August 2014

Looking into the future of changes to corporate governanceInterest in corporate governance has increased exponentially over the last several years, as has shareholder and governmental pressure – often successful – for companies to change how they are governed.  Since 2002, we’ve seen Sarbanes-Oxley, Dodd-Frank, higher and sometimes passing votes on a wide variety of shareholder proposals, and rapid growth in corporate efforts to speak with investors.  And that’s just for starters.   

These developments represent the latest iteration of what has become part of our normal business cycle – scandals (e.g., Enron, WorldCom, Madoff, derivatives), followed by significant declines in stock prices, resulting in public outrage, reform, litigation, and shareholder activism.   Now that the economy is rebounding, should we anticipate a return to “normalcy” (whatever that may be)?  Are we back to “business as usual”? 

Gazing into a crystal ball can be risky, but I’m going to take a chance and say “no.”  While our economic problems have abated, I believe that the past is prologue – in other words, we’re going to continue to see more of the same: investor pressure on companies, legislation and regulation seeking a wide variety of corporate reforms, and the like.  Some more specific predictions follow: 

  • Increased Focus on Small- and Mid-Cap Companies:  Investors have picked most if not all of the low-hanging governance fruit from large-cap companies.  Sure, there are some issues that may generate heat and some corporate “outliers” that investors will continue to attack.  However, most big companies have long since adopted such reforms as majority voting in uncontested director elections, elimination of supermajority votes and other anti-takeover provisions, and shareholder ability to call special meetings, to name just a few.  If investors (and their partners, the proxy advisory firms) are to continue to grow, Continue Reading The shape of things to come in corporate governance

Bob Lamm joins The Securities Edge.

The Securities Edge is excited to announce a new blogger to the fold: Bob Lamm!  After a 12-year “hiatus”, Bob has rejoined Gunster.  

Bob is widely considered a national expert in the securities and corporate governance space and frequently speaks and writes on securities law, corporate governance, and related topics. Bob’s unparalleled depth of experience will prove to be a great addition to The Securities Edge and Gunster. 

Bob has over four decades of in-house experience.  His most recent experience was as Assistant General Counsel and Assistant Secretary with Pfizer.  In addition to Pfizer, Bob’s previous experience includes service as Vice President and Secretary of W. R. Grace & Co., Senior Vice President – Corporate Governance and Secretary of CA, Inc., and Managing Director, Secretary and Associate General Counsel of FGIC Corporation/Financial Guaranty Insurance Company.  Bob also has extensive experience with small- and mid-cap public companies as well as non-profit entities.   

At Gunster, Bob will co-chair the Securities and Corporate Governance Practice Group, where his deep expertise will be welcomed in the Florida market.    

Bob is a long-term member of the Society of Corporate Secretaries and Governance Professionals. He is the immediate past Chair of the Society’s Securities Law Committee and has served on the Society’s Corporate Practices, Finance and National Conference Committees, and as a member of its Board of Directors. He is also a Senior Fellow of The Conference Board Governance Center.  

Bob is a member of the New York State Bar, The Florida Bar, and the American Bar Association (including its Business Law Section and Committees on Corporate Governance and Federal Regulation of Securities). He received a Bachelor of Arts from Brandeis University and a Juris Doctor from the University of Pennsylvania School of Law.

We are all looking forward to reading some great posts from Bob!

ISS trying to save its own neck?On Thursday, Institutional Shareholder Services Inc. (ISS) announced the launch of a new data verification portal to be used for equity-based compensation plans that U.S. companies submit for approval by their shareholders.  This is a welcome change to ISS policy; although call me a cynic, but I believe this new policy has more to do with the SEC Staff’s recent interpretive guidance and less to do with actually improving their product.

Criticism of ISS (and the other proxy advisors) is nothing new.  Public companies have long complained about ISS’s conflicts of interest (ISS “grading” issuers’ corporate governance policies and then charging companies a subscription fee to learn how to improve their “grades”).  Further, ISS constantly churns their corporate governance policies (presumably) to keep their services relevant.  But, the biggest complaint from public companies occurs when ISS makes a recommendation based on erroneous data.  In fact, in a study from the Center on Executive Compensation, 17% of respondents reported erroneous analysis of long-term incentive plans and 15% of respondents reported that Continue Reading Trying to save its own neck? ISS works to assure “data integrity”