The Informed Board

Skadden, Arps, Slate, Meagher & Flom LLP

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. 

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.

Fall 2022

Why Directors and Executives Need To Pay Attention to Sanctions, Money Laundering and Export Rules
As various laws restricting foreign transactions proliferate to support U.S. foreign policy, they are being aggressively enforced, so it is vital for boards to monitor compliance. Directors can face personal liability if they do not.

Demystifying China’s Merger Review Process
Winning Chinese approval for a merger can seem like an opaque and puzzling process to newcomers, in part because Chinese law requires regulators to consider broad economic and policy considerations, not just the impact on competition.

The Angel’s in the Details: The Importance of Carefully Drafted Board Minutes
Drafting board minutes is more than a formality. Carefully prepared minutes that explain the processes a board went through and the reasons for its actions can help prevent more intrusive books and records demands and limit litigation.

This SEC Press Release Is a Compliance Checklist for Corporations
The SEC is stressing higher penalties, requiring independent compliance monitors and including advisers in enforcement actions. Earnings manipulation, 10b5-1 plans and non-GAAP accounting are also coming in for scrutiny. 

Summer 2022

Boards and M&A: Playing, and Winning, the Game of Regulatory Risk
As companies pursuing mergers face more aggressive antitrust and foreign investment reviews, directors need to grasp the new regulatory risks and be familiar with the contractual and tactical tools to mitigate those.

Navigating the Uncharted Legal Territory of NFTs
NFTs are no longer just for celebrities, artists and musicians. Companies are now monetizing intellectual property and building customer loyalty with them. Boards vetting NFT strategies need to know the legal uncertainties and risks.

‘Mission Critical’ Issues and ‘Red Flags’: What It Means for a Board To Exercise Oversight
As courts allow more stockholder suits to go forward against directors for failing to diligently oversee the company, boards need to focus on the most critical aspects of their businesses and respond to warnings about serious problems.

Avoiding Potential Pitfalls When Developing Alternative Supply Chains
As companies diversify their supply chains in the wake of the pandemic and Russian sanctions, they need to be vigilant about the risks that new suppliers and new governmental interactions bring, and develop procedures to mitigate them.

Podcast: Should Your Company Take a Stand on Political and Social Issues?
In the latest installment of the Informed Board podcast, Skadden partner Ann Beth Stebbins leads a discussion about political and social issues in the workplace, responding to evolving employee expectations and the increased scrutiny of corporate political contributions. The panel also discusses how political and social issues may affect director elections this proxy season.

Spring 2022

In the Name of the Company: When Stockholders Interfere in the Boardroom
Because stockholders have unique and numerous ways to assert rights belonging to corporations, companies can find themselves defending essentially the same claims in multiple guises and jurisdictions. Here are some ways to manage the proliferation.

Winning the War for Talent: It’s the Board’s Responsibility, Too
With millions of employees resigning and millions of positions unfilled, boards need to monitor corporate culture closely to ensure that their companies have the talent they need to thrive.

Preparing for the Unexpected: Problematic Partners, Forced Exits and Extractions
Recent events have brought home the need for multinationals to have contingency plans to deal with the impact of geopolitical disruptions on operations and personnel. Here are ways directors can help ensure their companies are prepared.

How Antitrust Regulators and the SEC Are Advancing the Wider Biden Agenda
In this inaugural episode of the Informed Board podcast, Skadden partners Maria Raptis and Raquel Fox join our host Ann Beth Stebbins to discuss changing approaches to antitrust and securities regulation in Washington. They talk about new priorities in antitrust enforcement, new disclosure initiatives by the Securities and Exchange Commission, and the obstacles that could hinder regulatory rulemaking.

Two Directors Share Lessons on Building a Highly Functioning Board
DuPont's Alexander Cutler believes that executive sessions before and after formal meetings maximize a board's effectiveness. Boston Scientific's Yoshiaki Fujimori recommends careful allocation of a board's time according to the company's priorities.

Winter 2022

What Exactly Is an Independent Director? (Hint: It’s More Complicated Than You Think)
Director independence means different things for different purposes, and it is situational. When directors’ actions are challenged, courts often consider personal and business ties that might suggest divided loyalties.

2022: What You Need To Know …
This year, we expect to see new disclosure requirements; SEC rule changes affecting directors; activists adopting new tactics; changes to shareholder voting processes; tax and antitrust developments that could alter the way companies execute deals; and revised trade rules that will have an impact on many businesses. Here is a quick guide to topics that may affect your decisions as a director in 2022.

Interview: SEC Changes Would Let You Know More About Your Shareholders
The SEC has proposed to update disclosure requirements for investors that acquire 5% of a company, shortening disclosure deadlines and bringing some derivatives within the rules. As Skadden partner Brian Breheny explains, another change would loosen the definition of investors acting as “a group,” potentially requiring them to disclose their holdings and intent sooner.

Fall 2021

Don’t Let the Feds Beat You at the Data-Mining Game
Corporate compliance systems need to adapt to a world where enforcement agencies are increasingly adept at using sophisticated data analytics to spot violations.

Crisis in the C Suite: A 10-Step Plan
When senior executives are accused of misconduct, directors are thrust into the center of the crisis, with pressure to make quick decisions. Boards need a clear game plan to ensure the allegations are addressed and to minimize legal, regulatory, financial and reputational harm.

Interview: Companies May Soon Gain Better Insight Into Their Shareholder Bases, and Insiders May Face New Restrictions on Scheduled Share Sales
SEC veteran Raquel Fox explains how a bill in Congress would require investment funds to disclose their derivatives positions and what the SEC may do to address perceived abuses by directors and officers of pre-scheduled stock sales plans.

Antitrust Enforcement Takes a Sharp Left Turn
Progressives in the Biden administration are reshaping antitrust policy through key appointments and an executive order that aims to increase competition across the economy, not just in the tech sector. Expect more scrutiny of mergers and employment practices, in particular.

This Isn’t Your Grandparents’ Books and Records Demand
As plaintiffs have switched litigation strategies and Delaware courts have expanded stockholders’ rights to seek company records, boards need to be mindful of the changes and assess the way they communicate and record board decision-making.

Summer 2021 

Four Questions on Directors’ Minds as the World Returns to Work
Companies generally will be allowed to require employees to return to the office or other facility and to mandate vaccinations and/or testing. But they will need to observe state and federal laws, apply their rules evenhandedly and be alert to permitted exceptions.

What the Exxon Mobil Shareholder Votes Mean
The election to Exxon’s board of three directors nominated by a climate-focused activist fund and shareholder support for lobbying disclosures highlight the ESG forces companies now face. The outcome may embolden other ESG activist funds.

Is Tax Competition Dead?
The G7’s support for a more uniform global framework for corporate taxation could reduce the ability of countries to use low tax rates to attract businesses. Overall, the plan would likely raise taxes for many multinationals.

Fintech Disruption: It’s Not That Simple
Financial institutions and regulators will have to grapple with the potential disruption that could come from decentralized finance (DeFi) technology and cryptocurrencies.

Interlocking Boards: The Antitrust Risk You May Never Have Heard Of
The Clayton Act’s prohibition against competitors sharing directors or officers could be a tool if antitrust regulators look for new ways to preserve competition. Tech companies could be particularly vulnerable.

Spring 2021

What Am I Getting Myself Into? Five Questions Prospective SPAC Directors Should Ask
Much has been written about SPACs, but what does serving as a director of one entail? We highlight issues prospective board candidates should have on their radar and questions they should ask.

Just Between You and Us
The technical requirements of the attorney-client privilege can trip up clients who aren't careful. Here's a list of common misconceptions and real-world foot faults we've seen.

Shareholder Suits Demand More Progress on Diversity
Your board has women and underrepresented minorities. Yet you may still be targeted by a new wave of shareholder derivative suits pressing companies to take aggressive actions to further promote diversity and inclusion.

The Search for Board Diversity: Practical Tips, Statistics on Progress
Corporate governance thought leaders offer pragmatic suggestions for companies and directors aiming to diversify their boards, C-suites and employee ranks.

Winter 2021

Why Does the Brand of My Phone Affect My Credit Rating?
The predictive power of artificial intelligence and alternative data is often mysterious. And that’s a problem.

A Practical Guide to the Role of Directors in Fighting Ransomware
Ransomware is such a major threat to businesses that directors need to take an active role overseeing cybersecurity programs.

The Brexit Deal Leaves Some Mighty Big Holes
The Brexit agreement covered goods but not financial or other services, creating uncertainty for many businesses.

ESG: Many Demands, Few Clear Rules
Regulators and investors are pressing companies to act on ESG issues, but there are few agreed-upon standards. What is a board to do?

New Tactics and ESG Themes Take Shareholder Activism in New Directions
The dividing lines between activist and private equity firms are blurring, and new types of activists are emerging.

Get Used to the New Normal in US-China Trade Relations
Restrictions are unlikely to loosen under the new administration because there is bipartisan support now for taking a hard line with China.

Audio Interview: How Far Can the SEC Go?
Opponents of mandatory disclosures about climate risk and diversity will argue that they exceed the agency’s authority — a six-minute chat with Robert Stebbins, the SEC's general counsel until January.