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Defending Director Discretion

the-directors-handbookActivist investors looking to effect change on U.S. corporations via positional investment have monopolized discussion of board activity and director responsibilities of late. However, there are parallel legal developments impacting director discretion that should also be on directors’ radar, says Tom Dougherty, author of The Directors’ Handbook.

In the Foreword of the new 2016 Edition of The Directors’ Handbook, Dougherty examines three developments worthy of director attention:  the threatened demise of derivative court case protections; increasing judicial skepticism toward settlements of challenges to corporate disclosure; and the potential intrusion of SEC whistleblower protocols into corporate arenas.

“The interplay of governance allocation, strategy development and disclosure obligations impinges significantly on director decision-making,” Dougherty explains. He notes, for example, that recent court decisions in key incorporation states are opening the door to an increasing number of shareholder class action suits questioning director decisions, and that class-action suits are also being used to second-guess directors’ decisions regarding transaction recommendations.

The Directors’ Handbook: A legal and a practical perspective on developments faced by directors

Tom Dougherty explores these and other key issues in the 2016 Edition of The Directors’ Handbook, a leading resource for corporate governance. A partner at the Boston offices of Skadden, Arps, Slate, Meagher & Flom LLP, Dougherty has spent his career advising companies and their boards and he continues to apply this experience and expertise to this new Edition of the Handbook.

The 2016 Edition includes insight on how to best address the full spectrum of key governance and disclosure issues, and how to handle shareholder activist campaigns and proxy battles. It offers analysis of such vital issues as creating an audit committee charter, crisis management, and director and officer insurance.

Readers will find the most recent information about managing corporate conflicts of interest; the interplay of stock exchange independence rules and state law standards; the evolving role of proxy advisory groups; staggered board repeals; and the political economy of corporations and corporate governance approaches around the world.

There is a comprehensive look at adapting corporate compliance processes to SEC whistleblower challenges, and a chapter that addresses the role of the corporate secretary. A companion CD-ROM contains the key cases and legislation that form the basis for corporate governance here and abroad.

“A director’s job is a professionally rewarding task. As I say in the book, it is the vision and vigilance of the directors that determine the future of the company,” Dougherty says. “It’s very satisfying to be part of a team that can create jobs and value for people.”