For his latest column in Reuters’ Practical Law, Senior M&A Partner Frank Aquila authored “Human Capital Management Considerations,” discussing how boards can best prepare companies to respond to shareholder activism regarding human capital management strategies, policies and practices.
Frank suggests that boards pay special attention to the following issues that employees, regulators and shareholders are focused on.
- Recent Political and Regulatory Developments: Labor-related challenges that companies faced in 2023, such as elevated prices, challenging workplace conditions and rapid technological advancement, are likely to persist in the near term. Boards should remain engaged in these matters and monitor ongoing developments with internal and external advisors to exercise appropriate oversight.
- Shareholder Engagement and Activism: In 2023, companies received a high level of proposals related to workplace diversity, a just transition to a low-carbon economy, union activity, reproductive rights, pay equity and workplace harassment. In light of these proposals, boards should review their company policies and be aware of any potential legal exposure.
- Fiduciary Duties: To fulfill its fiduciary duties in the face of divergent views, boards need to have an appropriate framework for overseeing human capital management. Recent court rulings show that decisions regarding human capital management must be made after appropriate deliberation and often require input from many groups within the company.
- Disclosure and Engagement: Companies’ public disclosure must reflect their human capital-related policies and practices so that they are well-positioned in the face of activism, litigation and investigations. Similarly, a company’s response to shareholders and other stakeholders will be more effective if it is timely and appropriately balances a broad range of considerations.
Read “Human Capital Management Considerations”