September 21, 2020

Today: “Proxy Disclosure Conference – Part 1”

Today and tomorrow is our “Proxy Disclosure Conference” – Wednesday is our “17th Annual Executive Compensation Conference.” Here are the agendas: 15 substantive panels over 3 days – plus 6 breakout roundtables today that you can choose from. Check out my promo video to see what’s in store! You can still register online to get immediate access to these virtual events! Both conferences are paired together and they’ll also be archived for attendees until next August. That’s a huge value.

How to Attend: Once you register, you’ll receive a Registration Confirmation email from Use that email to complete your signup for the conference platform, then follow the agenda tab to enter sessions. All sessions are shown in Eastern Time – so you will need to adjust accordingly if you’re in a different time zone. Here’s today’s agenda. If you have any questions about accessing the conference, please contact Victoria Newton at

How to Participate in a Roundtable: New this year, we have added interactive roundtables to discuss pressing topics! We hope you’ll join us for one of these half-hour breakout sessions. Space is limited for those, but you can save yourself a seat ahead of time by navigating to the agenda tab in the mvp platform and clicking on the seat icon next to the roundtable you want to attend.

How to Watch Archives: Members of or who register for the Conferences will be able to access the conference archives until July 31, 2021 by using their existing login credentials. Or if you’ve registered for the Conferences but aren’t a member, we will send login information to access the conference footage on or

How to Earn CLE Online: Please read these “CLE FAQs” carefully to confirm that your jurisdiction allows CLE credit for online programs. You will need to respond to periodic prompts every 15-20 minutes during the conference to attest that you are present. After the conference, you will receive an email with a link. Please complete the link with your state license information. Our CLE provider will process CLE credits to your state bar and also send a CLE certificate to your attention within 30 days of the conference.

EU Considering Options for “Sustainable Corporate Governance”

The European Commission is studying the root causes of “short-termism” and wants to enact an EU-level solution that would make directors more accountable for companies meeting the UN Sustainable Development Goals and the goals of the Paris Agreement on climate change. The findings are summarized in this 185-page report – and it looks like one option that’s on the table is changing the formulation of director duties in EU nations. It characterizes these 7 areas as “key problem drivers” (also see this Wachtell memo):

1.Directors’ duties and company’s interest are interpreted narrowly and tend to favour the short-term maximisation of shareholder value

2.Growing pressures from investors with a short-term horizon contribute to increasing the boards’ focus on short-term financial returns to shareholders at the expense of long-term value creation

3.Companieslack a strategic perspective over sustainability and current practices fail to effectively identify and manage relevant sustainability risks and impacts

4.Board remuneration structures incentivize the focus on short-term shareholder value rather than long-term value creation for the company

5.The current board composition does not fully support a shift towards sustainability

6.Current corporate governance frameworks and practices do not sufficiently voice the long-term interests of stakeholders

7.Enforcement of the directors’ duty to act in the long-term interest of company is limited

B-Corps: Getting More Useful?

Last week, Veeva Systems – an NYSE-traded company with a $40B market cap – announced that it had formed a board committee to explore becoming a public benefit corporation – along with shedding its main anti-takeover provisions. That’s a pretty unique move for a company that’s not even consumer-facing, and if Veeva proceeds, they would join only three publicly traded companies incorporated under Delaware’s “public benefit corporation” statute – Laureate Education, Lemonade and Vital Farms.

Some are predicting that more might convert – or that we will see more public company subs going that route, as Danone North America and Proctor & Gamble’s “New Chapter” have done. This MoFo memo analyzes the three current public company PBCs, extracts some lessons, and explains the possible benefit:

An obligation to report on ESG considerations and risks is not the same as an obligation to pursue a public benefit potentially to the detriment of short-term stockholder value. Adopting a PBC form allows boards of directors and management to balance these considerations and make the choices they think are right, while having a defense from activist stockholders that may be off-put by a quarter or year of lower-than-hoped results. Because of this, PBCs have been touted as a potential solution both to the problem of short-termism in issuer and investor behaviors and to companies seeking to maximize profits for stockholders and passing associated negative externalities to the public at large.

Meanwhile, this Seyfarth memo notes some of the hurdles for public company PBCs – compared to the over 3,000 privately held companies have now gone through the B-Lab process to become Certified B-Corps. Here’s an excerpt:

Because of the need for, and cost associated with, a shareholder vote to reincorporate an entity, among other reasons, this can be a practical barrier to B Corp certification for public companies. Notwithstanding, B Corps are slowly making their way into the public company space – with Danone North America leading as the world’s largest B Corp. At this juncture, the few other public B Corps were certified before becoming public.

Demand for B-corps – although limited – may be helped along by Delaware’s recent amendments to its “public benefit corporation” statute – which make it easier to convert to that structure and afford more protections to PBC directors. As John recently blogged on The Mentor Blog, this Ropes & Gray memo takes a deep dive into the amendments. Here’s a summary:

Voting Thresholds for Opting In and Opting Out Lowered. The 2020 PBC amendments eliminated Section 363(a) and (c) – which had originally required 90% approval to convert in or out of PBC status. The result is that the voting thresholds for conversions, mergers and consolidations involving PBCs are now governed by Sections 242(b) and 251 of the DGCL, which provide for majority voting unless the certificate of incorporation provides otherwise.

Elimination of Statutory Appraisal Rights in Connection with PBC Conversions. The 2020 PBC amendments eliminated Section 363(b) – which had provided appraisal rights to stockholders who didn’t approve of a conversion to the PBC entity form. As a result, there no longer is a specific statutory appraisal right if a conventional corporation converts to a PBC. Appraisal rights in connection with PBC mergers and consolidations are now governed by Section 262 of the DGCL, which addresses appraisal rights in connection with mergers and consolidations more generally.

Director Protections Strengthened. As discussed above, under Section 365(a) of the DGCL, directors of a PBC must balance the pecuniary interest of stockholders, the interests of other stakeholders and the specific public benefit identified in the certificate of incorporation. Section 365(c) has been amended to clarify that a director’s ownership of stock or other interests in the PBC does not inherently create a conflict of interest, unless the ownership of the interests would create a conflict of interest in a conventional corporation.

In addition, the 2020 PBC amendments revised Section 365(c) to provide that any failure on a director’s part to satisfy Section 365(a)’s balancing requirement does not constitute an act or omission not in good faith or a breach of the duty of loyalty for purposes of Section 102(b)(7) (exculpation of directors) or Section 145 (indemnification) of the DGCL, unless the certificate of incorporation provides otherwise. Previously, this was framed as an opt-in in Section 365(c), rather than as an opt-out.

Ability to Bring Derivative Suit Brought into Alignment with Conventional Corporations. Amendments to Section 367 align the thresholds for PBC derivative actions with those applicable to conventional corporations.

Farewell to Justice Ruth Bader Ginsburg

Late Friday, the SEC Commissioners issued a joint statement on the passing of Justice Ruth Bader Ginsburg (here is her NYT obituary):

We join the nation in mourning the passing of Justice Ruth Bader Ginsburg. Justice Ginsburg’s powerful intellect and determination shaped decisions that had meaningful impacts for all Americans, including our nation’s investors. She inspired many, and her trailblazing career will serve as a model of public service and dedication to our country for generations to come.

Liz Dunshee