Selected Issues for Boards of Directors in 2017
January 17, 2017
By the end of 2016, the world was facing a considerably greater level of global uncertainty than it had experienced in recent years. From a legal perspective, many of the challenges faced by companies and their boards in the near-term will be significant in their magnitude, level of uncertainty, and complex global reach. For example, companies will face challenges as they grapple with an uncertain and changing tax regulatory landscape; the impact of overlapping and, at times, conflicting, privacy regimes that impact how they manage and store information in an increasingly global and digital age; the continued impact of cybersecurity concerns and hacking incidents; and continued, but evolving, trends in enforcement and anti-corruption investigations. These trends will increasingly bring these issues to board agendas of companies in the United States and across the globe, with a renewed focus on how boards assess, and assist in mitigating, these risks.
In some areas, however, the beginning of 2017 will provide for a period of reflection and refinement to themes from years past, as companies address issues of director tenure, skills mix and board refreshment—an area that has been garnering increasing attention from shareholders. The Delaware courts have also refined and limited the grounds for bringing a suit post-merger, but in ways that will require companies to carefully consider the disclosures made in the course of the transaction. This more measured approach to disclosure, however, is not entirely universal: the increased focus on environmental, sustainability and governance (“ESG”) matters has put pressure on companies to respond and address the types of issues that companies may not have considered even a decade ago and, in the area of compensation, companies will need to grapple with new (and still fluid) disclosure rules, and related risk management considerations.
Finally, corporate developments across the globe will be influenced by the results of the presidential election in the United States and the outcome of the Brexit vote in the United Kingdom, with other elections and geo-political events still to come in Europe and elsewhere in 2017. As the world grapples with the outcome of these votes, the focus of directors and companies will need to shift and adapt, although it may yet be too soon to determine even the most significant of any impacts resulting from these events. It is clear that new challenges will be brought into the boardroom in 2017. A strong understanding of the issues and challenges facing boards and companies over the next year and beyond will assist boards in addressing the issues and complexities that will undoubtedly arise in 2017. Active engagement and communication, with a defined strategy and execution plan, will be paramount as boards move forward this year.
Below, we address the following issues for boards of directors: