Governance Center Blog

Jul
15
2010

SEC Wants Your Proxy Plumbing Stories

With more than 600 billion shares being voted electronically at more than 13,000 shareholder meetings every year and the growing practice of share lending and the proliferation of short selling by hedge funds, it’s no wonder the so-called “proxy plumbing” is getting “clogged.” But when you consider that shareholders are about to be granted more power than ever, the need for a more accurate and transparent proxy system becomes paramount.

It’s hard to imagine that such a complex system as the proxy voting infrastructure has been operating under rules from the 1980s. That’s the justification for the SEC’s 5-0 vote Wednesday to issue a concept release on making changes to that system, as SEC Chair Mary Schapiro spelled out in a July 9 speech in Chicago at the annual meeting of the Society of Corporate Secretaries and Governance Professionals. [Read Schapiro’s prepared text and watch her comments during the July 14 SEC open meeting.] Read the rest of this entry »

- Gary Larkin

Jul
10
2010

Schapiro: SEC Ready to Tackle Proxy Voting Structure

If you take anything away from SEC Chair Mary Schapiro’s Friday speech to the Society of Corporate Secretaries and Governance Professionals annual meeting in Chicago, it should be this: the regulator plans to act quickly to institute the regulations behind financial reform.

In the meantime, Schapiro told a packed hotel room the SEC on Wednesday plans to vote on issuing a concept release on shareholder voting infrastructure, known by many as “proxy plumbing.” Additionally, Schapiro and her Deputy Chief of Staff Kayla Gillan explained to the hundreds of conference participants Friday that the SEC is looking to update many of the outdated forms registrants use and take another look at risk disclosure requirements. Read the rest of this entry »

- Gary Larkin

Jun
25
2010

Is There a Crisis Management Plan Crisis?

In light of the fallout from the BP oil spill, I scoured the web sites of some of the Fortune 100 and Googled the words “corporate crisis management plans.” I was unable to find any such plans for those corporations. I believe the reason is either the companies keep such plans private or that many companies just don’t have any.

After watching and reading some of the testimony given by the heads of five of the largest oil companies before U.S. Rep. Edward Markey’s Energy and Environment Subcommittee earlier this month, I am inclined to believe the reason is the latter. If you remember, it was during this hearing that Rep. Markey made the following revelation: [Read Markey’s speech here.] Read the rest of this entry »

- Gary Larkin

Jun
22
2010

SEC Will Have Hands Full Once Financial Reform Passes

As the House-Senate Conference Committee gets closer to an agreement for financial regulatory reform, directors and chief executives are wondering how the voluminous legislation will affect the governance of their companies.

How the proposed law plays out in boardrooms depends on what the SEC does. According to Commissioner Troy A. Paredes, a guest speaker at an executive compensation roundtable hosted by The Conference Board’s Directors Institute and the Weinberg Center for Corporate Governance at the University of Delaware Monday night, there’s most likely going to be anywhere up to 50 or 60 new rules coming out of the agency over the next six months. Read the rest of this entry »

- Gary Larkin

Jun
18
2010

Compensation Plans Provide Companies Chance to Rebuild Trust

Although executive compensation plans may not be as big a source of shareholder and public anger that they were last year in the heat of the financial crisis, they will become a sticking point for boards if and when Say on Pay becomes mandatory.

But there is a deeper reason public companies may want to address their compensation plans in the near future. There is a societal context to executive compensation as U.S. businesses try to regain the trust of the public and citizens feel some degree of common cause with those businesses. The financial crisis is the latest erosion of that trust, especially since American taxpayers were asked to bail out some of those large businesses. Read the rest of this entry »

- Gary Larkin

Jun
16
2010

Reports: Sustainability Reporting Standards Lacking

Boards of directors need to oversee corporate sustainability reporting more effectively as their companies should raise the bar on minimum reporting standards through voluntary disclosure, according to two recent reports.

In its Director Notes series report released last week, Sustainability in the Boardroom, The Conference Board Governance and Corporate Citizenship & Sustainability Centers surmised from the results of a survey of 50 corporate secretaries that there are flaws in how boards oversee their companies’ social and environmental initiatives. Read the rest of this entry »

- Gary Larkin

Jun
11
2010

Executive Compensation Conference Share: Board Placemats

Another week, another conference as the spring corporate governance season kicks into full gear. This week I attended the 2010 Executive Compensation Conference: Everything Directors and Senior Executives Need to Know About Effective Risk and Reward Sharing, which focused on risk assessments, SEC proxy disclosures, Say on Pay and compensation principles.

While the nearly 100 attendees at the June 9-10 conference at New York City’s Intercontinental Barclay were engaged on all those topics, there was one takeaway I thought many directors should most certainly have. It is a sample “Compensation Placemat” that was shared by Janet M. Clarke, a compensation committee chair with ExpressJet Holdings and Asbury Automotive Group.

What’s a compensation placemat, you may ask? It’s a one-page document that fits into a board book. The placemat (it’s called that because it literally looks like a menu placemat you see in diners) is a quick read of a company’s executive compensation plan complete with the executive pay strategy; a list of peer group revenue, earnings and market value; the company’s officer compensation, a description of the annual incentive and long term incentive plans; the company’s run, or burn, rate (Equilar definition: the sum of options granted and options assumed divided by total shares outstanding.); share ownership guidelines; termination provisions; and director compensation, including retainers, chair premiums and long term incentives.

The particular example that Clarke shared during the panel on how boards can engage management to improve risk management and incentive compensation was put together by Semler Brossy Consulting Group LLC. It is based on an actual compensation placemat for a health care company.

I have included a link to a larger version of the placemat here and in the image above. It’s a shared file using Adobe’s file sharing program.

- Gary Larkin

Jun
08
2010

DI Roundtable Share: Reminders for Directors

In this season of corporate governance conferences, I wanted to use this space to share some information gleaned from a recent Conference Board Directors’ Institute Roundtable held in New York City.

During a luncheon speech given by Justice Carolyn Berger of the Supreme Court of Delaware and Henry Klehm III, a partner with JonesDay, those in attendance at the Harmonie Club in Midtown Manhattan received a dissertation on director Do’s in today’s volatile environment. Klehm read a list of Ten Reminders for Directors, which he said was originally penned by fellow JonesDay partner Pat McCartan.

The list touches on such issues as conflict of interest, committee charters, corporate minutes and director note-taking. For your reading pleasure, the full list appears here or see below.

director top10

- Gary Larkin

Jun
08
2010

Diebold Case Shows Breakdown in Board Processes

As U.S. public companies continue to recover from the financial crisis, there were some reminders in the past couple of weeks about how the pressure to perform can lead chief executives to commit financial fraud to meet analysts’ expectations.

That was what happened in the Diebold Inc. case in which the SEC on June 2 charged the ATM, bank security system and election machine-maker and three of its former executives with engaging in an accounting scheme to inflate earnings. The SEC announcement comes a year after the company announced a settlement in the case. Read the rest of this entry »

- Gary Larkin

Jun
02
2010

Worth Reading … Financial Reform (the Final Chapter?)

Numerous law firms and at least one stock exchange are telling their clients and issuers to prepare for new corporate governance rules as early as this summer and do what they can to shore up communications with shareholders.

“Everybody knows it’s [proxy access] coming; we just don’t know what it will look like,” David Huntingdon, a partner with Paul, Weiss, Rifkind, Wharton & Garrison LLP, said during Corporate Board Member’s This Week in the Boardroom Webcast last week. “We’ll just have to wait until later this summer when the SEC takes action.” [To view Board Member Webcast, click here.] Read the rest of this entry »

- Gary Larkin

The Conference Board

Recently Updated

Stay Informed

Twitter Feed

SEC Wants Your Proxy Plumbing Stories

Schapiro: SEC Ready to Tackle Proxy Voting Structure

Is There a Crisis Management Plan Crisis?

SEC Will Have Hands Full Once Financial Reform Passes

Compensation Plans Provide Companies Chance to Rebuild Trust

Reports: Sustainability Reporting Standards Lacking

Executive Compensation Conference Share: Board Placemats

DI Roundtable Share: Reminders for Directors

Diebold Case Shows Breakdown in Board Processes

Worth Reading … Financial Reform (the Final Chapter?)