By R. William “Bill” Ide III and Crystal J. Clark
Shareholders are being prodded by peers, governance “thought leaders,” the media and others to obtain disclosures from boards of directors on their oversight of cybersecurity. Certain pension funds have sent extensive, joint questionnaires to directors of public companies seeking detailed information as to the cybersecurity oversight systems and controls in place. Our view is that until the SEC provides further guidance, companies will generally find it in their interest to respond to such shareholder inquiries. Such disclosures, however, should be kept at a high level to demonstrate appropriate awareness and attention, while not disclosing specifics that could compromise the company’s cybersecurity strategy or raise issues under Regulation FD. Read the rest of this entry »
By Marcel Bucsescu, Assistant Director, Governance Center, The Conference Board
Recent high profile cyber breaches at Anthem, Home Depot, and Sony remind us just how dynamic, complex, and rapidly evolving cyber security and the management and response to those risks is. Every day, email inboxes are flooded not just with phishing emails and other scams, but also with marketing blasts to solve cyber and tell directors everything they need to know. A huge industry is developing around cyber security, preparedness, and response. But managing risk is not a new challenge for management and boards. Every once and a while, it is helpful to ground ourselves. Recently, the general counsel of a Fortune 500 company shared a memo with me that they had prepared for the board. This memo serves as a reminder that the new and evolving threats that companies face today exist within a legal framework. And while there are many unknowns with cyber risks, the role of the board is still rooted in the basic duties of care, loyalty and good faith to the corporation. Read the rest of this entry »
By Jon Lukomnik, Executive Director, IRRC Institute
When you are traveling down the wrong road, changing lanes doesn’t help very much. Yet that’s what we’ve been doing about executive compensation for years, as we tinker with stock options or restricted stock or add performance hurdles.
Sometimes, it’s necessary to stop, remember the destination, and recalibrate your route.
That is admittedly an overworked metaphor, but it is where we are today with executive compensation. Few, if anyone, is pleased with the direction executive compensation is taking or the road traveled to date. Investors worry that top executives are paid too much for too little in way of accomplishments. Boards fret that their judgment is constrained by the perceived need for formulaic pay to satisfy investors and proxy voting agencies. CEOs and other executives feel short-termism in their pay formulae and wonder if they can really suggest that their boards allow them to invest for the future. Read the rest of this entry »
By Kal Goldberg, Partner, Finsbury and Charles Nathan, Senior Advisor, Finsbury
Tax inversion deals are clearly the most talked about M&A deal structure we have seen for many years. Unlike other hot-topic M&A deal structures (think LBOs or activist investor campaigns), inversions involve a highly charged political controversy in the context of the global competitiveness of corporations and their home economies. Although the recent Treasury Department rules have significantly or, in some cases, fatally crimped the economics of some previously announced inversions, many tax advantages of inversions remain. As a result, the structure retains its appeal for a number of cross-border acquisitions by U.S. companies and will likely continue to create business and political headlines in the U.S. and abroad. Read the rest of this entry »
By Donna Dabney, Executive Director, Governance Center, The Conference Board
There is almost daily coverage of activists investors in the media. And while several narratives have taken hold, little has been done in the way of stepping back to look at the aggregate impact that activism is having on our economy. As Larry Fink of BlackRock noted at this week’s DealBook Conference, “We need to start focusing on wages and focusing on long term solutions instead of things like activism and other things like that that destroy jobs.” Read the rest of this entry »