board's wrongful intent, the Court of Chancery essentially elevated the 'credible basis' standard on par with the standard applicable in the context of a motion for summary judgment...

Security Police and Fire Professionsals v. Blankfein: Executive Compensation and Fiduciary Obligations

Posted on January 21, 2010
We are a bit behind in corporate governance developments.  Back in December, shareholders filed a derivative suit challenging Goldman Sach's compensation practices.  The complaint essentially alleges that compensation practices were not performance based...

Executive Compensation and the Board of Directors

Posted on January 20, 2010
The most interesting was the piece in the NYT on the role of the board of directors in the whole fiasco, a topic that has been a mainstay on this Blog.  The piece was essentially a book review of Money for Nothing.  The review (and book) criticized the board for oversight lite and high pay...

SEC v. BofA: The Other Shoe Drops (The Merrill Lynch Losses) (Part 3)

Posted on January 19, 2010
In its newly filed complaint, the SEC alleged that BofA knew by mid-November that Merrill had estimated fourth quarter losses of over $5 billion.  By December 3, two days before the meeting, the estimated losses were in the vicinity of $7 billion...

The Depreciating Law Degree: A Story In Search of Facts

Posted on January 19, 2010
What a disappointment.  On Sunday, the NYT carried a story titled "No Longer Their Golden Ticket" with a smaller heading that described young associates as "stuck with depreciating law degrees." Depreciating law degree suggests some type of permanent decline in the value of the JD...

Executive Compensation and Bank Bonuses

Posted on January 19, 2010
For a discussion on this topic with Kenneth Raskin at White & Case and Jay Brown at the University of Denver Sturm College of Law, go here.

SEC v. BofA: The Other Shoe Drops (The Merrill Lynch Losses) (Part 2)

Posted on January 18, 2010
The Commission's complaint alleges the failure of BofA to disclose substantial losses incurred by Merrill Lynch just before the shareholder vote on December 5.  The Commission filed a single claim under Rule 14a-9 and did not name any individuals...

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