The Conference Board Governance Center Blog

Jul
28
2011

Worth Reading: News Corp. Phone Hacking a Tone at the Top Issue

I couldn’t help but notice the similarities between the accounting scandals of the late 1990s, early 2000s at Enron, Tyco and WorldCom and the News Corp. phone hacking scandal that was brought to light this year. True, the use of illegal electronic gizmos to eavesdrop on news sources is more similar to the wiretapping authorized by the Hewlett-Packard chairman in 2005 to track down a news leak. But in the governance lens, the two actions are really quite different since once involved the board chairman and the other involved employees.

The allegations made that News of the World employees somehow hacked the phones of sources to gain an unfair advantage in its newsgathering is more akin to fraud than Hewlett-Packard’s former chairman Patricia C. Dunn authorizing a third party to tap the phones of directors on her own board. (The incident eventually led to Dunn’s exit from the company.) And more importantly the News Corp. employee actions are indicative of a serious “Tone at the Top” problem as was the case at Enron, Tyco, and WorldCom. Read the rest of this entry »

Jul
26
2011

Proxy Access Court Decision Fallout: Bank on More Proxy Contests

Two things are almost certain following Friday’s decision by the U.S. Court of Appeals for the D.C. Circuit in the case challenging the SEC’s new proxy access rules: there definitely will be no proxy access for proxy season 2012 and the number of proxy contests will increase next year.

While I know I’m not going out on a limb to make the first prediction since the court unanimously  vacated Rule 14a-11 (which would allow shareholders direct access to the proxy), I believe shareholder groups will take advantage of Rule 14a-8 as a backdoor way toward proxy access. Additionally, there is bound to be some kind of blowback for those directors sitting on companies that had negative Say on Pay votes. Granted, that might take the form of withhold campaigns but many shareholder groups may just opt for the good old-fashioned proxy contest.

Here’s why I believe there will be an uptick in proxy contests and/or shareholder proposals calling for proxy access: Read the rest of this entry »

Jul
22
2011

Succession Plan in Place as Governance Center Director Embarks on New Opportunity

Paul DeNicola, The Conference Board Governance Center director, is leaving to become a director of  PwC’s Center for Board Governance effective Aug. 8.

“Paul has been a real asset to The Conference Board Governance Center over the past six years and he will be missed,” said R. William Ide III, chair of the Advisory Group of the Governance Center. “We are delighted that he will continue to be involved in The Conference Board, interacting with us on behalf of PwC, which is a Founding Member and Sponsor of the Governance Center.”

Jon Spector, The Conference Board president and CEO, lauded DeNicola’s work as well.

“We’re sorry to see Paul go; he’s done a fine job leading the Governance Center,” Spector said. “He’s found a great position at a Conference Board member company and we look forward to collaborating with both Paul and with PwC in the future.”

In his six years with The Conference Board DeNicola served as Governance Center manager and associate director before becoming director in 2009.

“I am grateful for the opportunities that The Conference Board has afforded me, and am confident that the Center is well positioned to continue as a governance thought leader,” DeNicola said.

Ide will take over day-to-day leadership of the Governance Center. Barbara Blackford, retired general counsel of Superior Essex Inc. and former associate general counsel and assistant secretary at Monsanto Company, will provide additional day-to-day assistance to the Governance Center. Having been actively involved with the Governance Center for nearly 10 years, Ide is also of counsel to McKenna Long Aldridge LLP, co-heading its governance practice.

“Corporate directors and companies are being challenged as never before with vastly increased responsibility, unprecedented accountability, and changing expectations,” Ide said. “The Conference Board Governance Center has long been a leader in helping define practices to help directors and executives meet these responsibilities. As the corporate world becomes increasingly global, we are working with our members to assess programs and research that meet these new challenges.   I look forward to engaging our new leader in realizing this vision.”

Over the last few years the Governance Center has expanded its research and outreach with the introduction of the Director Notes series and the Governance Center Blog while continuing to provide leadership to the corporate governance community with a variety of tailored education programs like the Directors’ Institute that helps directors and executives meet their governing responsibilities.

Just last month DeNicola was named a Millstein Center Rising Star of Corporate Governance for 2011 and he was named to the Directorship 100 list in 2009 and 2010. In his time at The Conference Board DeNicola not only led the day-to-day operation of the Center but co-authored the Handbook on Corporate Political Activity: Emerging Corporate Governance Issues, a timely review for companies evaluating the risks and rewards of various forms of political spending as the U.S. presidential elections near.

The Governance Center serves executives and directors of leading world-class companies, influential institutional investors, and professional service providers who gather to discuss the most pressing governance matters. The Center’s mission is to promote optimal corporate governance practices for public companies that enhance performance, public trust, and market confidence. Through its Directors’ Institute, the Governance Center is a world leader in engaging directors, chairmen, and CEOs on governance issues, offering tailored educational programs as well as numerous peer-to-peer learning groups.

Jul
18
2011

Derivative Lawsuits on Radar of Failed SOP Vote Companies

If you sit on the board of any of the 39 companies that had a failed Say on Pay vote the past proxy season, I don’t need to tell you that despite the fact the votes were only “advisory” there will be some shareholder repercussions. In the past year, seven companies have already faced one of those repercussions – the dreaded derivative shareholder lawsuit.

It’s possible the plaintiff’s bar may not limit their targets to companies with failed SOP votes; the word is that any vote below 70 percent is troubling. And in some cases compensation consultants have been named as defendants.

At last check, the companies facing derivative lawsuits from shareholders after negative SOP votes include:

  • Occidental Petroleum (2010)
  • Keycorp (2010)
  • Beazer Homes (2011)
  • Umpqua Holdings Corp. (2011)
  • Jacobs Engineering Group (2011)
  • Hercules Offshore Inc. (2011)
  • Bank of New York Mellon (2011)*

*=It should be noted that BNY Mellon is the only company to be sued following a successful SOP vote. Read the rest of this entry »

Jul
14
2011

Say on Pay Review: More Shareholder Engagement, but Pay for Performance ‘Disconnect’

The early word on what U.S. public companies should do following the first mandatory year of Say on Pay is to review the level of engagement with shareholders vs. the level of support the company received on the advisory vote.

Depending on what you read or who you talk to, the word is that companies and their boards should ascertain the power of proxy advisory firms recommendations and whether or not there is a “disconnect” on pay for performance. Those are two issues that have come up in at least two post-proxy season reports and a Webcast. Read the rest of this entry »

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