The complexity and legal implications of an M&A agreement are such that any material conflicts should be avoided for all parties. It falls to a board of directors to evaluate and negotiate transactions as part of its fiduciary duties to a company. To that end, a board can and should appoint a special committee of independent directors if there are significant potential conflicts.
In the period between the execution of definitive documentation for an acquisition and the intended closing, it is important to be aware of the “ordinary course” covenant often included in purchase agreements.
The COVID-19 pandemic has tested businesses’ ability to respond to a crisis and deal with internal and external consequences. Many boards have effectively overseen companies through these extraordinary circumstances, guiding and adapting crisis management plans. Additionally, communications and transparency between boards, management, shareholders, and employees have been tested.
Although the United States generally does not mandate retirement at a certain age, specific industries and occupations have such requirements, including for airline pilots. Statistics show that 63% of workers retire between the ages of 57 and 66, with 62 as the minimum age to collect social security.
The necessity of having virtual shareholder meetings this past proxy season due to the COVID-19 pandemic has further questioned the necessity of the in-person annual meeting.
A board of directors typically appoints a governance committee responsible for recruitment, onboarding, training, and director assessments. This committee may have responsibilities for compliance, risk, conflict matters, and other topics, too. The governance committee...
Rulings from the Delaware Court of Chancery and the Delaware Supreme Court have become the foundation for corporate law and a critical guide for corporate governance. Over one million businesses today list Delaware as their legal home, including roughly two-thirds of the Fortune 500. It has been the principal state where businesses have registered since the early 1900s.
Oversight of management is one of the board of director’s primary responsibilities. This includes hiring, monitoring, evaluating, and compensating the senior team. Most boards establish a compensation committee to be responsible for this important topic. Often, the committee retains an independent compensation consulting firm for advice.
Effective governance includes a board of director’s ability to play a role in helping to maximize long-term shareholder value. In general, a board’s primary responsibilities are to oversee management, strategy, and financial reporting and compliance.
Environmental, social, and governance (ESG) are three related pillars of criteria used to assess a company through the lenses of ethics and sustainability. The term was first coined in a 2005 study examining these three criteria as value drivers for a business. ESG factors are increasingly considered in investment and governance decisions and span a full spectrum of issues not traditionally part of financial analysis but that may very well have financial relevance. While so-called ESG investments total tens of billions of dollars, this understates ESG’s impact, as institutional investors such as BlackRock are increasingly demanding enhanced actions and reporting on ESG topics.