Claudia H. Allen serves as co-chair of the Corporate Governance practice. She counsels boards, management and investors in public and private companies on corporate governance matters and related issues, such as shareholder activism and engagement, shareholder proposals, defensive measures including shareholder rights plans, takeover preparedness, board/committee process and structure and fiduciary duties. Her practice also encompasses transactional matters, including private and public mergers and acquisitions, and securities matters, including compliance with the Dodd-Frank and Sarbanes-Oxley Acts.

Proxy access, meaning the ability of stockholders to put their nominees on management’s proxy card and create a proxy contest without having to file their own proxy statement, was the marquee issue of the 2015 proxy season. The 2015 push for proxy access was largely spearheaded by the New York City comptroller through his Boardroom Accountability Project. The comptroller, whose goal is to make proxy access universal at US companies, submitted 75 proxy access bylaw proposals to well-known companies with the following parameters: ownership of at least 3 percent of a company’s stock for at least three years and the right to nominate up to 25 percent of a company’s board. These parameters are largely based upon the proxy access rule adopted by the Securities and Exchange Commission in 2010, which was subsequently struck down by a federal court. 
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Following the unexpected May 2014 decision of the Delaware Supreme Court in ATP Tour Inc. v. Deutscher Tennis Bund, 91 A.3d 554 (Del. 2014), upholding the validity of fee-shifting bylaws of a non-stock corporation, the plaintiffs’ and defense bar in Delaware swiftly prepared legislation to ban such provisions in bylaws and charters. Although passage of the bill had widely been expected, following criticism from the US Chamber of Commerce and some public companies, the issue was tabled until the Delaware legislature’s 2015 session.
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In City of Providence v. First Citizens Bancshares, Inc., C.A. No. 9795 (Del. Ch. Sep. 8, 2014), Delaware Chancellor Bouchard upheld a bylaw adopted by the board of directors of a corporation incorporated in Delaware providing that intra-corporate disputes be litigated exclusively in North Carolina. City of Providence relies heavily upon then-Chancellor Strine’s June 2013 opinion in Boilermakers Local 154 Retirement Fund v. Chevron Corporation, 73 A.3d 934 (Del. Ch. 2013) (Chevron), which found that exclusive forum bylaws are facially valid.
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In Roberts v. TriQuint Semiconductor, Inc., No. 1402-02441 (Cir. Ct. Or. Aug 14, 2014), an Oregon state court, breaking with state courts in California, Illinois, New York and Texas, held that the bylaw of a Delaware corporation providing for derivative actions and other intra-corporate claims to be litigated exclusively in Delaware was unenforceable. TriQuint’s board adopted the bylaw on the same day that it approved entering into a merger of equals with RF Micro Devices, Inc.
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In a swift response to the Delaware Supreme Court’s May 8 opinion holding that fee-shifting bylaws are facially valid (ATP Tour v. Deutscher Tennis Bund), members of the Delaware bar, representing both plaintiffs and corporations, proposed legislation that would effectively overturn the application of the decision to stock corporations. The policy concerns are that fee-shifting provisions would undermine the limited liability associated with an investment in stock, and “loser-pays” clauses could result in a significant decrease in the number of meritorious (as well as frivolous) cases filed in Delaware, thereby negatively affecting Delaware’s preeminence in the field of corporate law. Notably, the amendments are not limited to fee-shifting provisions. Rather, they generally bar clauses in bylaws and certificates of incorporation imposing liability on stockholders.
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On February 18, 2014, Institutional Shareholder Services (ISS), a leading proxy advisory firm, will launch the second generation of its QuickScore governance risk scoring system and analytical tool for Russell 3000 companies. Version 2.0 will include seven new, as yet unidentified, governance factors as well as modified weightings, all to be announced on January 27, 2014. In addition, the new version will monitor certain regulatory filings and other disclosures on an ongoing basis for governance-related information and automatically update QuickScores. According to ISS, the updated version will “better align with company performance quantitative modeling results and ISS voting policy.” Version 2.0 will continue to score companies on an overall basis and on four separate “pillars”: board, compensation/remuneration, shareholder rights and audit.
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In response to the wave of strike suits filed outside Delaware in connection with mergers and acquisitions and executive compensation matters, boards of some Delaware corporations adopted exclusive forum bylaws. Those bylaws require that derivative actions, stockholder class actions and other intra-corporate disputes be litigated exclusively in Delaware. The validity of the exclusive forum bylaws adopted by Chevron and FedEx was litigated in the Delaware Court of Chancery in Boilermakers Local 154 Retirement Fund v. Chevron Corp. and IClub Investment Partnership v. FedEx Corporation. Chancellor Strine found that the bylaws were valid both contractually and statutorily.
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