The Informed Board

Skadden Publication

Directors must cope with constantly shifting challenges. To help boards navigate these, Skadden launched The Informed Board, a periodic collection of concise articles that provide broad insights about key issues directors face. In these pieces, we aim to help flag potential problems that may not be fully appreciated, explain trends, share our observations and give directors practical guidance without a lot of legal jargon. These articles are based not just on Skadden’s knowledge of the law, but also on our front-line experience inside boardrooms. 

Spring 2024

AI-Enabled Compliance: Keeping Pace With the Feds
The federal government is using AI and data analysis to spot everything from insider trading and earnings manipulation to bid-rigging and imports made with forced labor. Companies need systems to flag potential problems before the feds do.

Mind Your Disclosures: Delaware Courts Are Asking Just When a Stockholder Vote Is ‘Fully Informed’
To benefit from the “cleansing effect” of stockholder vote, a company must make full and accurate disclosures. Where a court finds the disclosures inaccurate or a material fact was omitted, that can deprive directors of certain defenses and expose them to liability.

Best Practices: How a Board Can Enhance Shareholder Value Creation in a Spin-Off
In a spin-off, the parent’s board plays a vital role, determining the structure of the split and the spinco’s governance and management, all while navigating sometimes delicate internal dynamics.

Preparing Now for the SEC’s New Climate Rules
The SEC’s climate disclosure rules are on hold pending court challenges, but companies still need to prepare to comply in case some or all the new rules do ultimately take effect, or similar requirements are imposed by state or foreign laws.

Podcast: When and How Directors Should Engage With Investors 
Skadden M&A partner Ann Beth Stebbins and her guest, Rebecca Corbin of Corbin Advisors, explore the critical role that directors play in shareholder engagement. Corbin stresses that a proactive, not merely reactive, approach toward shareholder engagement is essential for success. 

Winter 2024

Emerging Expectations: The Board’s Role in Oversight of Cybersecurity Risks
New SEC rules and an enforcement action against a company that was the victim of a cyberattack set out in detail the responsibilities of boards in maintaining cybersecurity. Directors should take an active oversight role in evaluating measures designed to protect against cyberattacks. The rules and the agency’s action are also likely to shape the expectations of investors and customers.

Seven Myths About the US Law Banning Imports Made With Forced Labor
Diligence of global supply chains is now critical as the U.S. vigorously enforces the Uyghur Forced Labor Prevention Act. Customs officials have detained $2.2 billion of imported goods, from textiles and solar panels to industrial goods and electronics. This has scrambled supply chains, prompting companies to re-evaluate their compliance policies and conduct more in-depth diligence of their suppliers.

AI Executive Order: The Ramifications for Business Become Clearer
The full impact on the private sector of a sweeping executive order on artificial intelligence is becoming clearer as government agencies spell out details. Any company developing or using AI is likely to be affected in some way.

A Guide for Directors to Political Law Issues in This Election Year
Corporations that want to help finance the presidential nominating conventions or support transition or inaugural activities need to be mindful of both campaign finance laws and pay-to-play rules. Violations of the latter could result in a company’s being banned for years from competing for government contracts.

Shareholder Activism Continues To Increase and Spread in Europe
Last year brought a surge of new activist campaigns in Europe, including a wave in Germany. Many activists surveyed think French companies will make good targets. Many companies are installing defenses against activists.

Podcast: CEO Succession Planning on a Clear Day
Succession planning for senior management should be an annual process, managed by the board. Our panel discusses best practices, including how to develop multiple and next-level candidates, how to keep internal candidates incentivized, and how appointment of an executive chairman for a fixed span can help a new CEO transition into the role.

Fall 2023

Real World Examples Where Conflicts Tainted a Deal Process, and Other Deals That Were Insulated From Conflicts
There are no hard and fast rules for dealing with conflicted fiduciaries who are involved in a deal, but recent Delaware decisions provide boards with some guidance on ways to protect the integrity of a deal — and situations to avoid.

Balancing Act: Sharing Information From an Internal Investigation Without Waiving Privilege
When auditors or regulators demand information from an internal investigation, a board can face difficult choices. Providing too little may not satisfy the request, but too much could waive legal protections for confidential material.

Key Insights for Dealmakers Confronting Washington’s Aggressive New Approach to Merger Reviews
Despite a losing record in court, the DOJ and FTC show no signs of easing up in their approach to merger reviews. Companies making acquisitions need to adapt to the new reality to get their deals done.

The IRS Is Coming for Partnerships and High Net Wealth Individuals
Armed with billions in new funding, the IRS is using AI and other techniques to flag partnership and cryptocurrency investments and generational transfers where additional tax may be owed.

Podcast: How Will Corporate DEI Policies Be Affected by the Supreme Court Ruling in the University Affirmative Action Cases?
Skadden partners Ann Beth Stebbins, David Schwartz and Lara Flath discuss what the Supreme Court decision in June striking down race-based factors in university admissions programs means for U.S. companies.

Summer 2023

How To Guard Against a Short Attack, and How To Respond if Faced With One 
Advanced preparation and a speedy substantive response are the best ways to defeat a short seller’s attack on your company. Boards should think twice before responding with buybacks or dividends, or running to court or regulators.

Ten Key Factors for Boards To Consider When Weighing an Internal Investigation
Before initiating an internal investigation, directors should assess the nature of the charges, their potential impact, any involvement by management, and the potential response of regulators and outside auditors.

What the New Federal Merger Guidelines Mean for Companies Pursuing Deals
Under proposed revisions to the DOJ’s and FTC’s merger guidelines, more deals would be considered presumptively anticompetitive and could be challenged. But it is not clear if courts will accept the agencies’ view of the law.

‘Going Dark’: Navigating the Tricky Path to Delisting and Deregistering 
Companies contemplating delisting and deregistering their shares should understand the pros and cons of “going dark.” Some potential downsides may not be obvious.

The EU’s New ESG Disclosure Rules Could Spark Securities Litigation in the US
New EU rules will require many non-EU companies that operate in Europe to disclose detailed information about a wide range of ESG topics. That could open the door to litigation in the U.S.

Podcast: Will the EU’s Focus on Foreign Subsidies Make It More Difficult To Acquire European Businesses?
Skadden partners Giorgio Motta and Ann Beth Stebbins discuss the EU’s new rules requiring companies buying European targets to disclose any non-EU subsidies they or the target have received that might distort the EU internal market.

Spring 2023

Nine Mistakes To Avoid When Transitioning CEOs
Transitioning CEOs, whether voluntary or not, is a complex process that often takes longer than expected. Boards need to plan for contract negotiations and legal disclosures, map out internal and external communications strategies, and consider the impact on other executives. Here are some tips on avoiding common mistakes.

What Is Generative AI and How Does It Work?
Companies using or developing generative AI systems need to understand the legal risks, and boards need to monitor the process and ensure that compliance systems keep pace with the adoption of the new technology.

The FTC’s Plan To Limit Noncompetes Could Pose an Array of Practical Problems
The FTC proposes to ban most noncompete agreements and require companies to rescind existing noncompetes. Some states have also restricted noncompetes. Companies need to prepare for the changes, including the potential implications for M&A.

The Impact of Banking System Turmoil: What’s Next?
The failure of three regional U.S. banks and Credit Suisse is forcing a reassessment of regulations created after the financial crisis, and of deposit insurance. Regulators might be more willing now to approve new mergers.

Podcast - What a New Executive Order and Tighter Controls on Tech Exports Mean for Companies Doing Business in China
With tighter U.S. rules restricting technology exports to China, stepped up enforcement efforts and an executive order expected soon imposing restrictions on certain outbound investments into China, companies should revisit their compliance programs to be sure they satisfy government requirements.

Winter 2023

Putting the Best Spin on Corporate Splits
Boards are likely to receive more calls for separation transactions as investors urge companies to focus their businesses. Spin-offs offer more flexibility than a simple sale, and companies retain more control over the process, terms and timing.

How the New Proxy Rules Will Affect US Companies Facing Activist Campaigns
Universal proxy cards may prompt more activist campaigns, subject individual directors to more scrutiny and put pressure on companies to settle. So far they do not appear to have changed proxy advisory firms’ approach to contested elections.

European Activism: More Attacks, More Engagement, More ESG Coming in 2023
Companies expect to see more activist campaigns in Europe this year. Many have identified weaknesses that could make them vulnerable and are engaging with shareholders. ESG issues figure prominently in many activists’ priorities.

FAQs: What the SEC’s New Insider Trading Rules Mean for Directors
New rules for insiders’ preset trading plans will force directors and others to wait before their first trade, and details of their plans will be made public. Restrictions on multiple plans and single-trade plans were also added.

Multinationals Need To Revisit Their Reporting as New EU Sustainability Disclosure Rules Bite
The EU’s new ESG disclosure requirements will apply extra-territorially. Non-EU businesses with EU operations will soon have to report on their environmental impacts and risks — requirements that could conflict with U.S. and U.K. rules.

A Board Chair Explains How To Make the Most of Self-Evaluations
Self-evaluations of full boards, committees and individual directors can elevate a board’s performance. But leaders have to create a culture of trust within the board for the process to work.

Podcast: How the SEC Is Making it Harder To Exclude Shareholder Proposals and What This Means for ESG This Proxy Season
Ahead of the 2022 proxy season, the SEC shifted its approach to shareholder proposals and permitted companies to exclude far fewer shareholder proposals from annual meeting agendas. Skadden M&A partner Ann Beth Stebbins leads a discussion about the impact the SEC shift had last year, particularly with respect to ESG proposals, and what we can expect this year. She is joined by Dalia Blass, BlackRock’s head of external affairs, Gabrielle Wolf, a director at shareholder advisory firm Innisfree M&A, and Skadden partner Marc Gerber.