The Conference Board Governance Center Blog

Mar
15
2013

Important Questions About Activist Hedge Funds

By Marty Lipton, Partner, Wachtell, Lipton, Rosen & Katz

Note from the Blog Editors: Last week on this blog we posted an article that favorably viewed the role of activists in the governance of public companies. This week we are posting an article questioning the value of activist involvement in the governance of public companies and will be considering these issues at our next Task Force on Corporate/Investor Engagement public forum on April 3.  For more information and details on how to participate, please see the Public Forum website.

In what can only be considered a form of extortion, activist hedge funds are preying on American corporations to create short-term increases in the market price of their stock at the expense of long-term value. Prominent academics are serving the narrow interests of activist hedge funds by arguing that the activists perform an important service by uncovering “under-valued” or “under-managed” corporations and marshaling the voting power of institutional investors to force sale, liquidation or restructuring transactions to gain a pop in the price of their stock. Read the rest of this entry »

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Mar
13
2013

Another Thing to Think About this Proxy Season: Don’t’ Forget the IRC Section 162(m) Proxy Lawsuits

By Jim Barrall, Partner, Latham & Watkins LLP

In addition to thinking about the lawsuits seeking to enjoin 2013 say-on-pay, equity plan, and other shareholder votes (See my latest Conference Board Governance Center blog on these cases: An Important Company Victory in the Proxy Disclosure Litigation Wars), as companies draft equity and cash incentive plans and proxies for shareholder approval, they also need to pay attention to a second strain of compensation proxy vote lawsuits, which have targeted ten or so companies (that we know of) in 2011 and 2012 and at least a couple in the last week. These suits allege that directors breached their fiduciary duties to shareholders by making material misstatements (and/or omitting to disclose material information) in company proxies regarding the terms and tax consequences of equity and cash incentive plans which have been designed to allow companies to pay “performance-based” compensation which is not subject to the $1 Million deduction cap of Section 162(m) of the Internal Revenue Code. Read the rest of this entry »

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Mar
08
2013

A Strategic Board Primer On All Things Social

by Bob Zukis, Senior Fellow, Governance Center, The Conference Board; Author, Social Inc. – Why Business is the Next Social Opportunity Worth Trillions

You can’t turn around without running into news about social media, networking, or technology. But the strategic implications around what social is truly about for businesses have not been well articulated or understood. Marketing has so far dominated the conversation, but something much more strategic is occurring with this technology that has major strategic business ramifications.

Is social just a channel, like Facebook that you need to advertise into? Is a site and service like Twitter a new way to communicate with the market, your employees, and a broader stakeholder community? The answer is yes to both of these questions but the bigger strategic underpinnings of social technology are much more important than this. Read the rest of this entry »

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Mar
03
2013

Debunking Myths About Activist Investors

By Chuck Nathan, Partner and Senior Advisor, RLM Finsbury

Activist investing has become quite the rage in the equity marketplace. Activist investors are proliferating, and there is a marked inflow of new capital to this asset class. The discipline of activist investing is popping up in more conversations about the nature and role of equity investors. As a result, it is occupying the thoughts, and sometimes the nightmares, of an increasing number of corporate executives and their advisers. The phenomenon has even become a topic du jour of academics, who are busily finding sufficient economic value in the function of activist investing to justify urging the SEC not to shorten the historic minimum time frames for reporting accumulations of more than five percent of a company’s stock explicitly to permit activists to accumulate larger blocks before disclosure of their activities results in a rise in market trading values for the stock in question. Read the rest of this entry »

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Mar
01
2013

Communicating and Engaging on Sustainability

By Thomas Singer, Researcher, Corporate Leadership, The Conference Board

While corporate sustainability reporting is on the rise, much debate continues to exist around the specifics of reporting as well as corporate engagement with stakeholders on this topic. A new publication from The Conference Board brings together recent research from subject experts to help guide companies on these issues and help corporate directors understand how their peers are communicating and engaging on sustainability.

The report, Sustainability Matters 2013: How Companies Communicate and Engage on Sustainability, presents leading research on interrelated topics on corporate sustainability disclosure. The annual report is a curated collection of select Director Notes – executive-length publications in which The Conference Board engages experts in an open dialogue about topical issues of concern to member companies Read the rest of this entry »

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