Restricting shareholder rights is not a new phenomenon. Companies frequently issue stocks with differential voting rights so that pre-IPO investors can maintain voting control. Many multi-class share companies give at least token voting rights to public shareholders. The most common structure is to give ten votes per share to insiders, and one vote per share…
Tag: Governance
Delaware Courts Should Add Meaning to Caremark’s Board Oversight Standards in the Cybersecurity Context
A prior blog post on corporate governance and cybersecurity mentioned recent high-profile cyberattacks on companies like Sony, Home Depot, Target, and Yahoo, and discussed the growing role the board of directors has in overseeing a corporation’s cybersecurity risk management.1 That blog post ended noting that, given the complexity of cybersecurity, the severe consequences an attack…
The Government as an Unexpected Shareholder: Whose Interests Should Be Prioritized?
Until the 2008 financial crisis violently shook the foundation of the global economy, the United States federal government had never taken a controlling interest in a publicly traded company chartered under state law.1 While the government has since fully divested from its holdings acquired through the Troubled Asset Relief Program,2 this blog argues that it…
Examining the Board’s Oversight Duties in the Cybersecurity Context
Recent high-profile cyberattacks on companies including Sony, Home Depot, Target, and Yahoo underscore how important effective cybersecurity has become to a corporation’s stakeholders, including shareholders and customers. Given the serious threat hacks pose, oversight in this area has become a key duty of the corporation’s board of directors. Yet evidence shows that boards may not…
Change is in the Air at the S.E.C.
The U.S. Securities and Exchange Commission (S.E.C.) is about to undergo a significant change under President Donald J. Trump. On Monday, November 14, 2016, Mary Jo White announced her plan to step down from her post as the 31st Chair of the S.E.C. Not long after her announcement, then-President-elect Trump nominated Wall Street lawyer…
Conflict Minerals: A Noble Cause, a Controversial Solution, and an Uncertain Future – Part III
In previous installments of this multi-part series, I discussed the historical context that was the impetus for Section 1502 of the Dodd-Frank Act as well as the mechanics of the final rule promulgated by the SEC.1 In this installment, I will lay out the current state of the law. Prior to Rule 13p-1 becoming effective…
Conflict Minerals: A Noble Cause, a Controversial Solution, and an Uncertain Future (Part 2 of 2)
In the previous installment of this multi-part series, I briefly laid out the historical context that was the impetus for Section 1502 of the Dodd-Frank Act. In this installment, I will describe the mechanics of the final rule promulgated by the SEC. The final rule is Rule 13p-1 of the Exchange Act, which was adopted…
Examining the Hershey Trust Company Through Mondelez’s Failed Takeover Attempt
After months of negotiations and two rebuffed bids, Mondelez International Inc. gave up its summer-long courtship of the Hershey Company near the end of August 2016.1 The $20-plus billion bids were noteworthy for Mondelez’s persistence in attempting to unite the two confectionary giants. Mondelez’s failed takeover highlighted the continuing importance of the Hershey Trust Company,…
Conflict Minerals: A Noble Cause, a Controversial Solution, and an Uncertain Future (Part 1 of 2)
Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act is an oft-forgotten piece of legislation. It found itself a miniscule minnow codified in the oceanic Dodd-Frank Act, which contained some of the most disruptive, paradigm-shifting rules enacted in recent memory. 1502 regulates the use of “conflict minerals,” or the so-called 3TGs: tin,…
Toshiba’s Accounting Scandal and Corporate Governance in Japan
Toshiba Corporation is a 140-year-old Japanese company that conducts business worldwide in a variety of industries, including semiconductors, personal electronics, infrastructure, home appliances, and medical devices. The company reported more than 63 billion dollars of net sales for the fiscal year ending in March 2015, and it employs more than 200,000 people worldwide.1 The manufacturing…