USA Law and Practice Contributed by: Lisa Fontenot, Jennifer Broder, Per Chilstrom and Lothar Determann, Baker McKenzie
2. Corporate Management 2.1 Principal Bodies or Functions
and conduct advisory say-on-pay votes at prescribed intervals under the Dodd-Frank Act. This includes: • a Compensation Discussion and Analysis (CD&A) section describing the company’s compensation philosophy and process; • detailed tabular disclosure of compensation paid to named executive officers; • pay ratio disclosure comparing CEO compensation to median employee compensation; and • pay versus performance disclosure showing the relationship between executive compensation actually paid and the company’s financial perfor - mance. Shareholder meetings Public companies are required to hold annual share - holder meetings and comply with state law and proxy disclosure requirements in connection with proxy solicitations. Statutory and listing requirements are mandatory. Proxy adviser policies and investor governance expectations are voluntary but have historically exert - ed significant practical influence. 1.4 Stock Exchange Requirements Developments Nasdaq’s 23/5 Stock Trading In April 2026, the SEC approved Nasdaq’s proposal to expand trading hours to 23 hours a day, five days a week. Nasdaq targets a late 2026 launch for this proposal. The expansion of trading hours raises sev - eral practical considerations for listed companies, and corporate governance practices may change as a result of the market changes. Vacated Board Diversity and Stayed Climate Disclosure Rules In 2024, Nasdaq’s board diversity disclosure rules were judicially invalidated and have been removed. Separately, in March 2024, the SEC adopted climate disclosure rules for public companies but is now rescinding them in the face of judicial challenge. Nei - ther set of rules is currently in effect.
In US corporations, the principal governing and man - aging bodies are the board of directors, board com - mittees, officers and shareholders. The board holds ultimate responsibility for oversight and strategy, while officers manage day‑to‑day operations under delegated authority. Committees perform specialised oversight functions. State law generally permits, and corporate charters typically authorise, the board to delegate any of its powers to a committee of directors. Boards may also establish special-purpose commit - tees (eg, a transaction committee for strategic trans - actions or a special litigation committee for deriva - tive litigation) and delegate oversight responsibilities to them. Shareholders exercise limited governance rights, primarily through voting on fundamental mat - ters, as further discussed in 2.2 Types of Decisions . LLCs and partnerships are governed according to their operating or partnership agreements, with man - agement authority vested in members, managers or general partners, as applicable. For a discussion of the different entities and their respective foundations for governance, see 1.1 Cor- porate Forms and Governance Requirements . 2.2 Types of Decisions Decisions Made by Governing/Managing Bodies Boards of directors, including committees to which authority is delegated, approve major corporate actions, including mergers, significant financings, equity issuances, executive appointments, strategic plans and dividend declarations. Generally, decisions reserved for the board include: • amending the certificate of incorporation and bylaws; • issuing stock and granting equity; • recommending actions to shareholders; • filling vacancies on the board; • approving a merger agreement or other material transactions, including engaging in a sale or dis - tribution of all or substantially all of the company’s assets, borrowing or lending material amounts of money, declaring dividends, approving the com -
718 CHAMBERS.COM
Powered by FlippingBook