Compliance issues are far from the only tariff-related operational challenges facing companies. This Debevoise memo discusses some of the friction points in commercial contracts that may arise due to tariffs. Here’s an excerpt addressing the potential contractual implications of supply chain disruptions:
Tariffs may cause delays and increase costs along a company’s supply chain. This may affect the ability of companies to meet contractual delivery, payment or timing obligations.
To assess risks in this scenario, companies should identify any price, delivery, timing or payment obligations in their contracts that may expressly allocate tariff risks to any given party. Some contracts, for example, may provide that the purchase price is inclusive of all applicable tariffs, whether existing or imposed during the term of the contract, thereby allocating tariff risks to the seller. Other contracts may establish procedures for determining which party bears the risk of any material change in circumstances, including tariff increases. For example, the seller may be given an opportunity to propose an adjusted price to reflect an increase in tariffs, after which the parties are to negotiate an equitable adjustment in good faith.
But not all fixed price, delivery or timing clauses will account for tariff risk. In many cases the clauses will impose hard deadlines and firm prices with clear consequences if an obligation is not met. Fixed delivery or “time is of the essence” provisions, for example, could allow the buyer to cancel the order, seek liquidated damages, or claim nonperformance for any late deliveries regardless of the cause. Some contracts may account for such risks in other types of clauses, which we describe below. However, where there is any ambiguity in the contract’s accounting of such risk, parties should expect dispute vulnerability to increase.
The memo points out that parties to a contract may have allocated tariff risk through broad indemnity or pass-through provisions, even if tariffs are not specifically called out in the language of the contract. It also addresses the potential role of liquidated damages provisions, force majeure provisions and non-contractual excuses for non-performance, and issues surrounding contract terminations and renegotiations.
Tune in at 2:00 pm Eastern today for our annual CompensationStandards.com webcast “Proxy Season Post-Mortem: The Latest Compensation Disclosures” to hear Mark Borges of Compensia, Dave Lynn of CompensationStandards.com & Goodwin and Ron Mueller of Gibson Dunn discuss the ins and outs of compensation disclosures during the 2025 proxy season and share some thoughts on the SEC’s upcoming Executive Compensation Roundtable, for which all three of them are serving as panelists.
In the last two years, we’ve extended the runtime of this program to 90 minutes since we were all tackling major new rulemaking. (I’m talking about you, PvP and clawbacks!) So much has happened this proxy season, we’re sticking with a 90-minute so Ron, Mark and Dave have time to cover all these hot topics:
2025 Shareholder Engagement Challenges
2025 Proxy Statements — DEI and Other E&S Developments
2025 Proxy Statements — Executive Compensation Disclosures
– Say-on-Pay during the 2025 proxy season
– CD&A highlights
– Pay-versus-Performance disclosure
– Compensation clawbacks
– Perquisite disclosure
– Proxy advisory firm policies
– Equity award grant practices
Shareholder Proposals
Upcoming SEC Roundtable
Members of CompensationStandards.com can attend this critical webcast at no charge. If you’re not yet a member, you can sign up by contacting our team at info@ccrcorp.com or at 800-737-1271. Our “100-Day Promise” guarantees that during the first 100 days as an activated member, you may cancel for any reason and receive a full refund. The webcast cost for non-members is $595.
We will apply for CLE credit in all applicable states (with the exception of SC and NE which require advance notice) for this 90-minute webcast. You must submit your state and license number prior to or during the program using this form. Attendees must participate in the live webcast and fully complete all the CLE credit survey links during the program. You will receive a CLE certificate from our CLE provider when your state issues approval; typically within 30 days of the webcast. All credits are pending state approval.
This program will also be eligible for on-demand CLE credit when the archive is posted, typically within 48 hours of the original air date. Instructions on how to qualify for on-demand CLE credit will be posted on the archive page.
On Friday, the SEC announced the appointment of Kurt Hohl to serve as the agency’s Chief Accountant. This excerpt from the SEC’s press release provides information on Mr. Hohl’s accounting industry and regulatory experience:
Mr. Hohl most recently founded Corallium Advisors, which helps businesses navigate the complexities of auditing, regulatory compliance, risk management, and initial public offerings. Before that, he spent 26 years as a partner at Ernst & Young (EY) in a variety of roles. His final EY role was as global deputy vice-chair of EY’s Global Assurance Professional Practice. In that role he was responsible for the operation and oversight of the technical, regulatory, risk, and quality oversight functions of EY’s global professional practice organization — a team of more than 1,400 professionals.
Mr. Hohl previously served at the SEC from 1989 to 1997, rising to Associate Chief Accountant in the Division of Corporation Finance. There he authored what became the Financial Reporting Manual, a primary guide for the SEC accounting staff and practitioners in the application of the federal securities laws. He began his professional career at Deloitte Haskins & Sells.
Ryan Wolfe, the SEC’s Acting Chief Accountant since Paul Munger’s departure in January, will return to his prior position as Chief Accountant for the Division of Enforcement.
The SEC also announced the appointment of Brian Daly as Director of the Division of Investment Management and the appointment of Erik Hotmire as the agency’s Chief External Affairs Officer and Director of the Office of Public Affairs.
If you’re following the DExit debate, you may be interested in this recent blog by Prof. Ben Edwards, which tracks the status of all 2025 public company Nevada reincorporation proposals. According to the blog, 12 of 14 proposals to move from Delaware to Nevada have passed, and the failure of the other two to pass was due to a large number of broker non-votes. Prof. Edwards notes that one vote in particular may be worth keeping in mind when it comes to the formula for success of future proposals:
One thing worth highlighting here is that Fidelity National succeeded on its second attempt to shift to Nevada. Previously in 2024, it secured 1110,277,692 votes in favor with 107,467,828 votes against. With about 27,000,000 broker non-votes, this wasn’t enough for the necessary majority. This year the votes were different with 147,059,505 votes cast in favor of the move and 74,874,567 votes cast against the move.
So what changed? As I covered in an earlier post, Fidelity National’s Nevada charter increased shareholder protections above the Nevada default threshold. This may have shifted some votes and makes it something to watch for future efforts.
The blog says that two proposals to move from Delaware to Nevada are currently pending, along with one proposal to move from New York to Nevada. Moves by public companies from Delaware to Nevada or other states are getting a lot of media attention, but let’s face it, 14 public company migrations during the current year with the possibility of two more isn’t exactly a reincorporation tidal wave.
My guess is that we’ll need to see whether, over time, IPO candidates are incorporating in places other than Delaware in order to assess just how big a long-term threat Delaware is facing. That’s because the data suggests that most Delaware public companies are unlikely to migrate, and some have argued that the bigger threat may be from private equity and venture capital investors who are persuaded that other jurisdictions will offer them a greater opportunity to keep calling the shots post-IPO than will the Delaware Chancery Court.
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:
– Brace for Impact: Grappling with Economic Uncertainty
– The Staff Throws a Lifeline to Rule 506(c) of Regulation D
– Navigating Shareholder Engagement After the Staff’s February 2025 Schedule 13G Guidance
Please email sales@ccrcorp.com to subscribe to this essential resource if you are not already receiving the important updates we provide in The Corporate Counsel newsletter.
Yesterday, the SEC announced and posted a notice of formal withdrawal for fourteen notices of proposed rulemaking that were issued between March 2022 and November 2023. Not surprisingly, the list includes the 2022 proposal to amend Rule 14a-8, which would have modified three bases for excluding shareholder proposals under the rule — substantial implementation, duplication and resubmission.
This is the only withdrawn Corp Fin rulemaking proposal. The remaining thirteen relate to the Division of Investment Management and the Division of Trading and Markets.
1. Executive Compensation Decisions: Setting Compensation and Informing Investment and Voting Decisions
2. Executive Compensation Disclosure: How We Got Here and Where We Should Go
3. More on Executive Compensation Disclosure: How We Got Here and Where We Should Go
The panelists include a mix of outside and in-house counsel, investors, compensation consultants, and more – including our very own Dave Lynn and Mark Borges, and several other folks who will be familiar to members of our sites! Mark just shared a few observations relating to topic #1 on his “Proxy Disclosure Blog” on CompensationStandards.com – and Dave shared on LinkedIn his perspective on creating the “summary compensation table” and “compensation discussion & analysis” disclosure rules.
The roundtable will be held at the SEC’s headquarters at 100 F Street, N.E., Washington, D.C., from 1 p.m. – 5:35 p.m. ET. The event will be open to the public and webcast live on the SEC’s website. Doors will open at noon ET. For in-person attendance, registration is required. For online attendance, registration is not necessary – you can find the broadcast on the SEC’s website.
We expect to see more activity around comment letters and suggestions after the roundtable.
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:
– Brace for Impact: Grappling with Economic Uncertainty
– The Staff Throws a Lifeline to Rule 506(c) of Regulation D
– Navigating Shareholder Engagement After the Staff’s February 2025 Schedule 13G Guidance
Please email info@ccrcorp.com to subscribe to this essential resource if you are not already receiving the important updates we provide in The Corporate Counsel newsletter.
On Monday, the DOJ announced the highly anticipated, updated Guidelines for Investigations and Enforcement of the Foreign Corrupt Practices Act (FCPA). In a Tuesday speech, the head of the DOJ’s Criminal Division summarized the updated guidelines, noting that they “provide evaluation criteria and a non-exhaustive list of factors to balance when deciding whether to pursue an FCPA case.” The listed, non-exhaustive factors (no one factor is necessary or dispositive) include whether the alleged misconduct:
– Deprived specific and identifiable U.S. entities of fair access to compete;
– Involves key infrastructure or assets;
– Bears strong indicia of corrupt intent tied to particular individuals and serious misconduct; or
– Is associated with the criminal operations of a Cartel or Transnational Criminal Organization.
He continues, “The through-line is that these Guidelines require the vindication of U.S. interests. People have speculated about the meaning of that phrase, but the DAG’s memo makes it clear. It is not about the nationality of the subject or where the company is headquartered. In plain terms, conduct that genuinely impacts the United States or the American people is subject to potential prosecution by U.S. law enforcement. Conduct that does not implicate U.S. interests should be left to our foreign counterparts or appropriate regulators.”
The updated FCPA Enforcement Guidelines also make clear that the DOJ is resuming foreign bribery investigations. However, the WSJ reported yesterday that the narrowed focus of enforcement on “matters that relate to U.S. strategic interests” has caused the DOJ to close “nearly half of its foreign-bribery investigations to align with new guidelines” — but, notably, they don’t “anticipate dismissing any more cases that have already been criminally charged.”
The Guidelines also include some procedural changes, described in this WilmerHale alert:
– First, the Guidelines state that the initiation of all new FCPA investigations and enforcement actions must be authorized by the Assistant Attorney General (or the official acting in that capacity) for the Criminal Division or a more senior Department official. The authority to open FCPA investigations formerly had been the provenance of the DOJ’s Fraud Section and the DOJ’s FCPA Unit.
– Second, the Guidelines explicitly direct prosecutors to consider the disruption to lawful business and the impact on a company’s business throughout an investigation—establishing the need to consider “collateral consequences” throughout an investigation and “not just at the resolution phase.”
– Third, the Guidelines also direct prosecutors to consider the likelihood that foreign regulators are willing and able to investigate and prosecute the misconduct, signaling deference to foreign authorities in the absence of compelling U.S. interests.
– In addition, the Guidelines state that “prosecutors shall focus on cases in which individuals have engaged in misconduct and not attribute nonspecific malfeasance to corporate structure.” During his remarks, Mr. Galeotti explained this aspect of the Guidelines as directing focus on “specific misconduct of individuals, rather than collective knowledge theories.” This language signals that the DOJ may take a stricter approach to the FCPA’s knowledge requirement in corporate cases.
The alert continues with these thoughts about FCPA enforcement going forward:
– Travel and entertainment cases and certain cases predicated on internal accounting control violations—both robust areas of enforcement over the years—may not present the severity of harm contemplated for DOJ enforcement under the Guidelines.
– Given the focus on cartels and TCOs, the next three years could see greater scrutiny of certain geographies—like Mexico—over other geographies that have more historically been at the center of FCPA investigations and resolutions.
– It remains to be seen how the SEC will fit into this new FCPA enforcement regime and whether the SEC will adopt the DOJ Guidelines, whether formally or informally, when considering its own FCPA enforcement.
It also includes these important reminders about the continued importance of compliance, including in areas that may not be highlighted in the Guidelines:
– Any abandonment or roll-back of FCPA compliance that some may have contemplated in the wake of the Executive Order would be unwise and ill-advised, particularly for non-U.S. entities who may find themselves competing with U.S. companies for business.
– Most importantly, as we noted in our client alert on the Executive Order, the FCPA remains U.S. law and carries a statute of limitations of five years (which may be extended far longer under certain conspiracy theories and when evidence is formally sought from overseas); FCPA violations committed today or in the next few years may be reviewed, and potentially prosecuted, under a different administration. It is important that companies remain vigilant to ensure that they have compliance programs in place that can prevent and detect violations of the statute and procedures in place to appropriately escalate and resolve issues when they do occur.
