Corporate boards face a panoply of risks – and the nature of these risks are quickly evolving. Cybersecurity has quickly risen to the top of the list of corporate risks. Add to that the new SEC regulations on cybersecurity disclosures, and board members face serious and escalating risks surrounding ransomware attacks, data breaches and other technical issues. The challenge – board members are not cyber...
In a far-reaching decision with significant implications, the Delaware Chancery Court recently issued a decision confirming that Caremark duty of oversight obligations extends to senior officers. This will have an immediate impact on shareholder derivative risks and litigation. Companies now will face duty of oversight breach claims that include or even just focus on senior officers who have breached their fiduciary duty of oversight. Vice...
We constantly hear about the importance of “accountability,” meaning that organizations and individuals have to be held accountable for misconduct or failures to act. The focus on accountability is a positive trend, consistent with our ideas of justice and fairness, Within an organization, accountability is a cornerstone of organizational justice. When demands for accountability reach the board room and individual board members, however, there are...
On October 1, 2019, in In re Clovis Oncology, Inc. Derivative Litigation (here), a Delaware Chancery Court denied a motion to dismiss the plaintiffs’ claims under the Caremark decision against individual directors for failing to monitor the development of the biotech firm’s experimental drug and allowing it to permit inflated performance results. The Court’s decision was the second opinion issued by the Delaware courts in...
I have long predicted that corporate board members are in for a rude awakening. (See posts here and here and ebook here) Corporate boards have to improve their ability and knowledge surrounding supervision and monitoring of a company’s ethics and compliance program. Most corporate boards have little to no knowledge about what compliance is, how it works, and what their precise obligations are as part...
