Shareholder Engagement and Activism
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Ranked Among the Top Firms Advising Clients on Shareholder Activism Matters
Wilson Sonsini ranked among the top five legal advisers in FactSet’s “Company Defense” advisor league tables for full-year 2022. The firm was also ranked among the top 10 firms advising clients on shareholder activism matters—in both the U.S. and globally—according to Bloomberg’s FY 2022 Activism League Tables. In 2020 and 2019, Wilson Sonsini was ranked No. 1 among technology company advisors in Bloomberg’s year-end rankings.
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Representing Sophisticated Clients Across Key Industries
Wilson Sonsini frequently represents the boards of global enterprises, special committees, and executive management, as well as private equity firms and investment banks in activist matters related to M&A transactions; our experience spans nearly every industry, but we have particular expertise in the technology, energy, and manufacturing sectors.
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Trusted Counsel on Shareholder Activism Matters
Wilson Sonsini's attorneys advise companies on defense preparedness, shareholder relations, and responding to shareholder proposals, and our experience also includes traditional takeover defense strategies, contested bids, activist shareholder campaigns and proxy rights, bylaws and governance strategies, and shareholder litigation defense.
With the increasing level of shareholder activism and contests for corporate control, clients have turned to attorneys in Wilson Sonsini's corporate law and governance practice who have extensive experience advising on—and responding to—shareholder activist efforts.
Consistent with the rise in activism campaigns, Wilson Sonsini's attorneys have represented dozens of companies and other clients involved in shareholder activist-related situations. In fact, Wilson Sonsini ranked among the top five legal advisers in FactSet’s “Company Defense” advisor league tables for full-year 2022. The firm was also ranked among the top 10 firms advising clients on shareholder activism matters—in both the U.S. and globally—according to Bloomberg’s FY 2022 Activism League Tables. In 2020 and 2019, Wilson Sonsini was ranked No. 1 among technology company advisors in Bloomberg’s year-end rankings.
Wilson Sonsini frequently represents the boards of global enterprises, as well as special committees and executive management. The firm also represents private equity firms and investment banks in activist matters related to mergers and acquisitions. Our activist-related experience has involved enterprises from virtually every industry, but the firm has particular expertise in the technology, energy, and manufacturing sectors.
A significant segment of our experience involves activism efforts initiated during the progression of landmark mergers and acquisitions. Wilson Sonsini is consistently ranked among the country's leading M&A legal advisors based on the number of completed M&A transactions. The quantity of M&A deals in which the firm is involved has given our attorneys countless opportunities to advise clients engaged in business combinations on many activist-related matters.
Wilson Sonsini regularly advises companies on defense preparedness, including:
- structural defenses
- stand-alone business and operating strategies
- financial and strategic alternatives
- corporate communications
The firm also advises companies on shareholder relations and responding to shareholder proposals, including:
- executive compensation
- corporate governance
- capital structure
- director nominations
In addition, Wilson Sonsini's shareholder engagement and activism experience includes:
- traditional takeover defense strategies, including poison pills
- contested bids
- activist shareholder campaigns
- shareholder proxy rights
- bylaws and governance strategies
- corporate compliance and related internal investigations
- shareholder litigation defense
Wilson Sonsini's activist team works closely with other practices, drawing on the firm's experience in the areas of corporate governance, M&A, and executive compensation. They also partner with the firm's litigation practices, including our securities litigators, who help position clients favorably in response to aggressive activist efforts.
Overview
With the increasing level of shareholder activism and contests for corporate control, clients have turned to attorneys in Wilson Sonsini's corporate law and governance practice who have extensive experience advising on—and responding to—shareholder activist efforts.
Consistent with the rise in activism campaigns, Wilson Sonsini's attorneys have represented dozens of companies and other clients involved in shareholder activist-related situations. In fact, Wilson Sonsini ranked among the top five legal advisers in FactSet’s “Company Defense” advisor league tables for full-year 2022. The firm was also ranked among the top 10 firms advising clients on shareholder activism matters—in both the U.S. and globally—according to Bloomberg’s FY 2022 Activism League Tables. In 2020 and 2019, Wilson Sonsini was ranked No. 1 among technology company advisors in Bloomberg’s year-end rankings.
Wilson Sonsini frequently represents the boards of global enterprises, as well as special committees and executive management. The firm also represents private equity firms and investment banks in activist matters related to mergers and acquisitions. Our activist-related experience has involved enterprises from virtually every industry, but the firm has particular expertise in the technology, energy, and manufacturing sectors.
A significant segment of our experience involves activism efforts initiated during the progression of landmark mergers and acquisitions. Wilson Sonsini is consistently ranked among the country's leading M&A legal advisors based on the number of completed M&A transactions. The quantity of M&A deals in which the firm is involved has given our attorneys countless opportunities to advise clients engaged in business combinations on many activist-related matters.
Wilson Sonsini regularly advises companies on defense preparedness, including:
- structural defenses
- stand-alone business and operating strategies
- financial and strategic alternatives
- corporate communications
The firm also advises companies on shareholder relations and responding to shareholder proposals, including:
- executive compensation
- corporate governance
- capital structure
- director nominations
In addition, Wilson Sonsini's shareholder engagement and activism experience includes:
- traditional takeover defense strategies, including poison pills
- contested bids
- activist shareholder campaigns
- shareholder proxy rights
- bylaws and governance strategies
- corporate compliance and related internal investigations
- shareholder litigation defense
Wilson Sonsini's activist team works closely with other practices, drawing on the firm's experience in the areas of corporate governance, M&A, and executive compensation. They also partner with the firm's litigation practices, including our securities litigators, who help position clients favorably in response to aggressive activist efforts.
Alerts
California Governor Gavin Newsom Signs Bill Enacting Changes to California Climate-Related Disclosure Laws
On September 27, 2024, California Governor Gavin Newsom signed Senate Bill 219, the Greenhouse gases: climate corporate accountability: climate-related financial risk (SB 219) after the California Assembly and Senate each approved SB 219. SB 219 amends Senate Bill 253: the Climate Corporate Data Accountability Act (SB 253) and Senate Bill 261, Greenhouse gases: climate-related financial risk (SB 261), which were signed into law in October 2023.1 Notably, SB 219 did not delay the compliance deadlines for reporting companies under either SB 253 or SB 261, as proposed by certain lawmakers. Additionally, proposals to amend Assembly Bill 1305, Voluntary carbon market disclosures (AB 1305) did not reach a final vote, so AB 1305 remains unchanged for now.
Client Advisories
Delaware's Status as the Favored Corporate Home: Reflections and Considerations
In recent months, a conversation has emerged as to whether Delaware should remain the favored state of incorporation for business entities. Indeed, many of our clients have asked us whether they should remain in Delaware or choose Delaware as the state of incorporation for their new ventures. In this discussion, we provide our reflections on that question and various factors that entrepreneurs, investors, and companies should consider when weighing incorporation in Delaware against incorporation in another state.
The Reliance on Delaware Compared to Other States
The sheer number of entities formed in Delaware reflects its dominance in this area. In 2022, more than 313,650 entities were formed in the state of Delaware, resulting in more than 1.9 million entities total in Delaware.[1] Delaware also continues to be the state of incorporation for nearly 68.2 percent of the Fortune 500, 65 percent of the S&P 500,[2] and approximately 79 percent of all U.S. initial public offerings in calendar-year 2022.[3] Of course, those numbers reflect that a substantial portion of entities are incorporated elsewhere, both within and outside of the United States. The Chief Justice of Delaware’s Supreme Court has noted that business entities indirectly or directly generate about a third of the state’s revenue.[4]
It also bears noting that Delaware has not always held the distinction as the favored destination for incorporations. Prior to the early 1900s, New Jersey had been the most significant state for incorporations.[5] Aware of New Jersey’s early success and in an effort to encourage corporations to domicile in Delaware, Delaware amended its constitution in 1897 to permit incorporation under general law instead of by special legislative mandate, and in 1899 adopted a general corporation law modeled largely after New Jersey’s approach.[6] These developments, in addition to the written opinions issued by Delaware’s Court of Chancery, helped make Delaware a natural home for corporations looking to leave New Jersey after that state adopted more restrictive laws related to corporations and trusts in 1913.[7]
A corporation’s state of incorporation is significant because that state’s laws govern the corporation’s internal corporate governance and inform how judges will review the conduct of directors and officers in stockholder litigation. As will be discussed in greater detail below, there are a number of factors that have made Delaware a favored state of incorporation for over a century.[8]
Why Is Delaware in Question?
Of course, it is critical to understand why some have called Delaware’s dominance into question. Some of the doubt has come from famous sources, such as Elon Musk’s much-publicized X (formerly Twitter) post stating, “Never incorporate your company in the state of Delaware” after the Delaware Court of Chancery rescinded his compensation package at Tesla.[9] Tesla’s stockholders are now expected to vote on the conversion of Tesla from a Delaware corporation to a Texas corporation at the company’s annual stockholder meeting on June 13, 2024.[10] In the conversations that we have had with clients, businesspeople, and others in the corporate bar, we have heard the following reasons given for reconsidering incorporation in Delaware:
The Reliance on Delaware Compared to Other States
The sheer number of entities formed in Delaware reflects its dominance in this area. In 2022, more than 313,650 entities were formed in the state of Delaware, resulting in more than 1.9 million entities total in Delaware.[1] Delaware also continues to be the state of incorporation for nearly 68.2 percent of the Fortune 500, 65 percent of the S&P 500,[2] and approximately 79 percent of all U.S. initial public offerings in calendar-year 2022.[3] Of course, those numbers reflect that a substantial portion of entities are incorporated elsewhere, both within and outside of the United States. The Chief Justice of Delaware’s Supreme Court has noted that business entities indirectly or directly generate about a third of the state’s revenue.[4]
It also bears noting that Delaware has not always held the distinction as the favored destination for incorporations. Prior to the early 1900s, New Jersey had been the most significant state for incorporations.[5] Aware of New Jersey’s early success and in an effort to encourage corporations to domicile in Delaware, Delaware amended its constitution in 1897 to permit incorporation under general law instead of by special legislative mandate, and in 1899 adopted a general corporation law modeled largely after New Jersey’s approach.[6] These developments, in addition to the written opinions issued by Delaware’s Court of Chancery, helped make Delaware a natural home for corporations looking to leave New Jersey after that state adopted more restrictive laws related to corporations and trusts in 1913.[7]
A corporation’s state of incorporation is significant because that state’s laws govern the corporation’s internal corporate governance and inform how judges will review the conduct of directors and officers in stockholder litigation. As will be discussed in greater detail below, there are a number of factors that have made Delaware a favored state of incorporation for over a century.[8]
Why Is Delaware in Question?
Of course, it is critical to understand why some have called Delaware’s dominance into question. Some of the doubt has come from famous sources, such as Elon Musk’s much-publicized X (formerly Twitter) post stating, “Never incorporate your company in the state of Delaware” after the Delaware Court of Chancery rescinded his compensation package at Tesla.[9] Tesla’s stockholders are now expected to vote on the conversion of Tesla from a Delaware corporation to a Texas corporation at the company’s annual stockholder meeting on June 13, 2024.[10] In the conversations that we have had with clients, businesspeople, and others in the corporate bar, we have heard the following reasons given for reconsidering incorporation in Delaware:
Client Highlights
Firm Advises Centerview Partners as Financial Advisor to Special Committee of HireRight
On February 16, 2024, HireRight Holdings Corporation, a leading provider of global background screening services and workforce solutions, announced that it has entered into a definitive agreement to be acquired by investment funds affiliated with General Atlantic, L.P. and Stone Point Capital (the “Sponsors”). Under the terms of the agreement, the Sponsors will acquire all of the outstanding shares they do not already own for $14.35 per share in cash, which implies a total enterprise value of approximately $1.65 billion. Wilson Sonsini Goodrich & Rosati advised Centerview Partners LLC, the financial advisor to the Special Committee formed by HireRight’s board of directors to evaluate the proposal from the Sponsors, as well as other alternative proposals.
The purchase price represents a premium of approximately 47 percent over HireRight’s 30-day volume weighted average price per share as of November 17, 2023, the last trading day prior to when the Sponsors indicated that they had agreed to work together regarding a potential strategic transaction involving HireRight, and an approximate 43 percent premium to HireRight’s closing stock price on the same date.
The Wilson Sonsini team that advised Centerview Partners includes:
The purchase price represents a premium of approximately 47 percent over HireRight’s 30-day volume weighted average price per share as of November 17, 2023, the last trading day prior to when the Sponsors indicated that they had agreed to work together regarding a potential strategic transaction involving HireRight, and an approximate 43 percent premium to HireRight’s closing stock price on the same date.
The Wilson Sonsini team that advised Centerview Partners includes:
Alerts
Approaching Shareholder Engagement in 2024
It has never been more important for public companies to engage—and engage regularly—with their shareholders. Sustained engagement helps companies communicate their strategy, understand shareholder perspectives, and even receive early warnings about impeding shareholder activism.
Alerts
FERC Initiates New Proceeding to Review Its Policy on Federal Power Act Section 203(a)(2) Blanket Authorizations, Posing Potential Ramifications for ESG Investing
On December 19, 2023, the Federal Energy Regulatory Commission (FERC) issued a Notice of Inquiry (NOI) to request public comments on questions relating to FERC’s current policy on providing blanket authorizations for the acquisition of voting securities of public utilities by holding companies, including investment companies, under Federal Power Act (FPA) Section 203(a)(2).1 Changes in FERC policy on such blanket authorizations could make it more difficult for investment companies to engage in transactions involving public utilities—including generation resources engaged in FERC-jurisdictional transactions—going forward. Further, as highlighted in a concurring statement issued by one of the FERC commissioners, depending on the record established through the public comments, the proceeding could diminish investment companies’ ability to influence their public utility portfolio companies’ environment, social, and governance (ESG) policies.
Insights
Alerts
California Governor Gavin Newsom Signs Bill Enacting Changes to California Climate-Related Disclosure Laws
On September 27, 2024, California Governor Gavin Newsom signed Senate Bill 219, the Greenhouse gases: climate corporate accountability: climate-related financial risk (SB 219) after the California Assembly and Senate each approved SB 219. SB 219 amends Senate Bill 253: the Climate Corporate Data Accountability Act (SB 253) and Senate Bill 261, Greenhouse gases: climate-related financial risk (SB 261), which were signed into law in October 2023.1 Notably, SB 219 did not delay the compliance deadlines for reporting companies under either SB 253 or SB 261, as proposed by certain lawmakers. Additionally, proposals to amend Assembly Bill 1305, Voluntary carbon market disclosures (AB 1305) did not reach a final vote, so AB 1305 remains unchanged for now.
Client Advisories
Delaware's Status as the Favored Corporate Home: Reflections and Considerations
In recent months, a conversation has emerged as to whether Delaware should remain the favored state of incorporation for business entities. Indeed, many of our clients have asked us whether they should remain in Delaware or choose Delaware as the state of incorporation for their new ventures. In this discussion, we provide our reflections on that question and various factors that entrepreneurs, investors, and companies should consider when weighing incorporation in Delaware against incorporation in another state.
The Reliance on Delaware Compared to Other States
The sheer number of entities formed in Delaware reflects its dominance in this area. In 2022, more than 313,650 entities were formed in the state of Delaware, resulting in more than 1.9 million entities total in Delaware.[1] Delaware also continues to be the state of incorporation for nearly 68.2 percent of the Fortune 500, 65 percent of the S&P 500,[2] and approximately 79 percent of all U.S. initial public offerings in calendar-year 2022.[3] Of course, those numbers reflect that a substantial portion of entities are incorporated elsewhere, both within and outside of the United States. The Chief Justice of Delaware’s Supreme Court has noted that business entities indirectly or directly generate about a third of the state’s revenue.[4]
It also bears noting that Delaware has not always held the distinction as the favored destination for incorporations. Prior to the early 1900s, New Jersey had been the most significant state for incorporations.[5] Aware of New Jersey’s early success and in an effort to encourage corporations to domicile in Delaware, Delaware amended its constitution in 1897 to permit incorporation under general law instead of by special legislative mandate, and in 1899 adopted a general corporation law modeled largely after New Jersey’s approach.[6] These developments, in addition to the written opinions issued by Delaware’s Court of Chancery, helped make Delaware a natural home for corporations looking to leave New Jersey after that state adopted more restrictive laws related to corporations and trusts in 1913.[7]
A corporation’s state of incorporation is significant because that state’s laws govern the corporation’s internal corporate governance and inform how judges will review the conduct of directors and officers in stockholder litigation. As will be discussed in greater detail below, there are a number of factors that have made Delaware a favored state of incorporation for over a century.[8]
Why Is Delaware in Question?
Of course, it is critical to understand why some have called Delaware’s dominance into question. Some of the doubt has come from famous sources, such as Elon Musk’s much-publicized X (formerly Twitter) post stating, “Never incorporate your company in the state of Delaware” after the Delaware Court of Chancery rescinded his compensation package at Tesla.[9] Tesla’s stockholders are now expected to vote on the conversion of Tesla from a Delaware corporation to a Texas corporation at the company’s annual stockholder meeting on June 13, 2024.[10] In the conversations that we have had with clients, businesspeople, and others in the corporate bar, we have heard the following reasons given for reconsidering incorporation in Delaware:
The Reliance on Delaware Compared to Other States
The sheer number of entities formed in Delaware reflects its dominance in this area. In 2022, more than 313,650 entities were formed in the state of Delaware, resulting in more than 1.9 million entities total in Delaware.[1] Delaware also continues to be the state of incorporation for nearly 68.2 percent of the Fortune 500, 65 percent of the S&P 500,[2] and approximately 79 percent of all U.S. initial public offerings in calendar-year 2022.[3] Of course, those numbers reflect that a substantial portion of entities are incorporated elsewhere, both within and outside of the United States. The Chief Justice of Delaware’s Supreme Court has noted that business entities indirectly or directly generate about a third of the state’s revenue.[4]
It also bears noting that Delaware has not always held the distinction as the favored destination for incorporations. Prior to the early 1900s, New Jersey had been the most significant state for incorporations.[5] Aware of New Jersey’s early success and in an effort to encourage corporations to domicile in Delaware, Delaware amended its constitution in 1897 to permit incorporation under general law instead of by special legislative mandate, and in 1899 adopted a general corporation law modeled largely after New Jersey’s approach.[6] These developments, in addition to the written opinions issued by Delaware’s Court of Chancery, helped make Delaware a natural home for corporations looking to leave New Jersey after that state adopted more restrictive laws related to corporations and trusts in 1913.[7]
A corporation’s state of incorporation is significant because that state’s laws govern the corporation’s internal corporate governance and inform how judges will review the conduct of directors and officers in stockholder litigation. As will be discussed in greater detail below, there are a number of factors that have made Delaware a favored state of incorporation for over a century.[8]
Why Is Delaware in Question?
Of course, it is critical to understand why some have called Delaware’s dominance into question. Some of the doubt has come from famous sources, such as Elon Musk’s much-publicized X (formerly Twitter) post stating, “Never incorporate your company in the state of Delaware” after the Delaware Court of Chancery rescinded his compensation package at Tesla.[9] Tesla’s stockholders are now expected to vote on the conversion of Tesla from a Delaware corporation to a Texas corporation at the company’s annual stockholder meeting on June 13, 2024.[10] In the conversations that we have had with clients, businesspeople, and others in the corporate bar, we have heard the following reasons given for reconsidering incorporation in Delaware:
Client Highlights
Firm Advises Centerview Partners as Financial Advisor to Special Committee of HireRight
On February 16, 2024, HireRight Holdings Corporation, a leading provider of global background screening services and workforce solutions, announced that it has entered into a definitive agreement to be acquired by investment funds affiliated with General Atlantic, L.P. and Stone Point Capital (the “Sponsors”). Under the terms of the agreement, the Sponsors will acquire all of the outstanding shares they do not already own for $14.35 per share in cash, which implies a total enterprise value of approximately $1.65 billion. Wilson Sonsini Goodrich & Rosati advised Centerview Partners LLC, the financial advisor to the Special Committee formed by HireRight’s board of directors to evaluate the proposal from the Sponsors, as well as other alternative proposals.
The purchase price represents a premium of approximately 47 percent over HireRight’s 30-day volume weighted average price per share as of November 17, 2023, the last trading day prior to when the Sponsors indicated that they had agreed to work together regarding a potential strategic transaction involving HireRight, and an approximate 43 percent premium to HireRight’s closing stock price on the same date.
The Wilson Sonsini team that advised Centerview Partners includes:
The purchase price represents a premium of approximately 47 percent over HireRight’s 30-day volume weighted average price per share as of November 17, 2023, the last trading day prior to when the Sponsors indicated that they had agreed to work together regarding a potential strategic transaction involving HireRight, and an approximate 43 percent premium to HireRight’s closing stock price on the same date.
The Wilson Sonsini team that advised Centerview Partners includes:
Alerts
Approaching Shareholder Engagement in 2024
It has never been more important for public companies to engage—and engage regularly—with their shareholders. Sustained engagement helps companies communicate their strategy, understand shareholder perspectives, and even receive early warnings about impeding shareholder activism.
Alerts
FERC Initiates New Proceeding to Review Its Policy on Federal Power Act Section 203(a)(2) Blanket Authorizations, Posing Potential Ramifications for ESG Investing
On December 19, 2023, the Federal Energy Regulatory Commission (FERC) issued a Notice of Inquiry (NOI) to request public comments on questions relating to FERC’s current policy on providing blanket authorizations for the acquisition of voting securities of public utilities by holding companies, including investment companies, under Federal Power Act (FPA) Section 203(a)(2).1 Changes in FERC policy on such blanket authorizations could make it more difficult for investment companies to engage in transactions involving public utilities—including generation resources engaged in FERC-jurisdictional transactions—going forward. Further, as highlighted in a concurring statement issued by one of the FERC commissioners, depending on the record established through the public comments, the proceeding could diminish investment companies’ ability to influence their public utility portfolio companies’ environment, social, and governance (ESG) policies.
Affiliated Programs
What’s AI Got to Do with It: Should Companies Rethink their Corporate Governance Structure?
Join us for a fireside chat that explores whether companies should rethink their traditional corporate governance structures in light of evolving AI technologies. We will examine the role of shareholder primacy, the rise of dual-class stock in Silicon Valley, and the impact of AI on future governance models. This session will provide insights for directors and legal professionals advising companies on long-term strategy and decision-making.
Speaking Engagements
The 2024 13D Monitor Active-Passive Investor Summit
Wilson Sonsini will be sponsoring the upcoming 2024 13D Monitor Active-Passive Investor Summit. For 15 years, this conference has been the most sought-after and ideal forum for the industry to meet, discuss, analyze and shape the development of the activist investing space.
Affiliated Programs
The Corporate Director Podcast: Trends in Shareholder Activism
In this episode of The Corporate Director Podcast, Doug Schnell and Sebastian Alsheimer, leaders in the shareholder engagement and activism practice at Wilson Sonsini, explore the latest developments in shareholder activism and offer tips and insights. Also in this episode, Rebecca Sherratt, Diligent Market Intelligence’s Publications Editor, shares key findings from the Shareholder Activism Annual Review. Available wherever you get your podcasts: https://www.diligent.com/resources/podcasts/trends-shareholder-activism
Affiliated Programs
Skytop Strategies - Shareholder Activism Summit 2024
Join over 200 shareholder engagement, communications and industry thought leaders as they discuss how ongoing shareholder engagement and activism play a vital role in affecting share value, how activist investors cultivate relationships with companies to positively influence sustained value creation, and the latest campaign practices of activists, their outcomes, and how boards and executives work constructively toward improved stock performance.
Speaking Engagements
43rd Annual Ray Garrett Jr. Corporate & Securities Law Institute
Please join us at Northwestern Law’s 43rd Annual Ray Garrett Jr. Corporate & Securities Law Institute. This two-day program provides a timely analysis of current securities and law developments confronting publicly and privately held corporations while allowing attendees to discuss shared experiences and network. The Garrett Institute offers the unique opportunity to hear from SEC officials and Delaware judges while networking with the securities law community. 15+ hours of CLE credit are available to attendees.
Events
Affiliated Programs
What’s AI Got to Do with It: Should Companies Rethink their Corporate Governance Structure?
Join us for a fireside chat that explores whether companies should rethink their traditional corporate governance structures in light of evolving AI technologies. We will examine the role of shareholder primacy, the rise of dual-class stock in Silicon Valley, and the impact of AI on future governance models. This session will provide insights for directors and legal professionals advising companies on long-term strategy and decision-making.
Speaking Engagements
The 2024 13D Monitor Active-Passive Investor Summit
Wilson Sonsini will be sponsoring the upcoming 2024 13D Monitor Active-Passive Investor Summit. For 15 years, this conference has been the most sought-after and ideal forum for the industry to meet, discuss, analyze and shape the development of the activist investing space.
Affiliated Programs
The Corporate Director Podcast: Trends in Shareholder Activism
In this episode of The Corporate Director Podcast, Doug Schnell and Sebastian Alsheimer, leaders in the shareholder engagement and activism practice at Wilson Sonsini, explore the latest developments in shareholder activism and offer tips and insights. Also in this episode, Rebecca Sherratt, Diligent Market Intelligence’s Publications Editor, shares key findings from the Shareholder Activism Annual Review. Available wherever you get your podcasts: https://www.diligent.com/resources/podcasts/trends-shareholder-activism
Affiliated Programs
Skytop Strategies - Shareholder Activism Summit 2024
Join over 200 shareholder engagement, communications and industry thought leaders as they discuss how ongoing shareholder engagement and activism play a vital role in affecting share value, how activist investors cultivate relationships with companies to positively influence sustained value creation, and the latest campaign practices of activists, their outcomes, and how boards and executives work constructively toward improved stock performance.
Speaking Engagements
43rd Annual Ray Garrett Jr. Corporate & Securities Law Institute
Please join us at Northwestern Law’s 43rd Annual Ray Garrett Jr. Corporate & Securities Law Institute. This two-day program provides a timely analysis of current securities and law developments confronting publicly and privately held corporations while allowing attendees to discuss shared experiences and network. The Garrett Institute offers the unique opportunity to hear from SEC officials and Delaware judges while networking with the securities law community. 15+ hours of CLE credit are available to attendees.
Sebastian Alsheimer
Partner
Sebastian Alsheimer is a corporate partner in the New York office of Wilson Sonsini Goodrich & Rosati. He is a leader of the firm’s shareholder engagement and activism practice, focusing on shareholder activism, proxy contests, corporate governance, and mergers and acquisitions.
David J. Berger
Partner
David is an expert in and leader of the corporate governance and shareholder activism practices.
Richard C. Blake
Partner
Richard has a comprehensive corporate law background, with extensive experience in public offerings.
William B. Chandler III
Partner
Mr. Chandler represents clients in governance matters, committee assignments, internal investigations, and transactional matters.
Todd Cleary
Partner
Todd represents companies, investors and other parties in private equity transactions.
Ross Davies
Partner
Ross Davies is a partner in the London office of Wilson Sonsini Goodrich & Rosati, where he has a wide-ranging corporate and mergers and acquisitions practice.
Broderick K. Henry Jr.
Partner
Broderick Henry is a partner in the Palo Alto office of Wilson Sonsini Goodrich & Rosati, where his practice focuses on mergers and acquisitions, divestitures, equity investments, and other strategic matters involving public and private companies. Broderick primarily represents clients in the technology industry, but has represented clients in a wide range of industries, including aviation, financial services, consumer products, energy and infrastructure, security, and manufacturing.
Remi P. Korenblit
Partner
Remi Korenblit is a partner at Wilson Sonsini Goodrich & Rosati, where his practice focuses on mergers and acquisitions, corporate governance, financing transactions, and other corporate and securities law matters. His transaction experience includes mergers, business combinations, asset and stock purchases, divestitures, carve-outs and spin-off transactions, private equity and venture financing transactions, joint ventures, and other strategic transactions for both public and private companies. He also advises clients on corporate governance matters, shareholder activism, takeover defense, recapitalizations and restructurings, and other special situations. Remi has represented U.S. and international clients in a variety of sectors, including software and technology, telecommunication, media, banking and finance, industrial, manufacturing, pharmaceutical, energy, and retail industries.
Douglas K. Schnell
Partner
Doug focuses his practice on shareholder activism, mergers and acquisitions (both negotiated and contested), and corporate governance.
Amy L. Simmerman
Partner
Amy is a leader of Wilson Sonsini’s Delaware office and governance practice.
People
Sebastian Alsheimer
Partner
Sebastian Alsheimer is a corporate partner in the New York office of Wilson Sonsini Goodrich & Rosati. He is a leader of the firm’s shareholder engagement and activism practice, focusing on shareholder activism, proxy contests, corporate governance, and mergers and acquisitions.
David J. Berger
Partner
David is an expert in and leader of the corporate governance and shareholder activism practices.
Richard C. Blake
Partner
Richard has a comprehensive corporate law background, with extensive experience in public offerings.
William B. Chandler III
Partner
Mr. Chandler represents clients in governance matters, committee assignments, internal investigations, and transactional matters.
Todd Cleary
Partner
Todd represents companies, investors and other parties in private equity transactions.
Ross Davies
Partner
Ross Davies is a partner in the London office of Wilson Sonsini Goodrich & Rosati, where he has a wide-ranging corporate and mergers and acquisitions practice.
Broderick K. Henry Jr.
Partner
Broderick Henry is a partner in the Palo Alto office of Wilson Sonsini Goodrich & Rosati, where his practice focuses on mergers and acquisitions, divestitures, equity investments, and other strategic matters involving public and private companies. Broderick primarily represents clients in the technology industry, but has represented clients in a wide range of industries, including aviation, financial services, consumer products, energy and infrastructure, security, and manufacturing.
Remi P. Korenblit
Partner
Remi Korenblit is a partner at Wilson Sonsini Goodrich & Rosati, where his practice focuses on mergers and acquisitions, corporate governance, financing transactions, and other corporate and securities law matters. His transaction experience includes mergers, business combinations, asset and stock purchases, divestitures, carve-outs and spin-off transactions, private equity and venture financing transactions, joint ventures, and other strategic transactions for both public and private companies. He also advises clients on corporate governance matters, shareholder activism, takeover defense, recapitalizations and restructurings, and other special situations. Remi has represented U.S. and international clients in a variety of sectors, including software and technology, telecommunication, media, banking and finance, industrial, manufacturing, pharmaceutical, energy, and retail industries.
Douglas K. Schnell
Partner
Doug focuses his practice on shareholder activism, mergers and acquisitions (both negotiated and contested), and corporate governance.
Amy L. Simmerman
Partner
Amy is a leader of Wilson Sonsini’s Delaware office and governance practice.
Recent Insights
Alerts
California Governor Gavin Newsom Signs Bill Enacting Changes to California Climate-Related Disclosure Laws
On September 27, 2024, California Governor Gavin Newsom signed Senate Bill 219, the Greenhouse gases: climate corporate accountability: climate-related financial risk (SB 219) after the California Assembly and Senate each approved SB 219. SB 219 amends Senate Bill 253: the Climate Corporate Data Accountability Act (SB 253) and Senate Bill 261, Greenhouse gases: climate-related financial risk (SB 261), which were signed into law in October 2023.1 Notably, SB 219 did not delay the compliance deadlines for reporting companies under either SB 253 or SB 261, as proposed by certain lawmakers. Additionally, proposals to amend Assembly Bill 1305, Voluntary carbon market disclosures (AB 1305) did not reach a final vote, so AB 1305 remains unchanged for now.
Learn More
Client Advisories
Delaware's Status as the Favored Corporate Home: Reflections and Considerations
In recent months, a conversation has emerged as to whether Delaware should remain the favored state of incorporation for business entities. Indeed, many of our clients have asked us whether they should remain in Delaware or choose Delaware as the state of incorporation for their new ventures. In this discussion, we provide our reflections on that question and various factors that entrepreneurs, investors, and companies should consider when weighing incorporation in Delaware against incorporation in another state.
The Reliance on Delaware Compared to Other States
The sheer number of entities formed in Delaware reflects its dominance in this area. In 2022, more than 313,650 entities were formed in the state of Delaware, resulting in more than 1.9 million entities total in Delaware.[1] Delaware also continues to be the state of incorporation for nearly 68.2 percent of the Fortune 500, 65 percent of the S&P 500,[2] and approximately 79 percent of all U.S. initial public offerings in calendar-year 2022.[3] Of course, those numbers reflect that a substantial portion of entities are incorporated elsewhere, both within and outside of the United States. The Chief Justice of Delaware’s Supreme Court has noted that business entities indirectly or directly generate about a third of the state’s revenue.[4]
It also bears noting that Delaware has not always held the distinction as the favored destination for incorporations. Prior to the early 1900s, New Jersey had been the most significant state for incorporations.[5] Aware of New Jersey’s early success and in an effort to encourage corporations to domicile in Delaware, Delaware amended its constitution in 1897 to permit incorporation under general law instead of by special legislative mandate, and in 1899 adopted a general corporation law modeled largely after New Jersey’s approach.[6] These developments, in addition to the written opinions issued by Delaware’s Court of Chancery, helped make Delaware a natural home for corporations looking to leave New Jersey after that state adopted more restrictive laws related to corporations and trusts in 1913.[7]
A corporation’s state of incorporation is significant because that state’s laws govern the corporation’s internal corporate governance and inform how judges will review the conduct of directors and officers in stockholder litigation. As will be discussed in greater detail below, there are a number of factors that have made Delaware a favored state of incorporation for over a century.[8]
Why Is Delaware in Question?
Of course, it is critical to understand why some have called Delaware’s dominance into question. Some of the doubt has come from famous sources, such as Elon Musk’s much-publicized X (formerly Twitter) post stating, “Never incorporate your company in the state of Delaware” after the Delaware Court of Chancery rescinded his compensation package at Tesla.[9] Tesla’s stockholders are now expected to vote on the conversion of Tesla from a Delaware corporation to a Texas corporation at the company’s annual stockholder meeting on June 13, 2024.[10] In the conversations that we have had with clients, businesspeople, and others in the corporate bar, we have heard the following reasons given for reconsidering incorporation in Delaware:
The Reliance on Delaware Compared to Other States
The sheer number of entities formed in Delaware reflects its dominance in this area. In 2022, more than 313,650 entities were formed in the state of Delaware, resulting in more than 1.9 million entities total in Delaware.[1] Delaware also continues to be the state of incorporation for nearly 68.2 percent of the Fortune 500, 65 percent of the S&P 500,[2] and approximately 79 percent of all U.S. initial public offerings in calendar-year 2022.[3] Of course, those numbers reflect that a substantial portion of entities are incorporated elsewhere, both within and outside of the United States. The Chief Justice of Delaware’s Supreme Court has noted that business entities indirectly or directly generate about a third of the state’s revenue.[4]
It also bears noting that Delaware has not always held the distinction as the favored destination for incorporations. Prior to the early 1900s, New Jersey had been the most significant state for incorporations.[5] Aware of New Jersey’s early success and in an effort to encourage corporations to domicile in Delaware, Delaware amended its constitution in 1897 to permit incorporation under general law instead of by special legislative mandate, and in 1899 adopted a general corporation law modeled largely after New Jersey’s approach.[6] These developments, in addition to the written opinions issued by Delaware’s Court of Chancery, helped make Delaware a natural home for corporations looking to leave New Jersey after that state adopted more restrictive laws related to corporations and trusts in 1913.[7]
A corporation’s state of incorporation is significant because that state’s laws govern the corporation’s internal corporate governance and inform how judges will review the conduct of directors and officers in stockholder litigation. As will be discussed in greater detail below, there are a number of factors that have made Delaware a favored state of incorporation for over a century.[8]
Why Is Delaware in Question?
Of course, it is critical to understand why some have called Delaware’s dominance into question. Some of the doubt has come from famous sources, such as Elon Musk’s much-publicized X (formerly Twitter) post stating, “Never incorporate your company in the state of Delaware” after the Delaware Court of Chancery rescinded his compensation package at Tesla.[9] Tesla’s stockholders are now expected to vote on the conversion of Tesla from a Delaware corporation to a Texas corporation at the company’s annual stockholder meeting on June 13, 2024.[10] In the conversations that we have had with clients, businesspeople, and others in the corporate bar, we have heard the following reasons given for reconsidering incorporation in Delaware:
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