Sullivan & Cromwell offers its clients a multidisciplinary approach to corporate governance. We believe no law firm has a more comprehensive understanding of current corporate governance requirements and practices, including the implications and requirements of the Sarbanes-Oxley Act, the Dodd-Frank Act and the related SEC, CFTC and stock exchange rules. Our advice is tailored for the specific company taking into account its specific circumstances based on a thorough understanding of current market practices.
In the post-Sarbanes-Oxley world, corporate governance commands the attention of directors, senior management, stockholders, regulators and academics, as corporations and other market participants wrestle with the question of what governance structures make the most sense in the context of ever-evolving regulation and market practice. S&C partners Marc Trevino and Bob Buckholz and retired partner Jack Bostelman have authored the Public Company Deskbook: Sarbanes-Oxley and Federal Governance Requirements, a comprehensive, three-volume treatise on governance and disclosure reforms for legal and accounting professionals, which collects and synthesizes much of the Firm’s experience and advice in governance matters.
Sullivan & Cromwell has long been recognized as a leader in corporate law. Our experience and familiarity with the issues that dominate the corporate governance debate allow us to give tailored advice—recognizing that this is not an area where one size fits all—including advising boards of directors on risk management in the changing environment and advising corporations on shareholder relations, including shareholder activism in all its forms.
Advice on Corporate Governance Compliance and Fiduciary Duties
We actively and closely help clients achieve compliance with corporate governance requirements using our expertise in such areas as audit, compensation and nominating committee practices, director independence issues, related party transactions, compliance procedures, director fiduciary duties, responses to shareholder proposals and demands and changes to charters or by-laws. In advising on corporate governance and disclosure matters, we bring to bear our knowledge of and experience with mergers and acquisitions, tax, executive compensation and litigation aspects of corporate governance matters. Our corporate governance compliance activities include:
- Advising companies and boards of directors on how to deal with shareholder demands and proxy proposals relating to corporate governance practices, such as majority voting, proxy access, rights plans, special meeting requests and staggered boards
- Advising our clients by making presentations to and participating in meetings of senior management, boards of directors and board committees concerning the corporation’s governance structure and risk management in the current environment
- Assisting clients in corporate structuring in preparation for, and governance implications arising from, capital markets, M&A and other transactions
- Analyzing existing client practices and disclosures, including those relating to director independence and qualifications, board structure and functioning, related party transactions, and executive compensation matters, and advising specifically on the options available to achieve compliance with the rules
- Drafting or revising corporate governance materials, including disclosure controls and procedures, audit committee policies, related party transaction policies and codes of ethics, as well as corporate governance disclosure in annual proxy statements, in light of SEC and stock exchange rules
- Issuing client memoranda to notify clients immediately of the content and potential impact of any rulemaking and practice developments
Active Participation in Regulatory Developments
We actively participate in the rulemaking for and interpretation of the governance and disclosure-related rules of the SEC, the CFTC, the NYSE and Nasdaq and in the broader dialogue on developing market practices. For example:
- We routinely submit comment letters to the SEC and the CFTC, and assist clients and legal groups with their comment letters, regarding rule proposals by the SEC, the CFTC and stock exchanges, offering suggestions for their improvement. For example, Sullivan & Cromwell and six other law firms submitted two joint comment letters to the SEC on its proposed proxy access rules, which would facilitate shareholder nominations of candidates for election to a public company’s board of directors.
- Our lawyers have coordinated with other international law firms and legal groups to reach common interpretive positions with respect to certain complicated and sensitive regulatory areas, such as loans to executive officers and directors.
- We regularly engage in direct discussions with the staff of the SEC and stock exchanges with regard to difficult interpretive matters faced by our clients.
- Our lawyers are active in governance organizations, have published numerous articles on corporate governance and frequently give speeches and participate in conferences and other events in this area.
Leading Corporate Governance Litigation Practice
Sullivan & Cromwell has long handled some of the most important cases in the development of U.S. corporate law. Our attorneys have extensive experience representing corporate directors and officers, corporate boards and Special Committees in complex litigation and investigations involving a wide range of issues relating to corporate governance, the fiduciary duties of directors and officers, and significant corporate decisions. We bring our litigation experience to bear directly on our corporate work and regulatory compliance programs. Highlights of our experience include:
- Successfully arguing to the Delaware Supreme Court on behalf of client CA that a proposed shareholder bylaw requiring the mandatory reimbursement of proxy solicitation expenses of short slate candidates was invalid. In ruling in the first case ever certified by the SEC to the Delaware Supreme Court, the Court set forth important guidelines on the permissible scope of shareholder bylaw proposals.
- Advising a Special Committee of the Board of Directors of one of the world’s largest companies in responding to a shareholder demand for litigation attacking the CEO’s compensation. Following receipt of the Committee’s report, the shareholder took no further action.
- Representing the Special Litigation Committee of the Board of Directors of Monster Worldwide, Inc. in its internal investigation concerning improper stock option backdating at Monster and in related derivative litigations brought in both state and federal court in New York. A court-approved settlement negotiated by S&C returned an estimated $32 million in value to Monster, significantly reduced the voting power of Monster’s founder and former Chairman and CEO, and enhanced Monster’s corporate governance measures. Monster has been realigned as the plaintiff against certain non-settling defendants and is directly pursuing those claims.
- Representing The New Germany Fund – a NYSE-listed, closed-end fund – and its inside directors in defense against an attempt by shareholder activist Phillip Goldstein and a group of dissident shareholders seeking to elect directors and to invalidate a director qualification bylaw. After class action litigation was commenced against the fund (and its directors), S&C defended them in the litigation and settled the case after a summary judgment motion by the defendants.
Broad Client Base
Sullivan & Cromwell has advised a wide array of clients across multiple industries and jurisdictions, ranging from some of the largest to more moderate-sized corporations andfinancial institutions, on a spectrum of corporate governance and disclosure issues critical to their successful business operations.
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