A guest post over on The D&O Diary by two Nelson Mullins lawyers provides a checklist of 10 key policy terms that boards should assess when reviewing D&O coverage. Here’s an excerpt addressing three of those policy terms:
Policy Limits and Order of Payments. In addition to selecting the right overall policy limit, it’s also important to understand how that limit works. A $15 million policy does not necessarily provide $15 million of protection to directors personally. Multiple claims or claims against the company itself may erode the available limit.
Directors should understand how the Side A, B, and C coverages interact and whether the limits available under one coverage section can be eroded by claims under another. Strong Side A protection can also be particularly important when indemnification is unavailable because of insolvency, legal restrictions, or other circumstances. For example, policies can prioritize individual Side A protection first if policy limits begin to erode rapidly due to heavy defense costs or corporate entity-level (Side C) claims.
Prompt Advancement of Defense Costs. Defense costs can become substantial long before a case reaches settlement or judgment, and directors should avoid having to fund years of defense expenses personally while waiting for the ultimate resolution of a suit or coverage dispute. Some policies may not provide for prompt advancement or include terms that may hold up the process, such as requiring allocation disputes to be resolved or other conditions. Boards should therefore review for advancement terms that provide prompt, mandatory advancement of legal fees and defense expenses before the final disposition of a claim or suit.
Severability. A strong severability provision generally prevents one insured person’s knowledge, conduct, or misrepresentation from automatically being attributed to another insured. Boards should assess the policy for severability terms, including related application representations, knowledge of circumstances, and policy exclusions. Directors should not necessarily lose coverage because another insured director or officer allegedly made a misrepresentation or engaged in misconduct. Boards can avoid issue that by ensuring one insured’s misconduct cannot be imputed to or used to deny coverage to any other “innocent” director or officer.
Other policy terms covered by the checklist include Side A “difference in conditions” coverage, favorable exceptions to the “insured v. insured” exclusion, regulatory investigations coverage, prior acts, continuity and retroactive dates, related claims and interrelated wrongful acts, non-rescission clauses, and jurisdiction and choice of law.
Here’s a keeper for you – several Richards Layton attorneys recently published an article in The Corporate Governance Advisor that’s a primer on key Delaware law considerations for annual meetings of stockholders. This excerpt discusses common voting standards for matters other than the election of directors:
A variety of voting standards may be applicable to other matters. Certain extraordinary matters may be subject to heightened voting requirements under the DGCL or the corporation’s certificate of incorporation or bylaws, while the voting standard applicable to other general corporate action is typically set forth in the corporation’s bylaws. Common voting standards include:
1. Majority of Votes Cast
2. Majority in Voting Power of Outstanding Shares (default statutory vote for specified extraordinary matters, which can only be increased, but not reduced, in the certificate of incorporation)
3. Majority in Voting Power of Shares Present in Person or by Proxy at the Meeting and Entitled to Vote on the Subject Matter (default under Section 216(2) of the DGCL for all matters other than the election of directors and specified extraordinary matters)
4. Majority in Voting Power of Shares Present in Person or by Proxy at the Meeting and Entitled to Vote at the Meeting (a majority of the quorum)
Other topics addressed in the article include pre-meeting considerations, quorum, adjournment, the treatment of abstentions and broker non-votes, and virtual meeting considerations.
We’re kicking things off today in Orlando with our “Proxy Disclosure Conference” and we’ll follow that up tomorrow with our “23rd Annual Executive Compensation Conference.” The agendas for our conferences include 13 substantive panels over 2 days – and we’ll get started in style with Dave Lynn’s interview of Christina Thomas, Deputy Director of the SEC’s Division of Corporation Finance and Chief Advisor on Disclosure, Policy, and Rulemaking.
We’re very excited to see everyone in Orlando, but if you can’t be here in person, you can still register to attend today’s program and tomorrow’s “23rd Annual Executive Compensation Disclosure Conference” online by visiting our online store or by calling us at 800-737-1271. Our conferences are bundled together into a single two-day event for registration and pricing, so your purchase will cover both events.
– How to Attend Online: Our conferences are hosted online through the RingCentral Events platform. When you register for the conferences, you’ll receive a registration confirmation email that will contain your personalized “Magic Link.” Just click on that link to be instantly directed to the event. The Magic Link acts as an “access pass” into the event. It is unique to you and cannot be shared with others. It bypasses the need for registered users to sign into RingCentral Events and brings you directly into your RingCentral Events account and into the event.
Once in the event, click the “Stage” button from the menu on the left of the webpage. In order to view the session currently playing on stage, you will need to press the play button on the video. If you’re having issues accessing the RingCentral Events platform, review this guide and contact your IT department. For audio/video issues, there are separate guides for Windows and for Mac. If you still need help, email info@ccrcorp.com.
– Access to Archives & On-Demand CLE: Your registration includes access to the conference archives, which will be available until October 12, 2027 – but you’ll need your confirmation email to access them so be sure to retain it! One big reason to make sure you do that is that if you can’t attend the conferences live, you may earn on-demand CLE credit by viewing the archives. See these “CLE FAQs for Archived Conference Sessions (ON DEMAND)” for more information.
– Thanks to Our Sponsors! A huge “thank you” to our sponsors who have helped make these events possible. Our founding sponsor for this year’s conferences is Goodwin, our PDEC lounge sponsor is Greenshoe.ai, our managing partner sponsor is Cooley, our associate sponsors are Ashurst Perkins Coie, Ballard Spahr, King & Spalding, Latham & Watkins, Morrison Foerster, Sidley, Troutman Pepper Locke, and Wilson Sonsini – and a special shoutout to our rise and shine breakfast sponsors Cleary and Dragon GC.
We are extremely grateful for the support of these fine law firms and businesses and invite you to consider joining them as a sponsor of next year’s conferences.
Finally, in honor of our host city, here’s a quote from a one-time Orlando resident that concisely explains why you won’t see me on any of our panels over the next couple of days:
“I had nothing to offer anybody except my own confusion.” – Jack Kerouac, On the Road
There’s been a lot of activity on the retail voting program front in recent weeks, and last Thursday, Corp Fin threw two new CFIs on retail voting programs into the mix. Here they are in their entirety:
Section 189. Retail Voting Programs
Question 189.01
Question: A registrant implements a retail voting program that allows shareholders to provide standing voting instructions to the registrant in reliance on staff no-action letters (e.g., Exxon Mobil Corporation (Sept. 15, 2025), The Goldman Sachs Group, Inc. (Sept. 28, 2026), and Tesla, Inc. (Sept. 29, 2026) no-action letters) or other applicable staff guidance. Under the retail voting program, shareholders can only provide standing voting instructions that require the registrant to vote their shares in accordance with the recommendations of the registrant’s board of directors on proposals presented for a vote at shareholder meetings. The registrant receives a request that its program offer additional standing voting instructions for shareholders to select from, such as an instruction that requires the registrant to vote against the board’s recommendations on proposals presented for a vote at shareholder meetings. Is the registrant required under the federal proxy rules to offer different types of standing voting instructions in its retail voting program?
Answer: No. The federal proxy rules do not require any person to implement a retail voting program, nor do the federal proxy rules require any person that implements a retail voting program to offer more than one type of standing voting instructions, including any suggested by another person. [October 8, 2026]
Question 189.02
Question: Can a registrant’s retail voting program offer shareholders an option to submit standing voting instructions that require votes to be cast in accordance with voting recommendations issued by a third party?
Answer: A registrant may be engaging in a solicitation subject to the federal proxy rules when it communicates with shareholders about submitting standing voting instructions through the registrant’s retail voting program. Accordingly, absent an available exemption under Rule 14a-2(a), such communications may be soliciting materials subject to Rule 14a-9, which prohibits material misstatements and omissions.
Registrants that want to permit shareholders to submit standing voting instructions requiring votes to be cast in accordance with third-party voting recommendations should consider, for purposes of Rule 14a-9, whether shareholders would be furnished with material information about the recommendations necessary to understand how their shares will be voted on a particular proposal at an upcoming meeting pursuant to the instructions. Two important factors that should be considered are whether shareholders will:
– receive the third-party voting recommendation on a particular proposal at no cost; and
– have sufficient opportunity after receiving the recommendation to override the vote to be cast pursuant to the standing voting instruction.
For example, the third party may provide its voting recommendation to the registrant at no cost and with sufficient time so the vote to be cast on a particular proposal pursuant to the instruction is disclosed in the registrant’s definitive proxy statement. Alternatively, the third party may agree with the registrant to provide the voting recommendation directly to shareholders at no cost and with sufficient time for shareholders to override the instruction by voting on the registrant’s proxy card for the meeting. [October 8, 2026]
I haven’t seen any formal reaction from shareholder democracy advocates yet, but I can’t imagine they’re going to be real pleased with the first of these CFIs, since the absence of a requirement to offer standing voting instruction alternatives has been one of their major beefs about these voting programs.
The latest issue of The Corporate Counsel newsletter has been sent to the printer. It is also available now online to members of TheCorporateCounsel.net who subscribe to the electronic format. The issue includes the following articles:
– SEC Proposes Repeal of Rule 14a-8 and Overhaul of Rule 14a-4
– SEC Proposes to Modernize Proxy Solicitation Process
Email info@ccrcorp.com or call 1.800.737.1271 to subscribe to this essential resource!
According to this WSJ piece, “prompt speak” and the use of corporate jargon are getting more common as AI enters the (real-world) chat. If you’re the type of person who’s bothered by that, then you can use this WSJ list of phrases to avoid so that you don’t unintentionally annoy your colleagues and/or sound like a personified LLM.
Alternatively, perhaps you want to live on the edge and see how many you can work into a conversation before you’re banned from future meetings! This one made me laugh:
Stakeholders: It makes me think of vampire slayers.
I am guilty of using a few of these phrases, and I apologize to anyone I’ve offended along the way. I’ll circle back with you when I’ve achieved the growth mindset that will allow me to move the needle away from these habits of speech. In the meantime, I’ll also be leveraging these new iterations (click the image to enlarge):
With all the great suggestions in my previous blog, which new phrase will you use in your next meeting? Please participate in this anonymous poll to vote for your favorites:
Do you have your own corporate-speak creations that aren’t listed here? Please feel free to drop me an email – a corporate jargon contest may be in our future.
If you are traveling to Orlando for our “2026 Proxy Disclosure & 23rd Annual Executive Compensation Conferences“, there is no better place to break in your new corporate jargon (or just mingle with new and old friends) than at our welcome reception this Sunday, October 11th. Stop by the Orange Foyer from 4:30 – 6:00 p.m. ET to collect your credentials for the PDEC Conferences, network with other 2026 attendees and sponsors, and enjoy complimentary drinks and appetizers.
There’s still time to register to attend our PDEC Conferences in person or virtually. Just email us at info@ccrcorp.com, call us at 800-737-1271, or visit our online portal. We look forward to seeing you there!
At the official dedication of Walt Disney World 55 years ago, Roy O. Disney offered this wish for visitors:
“May Walt Disney World bring joy and inspiration and new knowledge to all who come to this happy place.”
Now, we understand it would be a pretty high bar for a conference about proxy disclosure and executive compensation to live up to the same expectations as the Happiest Place on Earth, but we’re pretty confident that our speakers can deliver on the new knowledge – and between learning and connecting with other practitioners, we think you’ll get a little joy and inspiration along the way too.
Yesterday, the SEC posted this Section 21(a) report, detailing an investigation by the Enforcement Division, with support from Corp Fin, into whether the actions of certain members of Climate Action 100+ (“CA100”) in connection with the election of dissident directors at the May 2021 annual meeting of the Exxon Mobil Corporation may have violated the Exchange Act. As you might recall, this was the meeting where Engine No. 1 ran a proxy contest and won three seats, which led many companies to start taking “ESG” initiatives much more seriously.
Here’s an excerpt from the 23-page report:
The Commission has determined not to pursue an enforcement action based on the conduct and activities known to the Commission at this time, but has serious concerns about the conduct of CA100 members and other participants in these activities as described herein. The Commission in its discretion has determined to issue this report of investigation (“Report”) pursuant to Section 21(a) of the Exchange Act to inform those asset managers and investors who would join, or would consider joining, an organization such as CA100 to take appropriate steps to ensure compliance with the Exchange Act.
Specifically, this Report recognizes that the agreement, arrangement, understanding, or concerted action underlying the formation of a “group” may be implied and that coordinated engagement practices ̶ ̶ even when undertaken through an intermediary ̶ ̶ may implicate the beneficial ownership reporting framework. While shareholders may deny the existence of a group, such denials are not conclusive as to whether a group has formed.
Beneficial owners who do not wish to be part of a group therefore should proactively ensure policies aimed at avoiding group formation are adequately enforced. Irrespective of group formation, beneficial owners that report on Schedule 13G need to be mindful of whether their actions may be viewed as having been undertaken with the purpose or effect of changing or influencing control of a specific issuer. Membership in an organization whose stated purpose is to change or influence control of a specific issuer by promoting the election of dissident directors or otherwise could be a factor in the loss of eligibility to report on Schedule 13G instead of Schedule 13D.
Even though the Commission isn’t pursuing an enforcement action and the report is focused on activities that occurred in connection with a proxy contest, it’s fair to read the report as a warning to investors – especially asset managers that tend to own more than 5% of the shares of their portfolio companies and could face severe consequences and restrictions if they are not considered “passive investors.” Accordingly, the report reinforces some of the other pressure that is already being applied to asset managers, proxy advisors and the overall voting and engagement landscape. Here’s another excerpt:
This Report does not address any findings or conclusions, based on the activities described herein, regarding potential breaches of fiduciary duty by investment advisers. In addition, nothing in this Report should be understood as suggesting that the potential formation of a “group” or the loss of Schedule 13G eligibility is an issue unique to the asset managers identified in this Report. The considerations described herein apply equally to all members of CA100 that beneficially own securities in a covered class, as well as participants in any similar intermediary-driven organization.
As you might recall, the White House had issued an executive order late last year which – among other things – directed the SEC to:
Analyze whether, and under what circumstances, a proxy advisor serves as a vehicle for investment advisers to coordinate and augment their voting decisions with respect to a company’s securities and, through such coordination and augmentation, form a group for purposes of sections 13(d)(3) and 13(g)(3) of the Securities Exchange Act of 1934
And in a speech that Commissioner Uyeda delivered a mere week or so ahead of the Executive Order, he questioned whether the practice of proxy advisor “robo-voting” – where funds and asset managers use proxy advisors for voting decisions and engage in “robo-voting” based on those recommendations – could constitute a group for purposes of Section 13(d)(3) or Section 13(g)(3) of the Securities Exchange Act.”
Alongside that earlier context, this report shows that the SEC is still paying close attention to the boundaries of “passive” activities, even as the Corp Fin Staff issued a clarifying CFI last month about permissible investor engagement activities. In a LinkedIn post announcing the Section 21(a) report, the SEC stated:
As we head into the 2027 proxy season, the Commission’s 21(a) report reminds asset managers and investors of their responsibilities with respect to shareholder engagement, especially in the context of organized efforts that follow a playbook similar to that of Climate Action 100+.
Shareholders have the right to express their views on a particular topic and explain their voting decisions. Congress has mandated that shareholders, acting individually or as a group, owning more than five percent of a public company must disclose their plans and other information if they seek to change or influence control of the company.
John had already shared a prediction that investors may still be somewhat measured with their engagements and communications in the coming proxy season. Now, they may also be taking another look at any coalition memberships that still exist…
Yesterday, ISS STOXX Governance announced the results of its annual global benchmark policy survey. As Meredith blogged back in July, this year’s survey had a number of governance-related questions – including on director slate elections, director tenure, post-IPO governance provisions, and semi-annual reporting. The survey is part of ISS’s annual policy development process exploring potential voting policy changes for 2027 and beyond.
ISS STOXX Governance received a total of 253 responses, of which 141 were from institutional investors and investor-affiliated organizations, and 112 from companies, corporate-affiliated organizations, and other non-investor respondents. Here are key takeaways for US governance topics:
– Tenure impact on director independence: 64 percent of investor respondents said long director tenure should be considered a factor in assessing a director’s independence, while 74 percent of non-investor respondents said tenure, regardless of length, should not be a factor and that a board’s determination of independence is generally sufficient.
– Semiannual reporting: Investor and non-investor respondents expressed notably different views. Approximately half (50 percent) of investor respondents said a move to semiannual financial reporting would be a negative change and that less frequent reporting may heighten volatility and tilt the playing field away from public investors and toward, for example, those with access to non-public information or sophisticated data analysis capabilities, and a further 13 percent said semiannual reporting makes sense for many smaller, pre-revenue or start-up companies, but not for larger, more mature companies. By contrast, 54 percent of non-investor respondents said semiannual reporting would not be a concern and that boards should be trusted to balance the relevant considerations and make the right decision for the company, with a further 19 percent saying it would be a positive change.
– Re-incorporations and changes to corporate laws of location: Approximately 44 percent of investors and 48 percent of non-investors said that all significant changes should be taken into account in any assessment, including both the benefits identified by the company and any positive or negative changes to shareholder rights. Approximately 30 percent of investors responded that changes which weaken shareholders’ ability to hold company insiders accountable should generally be given greater weight than benefits in other areas, and a further 19 percent supported giving changes to shareholder rights greater weight than other factors. By contrast, 26 percent of non-investor respondents favored giving relatively greater weight to significant benefits identified by the company than to changes in shareholder rights.
– “Problematic” governance provisions: Under current ISS policies, certain practices, such as multi-class share structures, supermajority voting requirements, and restrictions on shareholder rights, can result in adverse voting recommendations – and those adverse recommendations generally continue for as long as the provisions remain in place, unless the provisions have been approved or ratified by shareholders or the company has measures to phase out the provisions. The majority of investor respondents supported maintaining this approach, with approximately 76 percent stating that adverse vote recommendations should continue to be issued for as long as the governance provisions identified as problematic remain in place. Non-investor respondents expressed different views, with approximately one-third supporting adverse vote recommendations only for the first director elections following the adoption of such provisions, while 29 percent selected “it depends” and 22 percent that such provisions are not problematic.
When asked about the application of negative vote recommendations under ISS U.S. Benchmark Policy, investor respondents most commonly favored an escalating approach whereby recommendations would initially apply to the chair of the committee responsible for governance oversight and, when warranted, expand to all committee members based on factors such as the nature, duration, severity, or number of governance concerns.
– Board slate elections: Investor respondents generally favored a market-specific approach, with 40 percent supporting the view that slate elections should be considered problematic only in markets where they are not the prevalent practice. However, 32 percent of investor respondents considered slate elections a governance concern regardless of local market practices. Non-investor respondents were evenly divided between a market-specific approach and the view that slate elections alone should not justify opposition to directors, with each option selected by approximately 40 percent of non-investor respondents.
The survey also asked for views on compensation matters and on climate and nature-related disclosures, with these results:
– Board responsiveness to executive pay concerns: The survey asked this question in light of the May 2026 SEC “filer status” proposal that, among other changes, would significantly expand the number of U.S. companies exempt from existing say-on-pay voting requirements. Fifty percent of investor respondents said that where pay concerns and a say-on-pay vote is not on the ballot, they would support in the first year opposing the election of the chair of the compensation committee, and a further 41 percent of investor respondents supported opposing all incumbent compensation committee members. Among non-investor respondents, 54 percent of non-investor respondents said opposition of compensation committee members would not be appropriate under such circumstances. See Meredith’s CompensationStandards.com blog today for more color on this question and other compensation topics.
– Reduced climate disclosures due to less stringent disclosure requirements: 43 percent of investors said that directors should be considered accountable for reduced transparency even where the company may be in regulatory compliance. By contrast, 85 percent of non-investor respondents responded that directors should not be considered accountable provided the company continues to meet applicable regulatory requirements. Twenty-four percent of investor respondents selected the same response.
– Reduced climate disclosures driven by legal and/or financial risks identified by the company: 43 percent of investors said that directors should not be considered accountable for reduced transparency provided the company discloses the reasonable steps it is taking to continue to assess the risks and its expectations of resuming at least previous disclosure levels in the future. Other Investor responses were otherwise relatively divided, with 24 percent responding that directors should be considered accountable and 22 percent that directors should not be considered accountable because companies are best positioned to assess disclosure-related risks. Non-investor respondents expressed a clearer preference for this last answer, with 75 percent selecting this option.
– Nature-related risk disclosures: The survey also sought views globally on evolving expectations around nature-related risk disclosures. When asked whether companies with significant exposure to nature-related risks should disclose information using a recognized framework, 68 percent of investor respondents said yes, while half of non-investor respondents said such disclosure should be left to the discretion of individual companies.
We’ll be discussing the proxy advisor landscape and expectations for 2027 next week at our “Proxy Disclosure & 23rd Annual Executive Compensation Conferences.” Among other informative sessions on our agenda, we will hear from Hannah Fasbender of Glass Lewis and Kevan Marvasti of ISS on Tuesday, October 13th. You can still register. Sign up online, email info@ccrcorp.com or call our team at 800-737-1271 today.
