1) Recent Developments in Litigation, with a focus on M&A and Say-on-Pay
This session will address recent developments in shareholder litigation. We’ll examine the substantial increase in litigation related to mergers and acquisitions: a) how every merger results in a suit; b) most deals get multiple suits; c) remedies are almost always cosmetic disclosures to shareholders; and d) whether the costs of shareholder litigation, including large fee awards to plaintiff’s attorneys, are worth the benefits. This session will also discuss recent shareholder suits that seek to block shareholder votes on executive compensation. These suits seek to prevent Say-on-Pay votes and other compensation related votes at public firms absent additional disclosures.
2) Developments in Financial Regulation Under Dodd Frank
This session will cover recent developments in the implementation of Dodd Frank. Topics will include the Volcker Rule, orderly liquidation, derivatives trading, regulation of systemically important financial institutions (“SIFIs”), and other recent developments.
This session will provide a background on executive compensation and design choices for these remuneration arrangements. Topics include level of compensation, pay-for-performance, choice of performance measures, and say-on-pay. Discussion will also include executive hedging and pledging and role of compensation consultants and members of the compensation committee.
4) Corporate Finance
This session will evaluate and deconstruct the key issues of corporate finance that confront directors and review how managers should make investment decisions and what tools capable directors (and journalists) might use to study and evaluate those decisions. Topics include simple and complex discounting, cash flow analysis; free cash flows, and the incorporation of probability analysis in investment decisions. Discussion will include the role of the cost of capital, how to measure the cost of capital, and how directors (and others) might think more clearly about risky projects. We will review the modern relevance of the various Modigliani-Miller (MM) financing propositions.
The canonical account of U.S. corporate governance, which stresses the tension between dispersed shareholders and company managers in large public firms, has become factually obsolete and now provides a misleading framework for contemporary corporate governance theorizing. In this account, framed by Adolph Berle and Gardiner Means 80 years ago, shareholders individually own too few shares to monitor management’s performance and confront coordination costs that make collective monitoring difficult. But the Merle-Means premise of dispersed share ownership is now wrong. In 2011, for example, institutional investors owned over 70 percent of the outstanding stock of the 1,000 largest U.S. public corporations.
In this presentation, Prof. Gilson will address the impact on corporate governance of the ownership reconcentration of U.S. public corporations. Beneficial owners now typically hold their equity interests through a set of intermediary institutions like pension funds and mutual funds.This shift gives rise to a new “agency capitalism”, an ownership structure in which agents hold shares for beneficial owners. The consequence is a double set of agency relationships: between shareholders and managers; and between institutions and their beneficiaries- what Professor Gilson calls “Agency Capitalism.”
Many of these institutional fiduciaries have business models that limit their incentives and capacity to monitor the business choices of their portfolio companies except through assessing stock market performance. Record owners prefer selling their stock to exercising governance rights even when a governance approach is more valuable to the beneficial owners.
Prof Gilson will argue that the appearance of activist shareholders, such as hedge funds, is an endogenous response to the monitoring shortfall that follows from ownership reconcentration in intermediary institutions. In this analysis, the activist shareholders are governance intermediaries: they function to monitor company performance and then to present to companies and institutional shareholders concrete proposals for business strategy through mechanisms less drastic than takeovers. The role of a new entrant into the governance story, the activist shareholder, is to increase the value of the vote held by institutions by teeing up the intervention choices at low cost to the institutional owners, providing a new form of market-based stewardship.
This session will cover what journalists should know about requirements for financial literacy by corporate board members. The purpose of the income statement is not to report income; once you understand this, you’ll have mastered the basics. Topics will include controversies over revenue recognition; the single most important understanding about cash flow analysis; how some lie with accounting statistics; the convergence of US GAAP with International Financial Reporting Standards (IFRS); the important measure of income that journalists hide from their readers; and wreaking havoc with executory contracts.
7) Insider Trading and Selective Disclosure: Implications of Social Media and High Frequency Text Analytics for the SEC’s Enforcement Agenda
Insider trading and selective disclosure (Regulation FD) issues have special salience for the press. These enforcement proceedings are often high profile and can turn on subtle questions of whether information has been adequately disseminated so that it constitutes “public” dissemination. That question, never an easy one, has become all the more difficult because of the emergence of social media and the proliferation of “push” features that cause information to spread in a manner that is unrelated to the footprint of the source at which the information is originally published or posted. This session addresses the law of insider trading in general, and the operation of the anti-selective disclosure rule (Regulation FD) from a perspective that is particularly relevant to members of the working press. The SEC’s threatened enforcement proceeding against Netflix because of its CEO’s posting on his personal Facebook page will receive particular attention.