As the U.S. government takes multibillion-dollar stakes in private companies and steers capital in other ways unprecedented outside of wartime, should companies be worried or opportunistic? Mick Mulvaney, our guest on the latest Informed Board podcast, offers insights into the administration’s thinking and some cautionary words.
The SEC is doing many things that companies will view as helpful. It has removed a deterrent to the use of arbitration clauses to curb shareholder litigation, and it may no longer require companies to file quarterly financial reports. But, as we explain in this issue, deciding whether to take advantage of these changes won’t be as clear-cut as it might seem.
We also point out the dangers of brushing off complaints about safety, ethics or compliance — even when they come from outsiders with no financial stake in the company.
Finally, we hear a director’s practical tips about how boards can make the most of their limited time together.
Podcast: Mick Mulvaney Offers Insights on US Government Involvement in the Private Sector
How should we think about the federal government taking equity stakes in companies, encouraging investment in companies that are important to national security and guiding foreign investment in the U.S.? First-term Trump White House chief of staff and OMB director Mick Mulvaney shares his views with Skadden’s Ann Beth Stebbins about the dangers and the opportunities.
Would Your Company Want To Stop Filing Quarterly Reports if No Longer Required?
Semiannual financial reporting could free up resources and allow managements to focus on the long term. But less frequent reporting could complicate buybacks and trading by insiders, and companies could be forced to make more disclosures in between full financial reports. Moreover, markets may demand quarterly reporting.
Could Mandatory Arbitration Spell the End of Securities Class Actions?
The SEC has opened the door for companies to adopt mandatory arbitration clauses for federal securities law claims, but it’s not clear how many companies will walk through it. Some companies may decide they are better off litigating in court rather than before an arbitrator.
Watch Out for the Watchdogs
Watchdog groups with no direct financial stake in a company may write its board directly about critical issues that concern the group such as safety, ethics or compliance. To avoid pitfalls, boards need a process to determine how to respond.
Interview: How Boards Can Use Their Time Together Most Effectively
To get the most out of time together in the boardroom, management and directors need to leverage the time spent outside the boardroom, devoting meetings mainly to discussion, not presentations, says Alarm.com director Simone Wu.