Charles Elson
Wilmington
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Articles by Charles Elson
The Quarterly Disclosure Conundrum
Just when many had expected no new earth-shattering proposals from the SEC, Chair Paul Atkins struck again. In what has become a highly controversial move, the chair has proposed the elimination of the long-standing requirement for public quarterly corporate financial reports. As directors, what should we make of this effort? Is this advantageous for the businesses and investors that we serve or something that we should avoid supporting?
Boards and Shareholder Proposals
The debate over the necessity, content and future of shareholder proposals has been ongoing for the entirety of my professional career. Recently, it took a dramatic turn with an initiative begun by SEC chair Paul Atkins to significantly limit, if not to eliminate entirely, such proposals, which many view as a wasteful managerial nuisance.
A Last Word on Mr. Musk and His War on Delaware
It is finally over. After years of wrangling and far-flung attacks on the Delaware judiciary by Elon Musk, the final legal resolution of his Tesla compensation controversy has been handed down by the Delaware Supreme Court. The result is not pretty. The compensation baby was rhetorically split. Hopefully, I can explain the Court’s seemingly contradictory resolution of the matter and how it will affect executive compensation and director duties more generally.
Government Investment and Back to the Future
The recent news of significant U.S. government equity investments in a number of public companies involved in industries considered important to our national defense took me by complete surprise. In the words of the late, great Yogi Berra, it was “déjà vu all over again.” Suddenly, we seemed back in the great 2008 financial crisis, when the government took large stakes in various financial and even industrial companies to keep such “vital” businesses afloat.
An Ode to Robert Monks
The corporate governance community lost one its most significant and influential members on April 29, 2025. The passing of Robert Monks was a sad but important event that must be noted in these pages. Very few of us can claim a substantial impact on the broader communities in which we live. Even fewer can be said to have truly changed the world. Bob Monks was such a man.
The Case of the Bluebell Ice Cream
iStock.com/Kristine Radkovska Host Professor J.W. Verret interviews Professor Charles Elson on Delaware's Marchand case. A listeria outbreak in Bluebell ice cream led to a criminal case by the federal prosecutor and a successful "Caremark" failure to oversee claim in Delaware. We interview Charles about his service as a member of the Bluebell special litigation committee that handled this matter.
Directors and the New Delaware
As directors, few of us are typically concerned with our companies' state of incorporation. It seems to be a distant and technical issue far removed from our daily responsibilities of managerial oversight. But, in actuality, it is highly important. The state of your incorporation determines the laws that govern the relationship between the management, board and investors, and provides a judicial system to adjudicate any disputes that arise.
Elon Musk and the Delaware Courts
Nobody likes to lose a case in court — especially corporate directors. We feel that it is an attack on our business acumen and integrity. Hurt feelings at a loss are inevitable. The question of the day, and of this column, is what do you do next? Obviously, something went wrong that created the dispute. The best response is to take one's lumps and make changes responsive to the action. If only everyone subscribed to this approach.
Sunday Book Review: November 17, 2024
In the Sunday Book Review, Tom Fox considers books that interest the compliance professional, the business executive, or anyone curious. These could be books about business, compliance, history, leadership, current events, or anything else that might interest Tom. In today’s Sunday Book Review edition, Tom Fox looks at four top books on due diligence for the compliance professional in November 2024.
Governments and Director Selection
Who should determine which individuals may serve on public company boards — management, shareholders or the government? Traditionally, the corporate governance movement has focused on displacing management's role in selecting who should oversee it. And with the advent of independent nominating committees, institutional investor hostility to the “management-captured” board and more enlightened corporate management, we have seen boards that are much more shareholder-centric.
Viewpoint: Battle over Seanergy tests whether the Marshall Islands could become uninvestable
The Republic of the Marshall Islands receives millions of dollars in revenue every year from the corporate registry services it provides to businesses headquartered around the world. Unlike many offshore jurisdictions, Marshall Islands corporations have experienced tremendous success in initial public offerings and on public exchanges worldwide, with dozens currently traded on the New York Stock Exchange and Nasdaq.
Delaware Swallows a Poison Pill
Two weeks ago, Delaware, the legal home of a substantial majority of U.S. public companies, self-destructed with serious consequences for investors worldwide. At the behest of a coalition of lawyers representing private equity firms, hedge funds and controlling investors, Delaware's General Assembly passed legislation that jettisoned the State's traditional investor-protective approach.
Delaware is jettisoning its traditional approach of protecting investors
The writer is the founding director of the John L.
Nelson Peltz and the Mouse
Contrary to popular media reports, Nelson Peltz did not lose his proxy contest with Disney. While it is true that he and his aï¬liated candidate did not win election to the Disney board, his real impact on the company was significant. And, in that respect, he ultimately won the war. Proxy fights are not like basketball games, where one point wins the contest. A good showing by the “loser” has a substantial impact on the contested company's future.
Elon Musk and the Outsized Executive Compensation Package
Four months ago, Chancellor Kathaleen McCormick of the Delaware Court of Chancery hurled a lightning bolt into the corporate boardroom with her landmark decision to rescind Elon Musk's massive stock award in the recent Tesla compensation case. I have written about the executive compensation controversy for over 30 years and was, like many others, shocked by her ruling. I never expected such a result from a Delaware court. And, frankly, I was delighted.
A New Investor Paradigm and the Corporate Board
“System stewardship” is a term few corporate directors are familiar with but it is emerging as a relevant and discussed area in the corporate governance field. The directorship community is largely unaware of the concept, but within the institutional investor universe it has become increasingly discussed. Notably, it creates a new tension between the role of the director and the role of the investor, which may in fact be a productive one. But what is it?
Corporate Governance Lessons from the OpenAI Controversy
The ongoing controversy surrounding the artificial intelligence company OpenAI, Inc. (OpenAI) offers valuable, broad-based governance lessons for corporate boards across industry sectors and regardless of whether they are for-profit or non-profit companies. The lessons include those relating to mission restrictions, corporate structure selection, the board/management dynamic, risk oversight, and workforce culture.
A Governance Lesson from Academia, Part II
Though the world of academia has rarely proven fertile ground for governance lessons for corporate boards, the recent controversies at Harvard and the University of Pennsylvania have proven otherwise. There are a number of important takeaways for corporate directors evolving out of the handling of management-oversight issues by the boards of both these prominent institutions.
A Governance Lesson from Academia
While most of the focus in corporate governance has been in the public for-profit corporation arena, sometimes much can be learned from governance-inspired debacles in the nonprofit sector. While nonprofits are in many ways different from profit-seeking enterprises, there are some distinct similarities. Such organizations are governed by elected trustees whose management oversight and guidance responsibilities mirror those in the commercial corporate area.
Editor's Note: Planes, Trains and Corporate Governance
I have long argued that the skills-based composition of a corporate board is critically important to proper board function. In addition to obvious independence from management, a wide range of talents that are tailored to the business of the corporation is vital to effective management monitoring. A recent set of travel experiences, oddly enough, drove this point home to me in an unexpected way.
Beyond Disruption
Beyond Disruption Listen to article A book review by Howard Brod Brownstein. Beyond Disruption: Innovate and Achieve Growth Without Displacing Industries, Companies or Jobs is an interesting and insightful book for board members, which has been written by two professors at the Institut Européen d'Administration des Affaires (INSEAD), a business school with campuses around the world.
Three Ways for Boards to Spur Total Shareholder Return
Effectively communicate commitment to shareholder value and engage in dialogue with your shareholders. As a board member, your primary responsibility is to maximize shareholder returns. But what happens when, despite believing your strategy is on point and management is delivering to plan, total shareholder return (TSR) continues to lag?
Compensation Consultant Best Practices
Compensation Consultant Best Practices Listen to article Identify the right counsel for your compensation committee. With board compensation committees taking on more responsibilities for companies, including oversight of compensation plans, pay governance and human capital policies, it is often necessary to bring on an independent consultant to ensure that the committee’s decisions are fair and support the company’s strategic vision.
Key Takeaways from Elon Musk vs. the SEC
The court’s decision has important implications for public company directors. On May 15, 2023, the Second Circuit Court of Appeals affirmed the judgment of the United District Court for the Southern District of New York that Elon Musk could not back out of a settlement he entered into with the SEC on Sept. 29, 2018. The settlement emanated from tweets concerning Musk’s desire to take Tesla private at $420 per share.
Prepare For Impending Cybersecurity Regulations
Six steps all boards should take immediately. The SEC’s proposed cybersecurity rules for public companies are widely expected to come into effect this fall. They will likely require disclosures in annual reports and proxy filings about board-level expertise in cybersecurity. The implication is that such expertise is both expected and necessary.
A Product in Need of Improvement
Large swaths of the American public, including Black Americans, are disillusioned by capitalism. How can we make it work for them? The benefits of capitalism are well known and have been covered at length in this edition of Directors & Boards. It is an economic system that helps to facilitate rapid economic growth, with limited government intervention, allowing producers to accumulate wealth by marketing their products to consumers who desire them.
Sitting CEOs Get the First Call
Broad talents are needed for a board, but there’s no substitute for the experience of a current chief executive. For advice and guidance regarding how to handle a crisis such as a pandemic shutdown, a financial meltdown or a supply chain breakdown, CEOs reach out to their board of directors, particularly to those members who have a deep understanding of such crises because they have dealt with similar ones before.
Digital Transformation Payday
A book review by Howard Brod Brownstein Digital transformation is a common theme among the issues and decisions currently facing boards. It can involve elusive concepts and may seem simple to talk about but complicated to implement. Even the most long-standing industries and businesses are affected by digital transformation. It permeates every area of a company’s activities, including production, supply, marketing, sales, human resources or regulatory compliance.
A Slow but Steady Increase in Gender Diversity on Boards
A Slow but Steady Increase in Gender Diversity on Boards Listen to article Gender diversity in the boardroom is slowly increasing, according to the findings of 2022 Inside the Public Company Boardroom, a report released in January 2023 by the National Association of Corporate Directors. The report, which was released in conjunction with Pearl Meyer, Main Data Group and MyLogIQ, found that 41% of new director appointees were women.
Investors Are Becoming More Focused on Board Quality and the CEO Role
Investors Are Becoming More Focused on Board Quality and the CEO Role Listen to article According to Global Corporate Governance Trends for 2023, the latest report by Russell Reynolds Associates, the three most pressing issues for boards on a global scale for the rest of the year and beyond involve skepticism about board quality, increased focus on the role of the CEO, and development of ESG programs and disclosures.
Understanding Capitalism | Henry Ford | Directors & Boards
Planes, Trains and Corporate Governance Published August 09, 2023 By Charles Elson If a company is struggling from a service perspective, the board must not only know about it, but work to mitigate the issue. Does Your Company Have the Right CFO? Published August 08, 2023 By Erin Essenmacher The chief financial officer is an essential role for any company. How the person in that role interacts with the board can be key to the company’s success.
Lara L. Lee | Harley-Davidson | Directors & Boards
My Board Journey Lara L. Lee Director: WD-40 Company, The Sill Inc., Rather Outdoors LLC, Liberty Safe What was your first board? I joined the board, and was then elected chair, of the Motorcycle Safety Foundation in 2001, when I was a serial “intrepreneur” and VP of enthusiast services at Harley-Davidson. What do you look for in a board? First, I look for the opportunity to add value in the near term and into the future. Second would be values alignment with management and my board colleagues.
Keeping track record of competence
What Directors are Thinking Charles Zimmerman, DMin Independent Director: Univest, Clemens Family Corporation As a lead director and governance committee chair, board composition and development and director recruitment and succession are always on my mind. ESG and DEI are hot topics in every public company boardroom these days, and they should be. But we must not focus so intently on the regulation trees that we lose sight of the board composition forest: balance.
Risk 2023: Déjà Vu All Over Again
Boards continue to be challenged by the war in Ukraine, China relations and ESG expectations. This year, geopolitical, climate change and environmental risk will again dominate global headlines. We are at the world not only faces a crucial inflection point, not only in relations between the West and the rest of the world, but also over ESG investment strategies and corporate policies in the private sector.
Character of the Corporation: The Delaware Court of Chancery and the Board
The following is an excerpt of a keynote conversation that took place at MLR Media's Character of the Corporation conference. Don Delves: How does the court approach situations when evaluating a stockholder challenge to board action? Andre Bouchard: I would look at it from the perspective of four different concepts. One is, what are the fundamental duties of directors? Second, what is the standard of conduct associated with those duties?
New Survey Finds Boards Ready for Refreshment and Skeptical of ESG Benefits
New Survey Finds Boards Ready for Refreshment and Skeptical of ESG Benefits Listen to article About half of the 700 directors surveyed by PwC for its Charting the Course Through a Changing Governance Landscape report would replace at least one member of their board if they had their druthers. Nearly 20% said that they would replace two or more.
Economic Recession Looms as the Top Concern for Corporate Directors
As part of its 2023 Governance Outlook: Projections on Emerging Board Matters, the National Association of Corporate Directors surveyed more than 300 directors on their expectations for the coming year as well as what areas they deem as important for their boards. When asked what trends they believe would have the greatest impact on their companies, 64% identified the threat of economic recession.
Adherent invasive Escherichia coli in Crohn’s disease: guilt by association?
http://orcid.org/0000-0001-8873-1534Charles O Elson Department of Medicine, The University of Alabama at Birmingham, Birmingham, AL, USA Correspondence to Dr Charles O Elson, Department of Medicine, The University of Alabama at Birmingham, Birmingham, AL 35298, USA; coelson{at}uabmc.edu Statistics from Altmetric.com Request Permissions If you wish to reuse any or all of this article please use the link below which will take you to the Copyright Clearance Center’s RightsLink service.
Prepare Today for Your Company’s Environmental Challenges of Tomorrow
Ten actions the board can take now! There is significant speculation today about what will be expected of public companies and their boards around environmental reporting and consideration of risks. While the exact form this will take is under debate, one thing is certain — companies must ensure that directors individually and their board as a whole are prepared for this increased responsibility.
Cyber Disclosure Practices Are Evolving Ahead of SEC Rules
Cyber Disclosure Practices Are Evolving Ahead of SEC Rules Listen to article An efficient board must set the tone for a company’s cybersecurity prioritization. How Cyber Governance and Disclosures Are Closing the Gaps in 2022, the EY Center for Board Matters’ latest analysis of cyber-related disclosures in the proxy statements and Form 10-K filings of Fortune 100 companies, reports mixed results when it comes to how companies are rising to the challenge of increased risk around cybersecurity.
Is Your Board Ready for a New Era of Shareholder Activism?
Is Your Board Ready for a New Era of Shareholder Activism? Listen to article Activists are launching more campaigns, and they are finding more success. In the first half of 2022, 37% of shareholder activist campaigns were conducted by first-time activists, a number that dwarfs the percentage led by more familiar activist names, such as Elliott Management or Icahn Associates (23%).
Survey: Recession Concerns Make Non-M&A Growth a Top Board Priority
Survey: Recession Concerns Make Non-M&A Growth a Top Board Priority Listen to article Meanwhile, the best home for ESG oversight is still up for debate. In its recently released fall board pulse survey, Proactive Governance to Address Recessionary Pressures, BDO USA sought to pinpoint the obstacles boards currently face and what strategies they use to overcome them. The survey found that boards prioritize the driving of growth and planning for recessionary declines in product or service demand.
Your Company Exited Russia: Will China Be Next?
A business’s departure from an international market requires extensive board contemplation. When Russia invaded Ukraine on Feb. 24, 2022, the reaction of the American business community was swift. According to the Yale School of Management’s Chief Executive Leadership Institute, over 1,000 companies have since curtailed operations in Russia to a point beyond the minimum legally required by international sanctions.
Five Key Points on the New 1% Buyback Tax
Who: The tax applies to corporations with stock traded in an established securities market, if the total stock traded (including adjustments) has market value of $1 million or more. It does not apply to investment companies or real estate investment trusts. Foreign companies have special rules. What: It levies a tax equal to 1% of the fair market value of any corporate stock repurchased by the corporation during the taxable year.
How Global Upheaval Influences Board Decision-Making
What is the effect of Cold War II on corporate governance? What should boards and companies do or not do when confronting the impact of geopolitical crises? It may be helpful to consider the broader context giving rise to these issues, namely why we’re in the situation, the lessons we’re learning about geopolitical risk in real time and the key insights that may be helpful in preparing for future geopolitical crises.
Defying Critics and Curbs, Buybacks Persist: Should Executives Benefit From Them?
Buybacks can be a boon for shareholders, but a detriment to employees. Despite the new 1% tax on share repurchases under the Inflation Reduction Act of 2022, U.S. public companies today are still using share buybacks to return cash to shareholders — including executives with equity-heavy pay — at unprecedented rates.
The Illusion of Corporate Governance “Best Practices”
The best boards focus on solutions and structures tailored to their companies, ignoring cookie-cutter “gold standards.” Contrary to what good parents have long taught their children, it’s now acceptable in corporate governance to say “everyone else is doing it, you should too.” Advocates of so-called good governance urge companies to take specific actions because they “lag behind their peers” on some favored practice. This is new.
My Board Journey
My Board Journey Beverly Cole Director, Bank OZK Board service, whether it’s for a nonprofit organization or corporate entity, can provide professional growth opportunities and strengthen your personal brand. My first board experience was with several nonprofit and business chambers. I also served as a state commissioner and a state task force member. Founders First Capital was my first private venture fund board position, and Bank OZK is the first public board on which I have served.
All Corporate Boards Should Have Director Term Limits
Mandated limits on service time are the only way to guarantee new perspectives and fresh ideas. In this issue of Directors & Boards, we have sought to supply “Big Ideas for Corporate Governance”: fresh perspectives that can help you think about the work of boards in new, previously unforeseen ways. Of course, new ideas are not just valuable on the page. They have a tangible, intrinsic value when offered at the board table as well.
Adherent invasive Escherichia coli in Crohn’s disease: guilt by association?
http://orcid.org/0000-0001-8873-1534Charles O Elson Department of Medicine, The University of Alabama at Birmingham, Birmingham, AL, USA Correspondence to Dr Charles O Elson, Department of Medicine, The University of Alabama at Birmingham, Birmingham, AL 35298, USA; coelson{at}uabmc.edu Statistics from Altmetric.com CROHN'S DISEASE Over 30 years ago, Rutgeerts et al published a seminal paper detailing the endoscopic recurrence of Crohn’s disease in the neoterminal ileum following ileocecal...
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