Governance Center Blog

Jan
28
2011

Taking a Look at Say on Pay Proxy Statement Language

Now that the SEC has adopted the final rules for Say on Pay, Say When on Pay and golden parachutes advisory votes, I thought it would be a good time to share some examples of a public company  that has already dealt with these votes for the upcoming proxy season.

For those of you who haven’t had the time to read about the Jan. 25 SEC vote (3-2 along party lines), there is quite a lot of blog posts out there that explain what the new rules mean. I would suggest looking at TheCorporateCounsel.net Jan. 26 blog post and Wachtell, Lipton, Rosen & Katz’ client memo. Read the rest of this entry »

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Jan
26
2011

Guest Contributor: Contraction of U.S. Companies Blurs Women Director ‘Magic Number’

GUEST CONTRIBUTOR POST: Elizabeth Ghaffari is the founder, president and CEO of California-based Technology Place Inc., parent company of Champion Boards – a service that fosters the design of boards with an emphasis on the advancement of top level women at major corporations and organizations. This post is exclusive to The Conference Board.

By Elizabeth Ghaffari

The historic focus on the “magic number” – the percentage share of women directors on the top company lists from Fortune , Forbes or S&P  – tends to miss the bigger picture of what’s happening to boards and corporations in general.  Women have been added to boards when firms have been able to increase the size of their boards.  Recently, companies have disappeared through mergers, acquisitions and closure; and boards have shrunk. A steady trend in the addition of new women directors “appears” to be a slight increase in that magic number.

We have failed to mention or analyze these trends, suggesting a short-sightedness and lack of strategic perspective in talking about adding diversity candidates to corporate boards.  If we don’t understand what is causing this sea change in the American economy, we are failing to address the substantive and fundamental issues at play in the marketplace. We’re just shuffling the deck chairs on the Titanic. Read the rest of this entry »

Posted by at 5:31 PM | 2 Comments »

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Jan
22
2011

SEC Answers Proxy Access Suit Charges; Court Date Set for April 7

The case that could decide the legality of the shareholder proxy access rules adopted by the SEC will be heard by the U.S. Court of Appeals for the D.C. Circuit April 7 now that the commission filed its initial brief Wednesday.

For the first time since the U.S. Chamber of Commerce and the Business Roundtable filed their lawsuit in September, the SEC has officially lodged its counterargument with the court. The suit was filed about a month after the commission adopted Rule 14a-11, which allows shareholders with at least 3 percent of ownership for at least three years the right to have their own director candidates added to the proxy ballot alongside management’s without having to engage in an expensive proxy fight. The SEC issued a stay in the implementation of the rule in October until the matter is resolved by the court. Read the rest of this entry »

Posted by at 12:36 PM | 4 Comments »

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Jan
18
2011

CAQ Report Accentuates Ways to Battle Financial Fraud

With all that has been written and discussed about in the aftermath of the great financial crisis of 2008-2009, there hasn’t been a lot of focus on the detection and deterrence of financial reporting fraud. Granted, fraud might not have been at the center of the crisis like it was in the late 1990s and early 2000s when Enron and WorldCom made headlines for their large accounting scandals.

But when you start to look closely at the subprime mortgage mess and the subsequent mortgage securities meltdown, and fair value debate  that followed, it makes more sense to look at what happened through the fraud lens. (If you think about it, probably the only reason the Bernard Madoff Ponzi scheme was revealed was because of the depth of the financial crisis and recession that followed. I remember some pundits comparing the discovery of the Madoff scandal to the large rocks along the coastline that only show up when the tide goes out. Everyone knows they are there but they don’t worry about them because they don’t usually see them.) Read the rest of this entry »

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Jan
14
2011

Wikileaks Episode Should be Wake-Up Call for Companies

If you are a director on a U.S. public company, you probably had a queasy feeling in your stomach when you heard about Wikileaks’ potential next target: corporate America.

Let’s face it. If there were to be a data dump of corporate e-mails, documents and other secret information that was the size of the classified U.S. government cables released by the rogue Wikileaks Web site last year, the ramifications for that particular company could be severe. And that’s not so much because the information being leaked was confidential or top secret. It’s how the information is portrayed by the leaker and how key stakeholders and the markets react to that portrayal. Read the rest of this entry »

Posted by at 3:50 PM | 4 Comments »

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Jan
11
2011

Triennial, Annual Favorites for Say on Pay Frequency Vote

Triennial, biennial, or annual. What will it be? That’s the question public companies will be answering this coming proxy season when it comes to the frequency of Say on Pay votes, as required by the Dodd-Frank Act.

The early returns are mixed as an analysis of proxies filed by Dec. 30 done by Latham & Watkins law firm found that 41 of 73 companies (56 percent) have recommended triennial votes, 17 (23 percent) have recommended annual votes, and 8 (11 percent) have recommended biennial votes. Interestingly enough, 10 percent did not make a frequency recommendation, which the SEC allows as long as there is an explanation. Read the rest of this entry »

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Jan
06
2011

Some More Top Issues Lists for 2011

With the first week of the New Year just about over, I have come upon three more top issues lists for directors and management in 2011. Consider this an addendum to my Dec. 21 post.

One list comes from the very prolific and opinionated Norman Marks of the Institute of Internal Auditors, a thought leader on internal audit, corporate governance, risk management and compliance who is responding to KPMG Audit Committee Institute’s Ten To-Do’s for Audit Committees in 2011 list. Another is the annual list of Top Challenges for Financial Executives by Marie N. Hollein, president and CEO of Financial Executives International. The other list, which I just received today, comes from Michael Rasmussen, president and owner of Corporate Integrity LLC, a corporate governance, risk management and compliance (GRC) think tank and advisor. Read the rest of this entry »

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