April 13, 2020

Chief Justice Strine Makes Another “New Deal” Pitch

When Delaware Chief Justice Leo Strine retired last fall, Liz blogged about his proposal that would recommit to “New Deal” concepts focused on workers’ rights and a reformed shareholder voting/proposal process.  Last Friday, Chief Justice Strine, along with Dorothy Lund of the University of Southern California Gould School of Law, published an essay in DealBook that again calls for a “21st-century New Deal.”

The essay echoes Chief Justice Strine’s earlier comments, but the current pandemic offers a new backdrop for delivering the pitch. Here’s an excerpt:

Recently, the Business Roundtable and leading institutional investors have responded to growing inequality and economic insecurity by calling for greater respect toward all corporate stakeholders, not just stockholders. But what does it say about whether rhetoric is enough that, in the national emergency we are facing, American workers and taxpayers, not institutional investors or top corporate managers, are bearing the brunt of the harm? We are again paying the price for a corporate governance system that lacks focus on financial soundness, sustainable wealth creation and the fair treatment of workers.

Instead of just rhetoric, consider regulatory action to encourage corporations and institutional investors to make the best interests of American workers, consumers, communities and the environment an end goal of corporate governance, as important as serving stockholders. Public and large private companies receiving bailouts or pandemic-related subsidies could be required to become public benefit corporations under state law, and others could be given positive incentives to do the same. Institutional investors and socially important companies could be required to disclose to the public how much weight they give to issues like worker pay and safety, environmental responsibility and maintaining a strong balance sheet.

The essay emphasizes the need to invest in infrastructure, innovation and worker training and says progressive approaches like a financial transaction tax, a graduated capital gains tax and an end to the carried interest loophole for hedge funds can pay for these essential investments fairly. These measures are integral to corporate governance reform because they encourage sustainable investing and put a damper on imprudent speculation.

Covid-19 & Stakeholder Interest Impact on the Future of Buybacks

As the economic fallout from the Covid-19 pandemic continues, many are wondering when or if buybacks will pick up again.  This MarketsInsider article cites Sanford Bernstein analysts as saying buybacks may not return for several years.

Companies accepting help from CARES Act stimulus programs will be restricted from buying back their stock and others want or need to conserve cash.  But, the article high-lights what might be the “most intriguing factor fueling buybacks’ demise is the social stigma against them.”  As noted in the article, buybacks and dividends could “become ‘socially unacceptable’ as calls increase to shift focus from shareholders to stakeholders.”  The article says we should anticipate a broad decline in buyback activity but it won’t all disappear.

Public pressure to keep stakeholder interests top of mind is also high-lighted in this NY Times article recognizing that companies are receiving criticism for cutting jobs rather than investor payouts.  Chief Justice Strine and Professor Lund in their DealBook essay also recognize that families are encouraged to save for a rainy day but many companies didn’t do the same and instead used cash for dividends and stock buybacks.  Given nearly all companies are dealing with this unprecedented crisis, time will tell whether the economic effects from the pandemic coupled with focus on stakeholder interests have struck a lasting damaging blow to buyback programs.

Corp Fin Provides Temporary Relief for Form 144 Paper Filings 

Yes, Forms 144 are still required but you can email them, for a while.  Friday afternoon, Corp Fin issued an announcement providing temporary relief for Form 144 paper filings in light of the ongoing health and safety concerns from Covid-19.  The relief allows Forms 144 filed in paper under Rules 101(b)(4) or 101(c)(6) of Reg S-T to be submitted by email provided a PDF of the complete Form 144 is attached to the email.  Filers choosing to do so should direct the email to

The relief is available for those who submit Forms 144 from April 10, 2020 through June 30, 2020.

For those worried about a manual signature on Forms 144 submitted via email, the Staff won’t recommend enforcement action if the filer includes a typed form of signature.  If you can’t get a manual signature on the Forms 144, besides providing a typed form of signature, you’ll want to ensure:

– the signatory retains a manually signed signature page or other document authenticating, acknowledging, or otherwise adopting his or her signature that appears in typed form within the electronic submission and provides such document, as promptly as practicable, upon request by Division or other Commission staff;

– such document indicates the date and time when the signature was executed; and

– the filer or submitter (with the exception of natural persons) establishes and maintains policies and procedures governing this process.

For those wanting to continue with regular mail, the announcement says you can still do so, there just may be processing delays.

– Lynn Jokela