Focus on board composition and director performance has never been greater. With regulations and listing standards requiring disclosure of board diversity and expertise in climate and cybersecurity, the rise of activist investors with an increased focus on individual directors under the universal proxy, the complexity of operating in a global marketplace, and additional scrutiny on directorial independence, corporations are under increasing pressure to assemble a board with the right mix of experience, specialized skills, industry-specific expertise, international exposure, and gender, racial, ethnic, and age diversity. Many shareholder advisory firms and institutional investors argue that director tenure should be scrutinized more heavily, with some advocating term limits or mandatory retirement ages to refresh boards with entrenched directors or stale skill sets, and to accelerate the turnover of board seats. In addition, uncertainty can abound as to whether and when directors qualify as independent, and new procedures may be necessary to address that uncertainty. Taken together, these pressures can force nominating and governance committees to reconsider the process by which they assess board composition, identify board candidates, onboard new directors, and evaluate individual director performance. This session will discuss successful strategies for ensuring that companies focus on long-term planning for board succession to build and maintain a board with the right mix of director skills and backgrounds given the company’s current and projected needs.
Litigation risks facing directors, officers, and corporations are inevitable and increasingly complex. The Securities and Exchange Commission (SEC) and Department of Justice (DOJ) have stated their intention to pursue, punish, and deter the individuals who are responsible for corporate misconduct, and both agencies are increasingly focused on cooperation and self-reporting from target companies. In late 2023, the DOJ outlined a new safe harbor policy for misconduct uncovered during the M&A process. And the DOJ recently announced the development of a whistleblower pilot program with potential monetary awards in exchange for new information about “significant corporate or financial misconduct.” Meanwhile, private securities class action filings grew slightly in 2023, as the plaintiffs’ bar continues to develop new legal theories and causes of action designed to maximize corporate and individual director liability. In 2023, the number of securities class action settlements declined significantly while the median settlement amount reached its highest level in over a decade. And the SEC’s ambitious rulemaking agenda may lead to more filings in the future. What can you do to make your company—and yourself—more defensible from lawsuits? How should you navigate the complexities and challenges of government investigations? What protections are available through risk transfer instruments like indemnification agreements and D&O insurance, and under what conditions do these risk-transfer mechanisms fail? This panel will explore a series of cutting-edge litigation issues that can threaten corporations, directors, and senior executives, with an emphasis on practical strategies for minimizing and insuring against these risks and responding to an investigation or litigation if the challenge arises.
The question confronting today’s modern business is not whether to use artificial intelligence (AI), but where and how to use it effectively. AI has the capacity to disrupt a broad range of industries, revolutionize business functions, and provide a competitive advantage to early adopters. While not every company will end up incorporating AI into consumer products and services, it is increasingly evident that AI and data science will play a critical role in powering the future of operations across all industries. To remain ahead of the curve, boards must understand how AI systems work and the potential risks surrounding their implementation. This session will explore the legal, operational, and reputational risks associated with designing and deploying AI, and consider how those risks impact real-world decision-making. Panelists will address input and output risks, including the potential pitfalls of AI algorithms, the possibility of bias, errors and hallucinations, as well as intellectual property, trade secret, privacy, data protection, security, workforce and societal concerns associated with an organization’s development and deployment of AI systems. Finally, this session will address recent litigation trends and legal challenges arising from the rapid development of this emerging technology. Please note that this discussion is intended as an overview of potential risks in the implementation of AI, and a separate session will address the governance framework and the board’s approach to mitigating the risks of AI as part of its oversight function.
This session is designed to provide “ordinary” and/or newly appointed board members with concrete suggestions to monitor potential issues related to financial reporting. The classroom-style presentation seeks to improve directors’ understanding of accounting principles in a way that cuts to the chase and de-emphasizes “traditional practices” in favor of more practical strategies. Time permitting, the session will conclude with a brief case study illustrating the complications associated with arguably incomplete accounting disclosures.
