Volume 1:Issue #9
Edited by Francis H.Byrd
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The Way We See It – Commentary from The Altman Group

By Francis H. Byrd, Managing Director, Corporate Governance Practice Co-Leader

Last week, we broadly discussed the implications of the demise of the broker discretionary vote for issuers and how that might interact with proposed disclosure on company director nominees.

Among the concerns that issuers have voiced over the loss of Rule 452 and the prospect of new disclosure, has been that the election of corporate directors will come to more closely resemble elections for political office – especially during contests for corporate control.  While there is some truth to this, incumbent directors (and those who advise them) should not be preparing for a whistle-stop campaign.

An alternative format, which we believe will be helpful to governance and nominating committees alike, calls for providing shareholders with information about director nominees, why they have been selected by the board to stand for election, and the mechanisms used by the governance and nominating committee in selecting the nominees.

The best example of this type of discussion is in the 2008 proxy statement of Point Blank Solutions, Inc.

A little background first.  Point Blank was the subject of a contest in 2008 by Steel Partners (who won the contest) and its former CEO who had been fired.  The board, in defending against attacks upon the experience of management’s nominees, made a serious effort to distinguish the experience and background of company director nominees beyond the standard biographical material found in the proxy statement.  This concept was advanced by Point Blank board member Suzanne Hopgood, who chaired the board’s governance and nominating committee.

The advantage to an issuer of this alternative format is that it provides for disclosure of those skills and experiences that the governance and nominating committee, and the full board, considered important in fulfilling their oversight responsibilities.  The discussion in the Point Blank proxy statement provides a solid reference for shareholders (and proxy advisory firms) who are looking to focus on director nominee qualifications for board membership.  The discussion provides a solid reference for shareholders (and proxy advisory firms) who are looking to focus on director nominee qualifications for board membership.

The Point Blank proxy also briefly discusses the company’s strategic plan, but does not touch directly on risk oversight.   We expect that going forward, given the SEC’s proposed disclosure regime, more companies will move to a more comprehensive disclosure format.

The Legal Opinion

This Akin Gump alert discusses the details of the SEC’s June 10, 2009 proxy access proposal on registered investment companies.

> read more

Weil Gotshal discusses the implications of the SEC’s approval of the elimination of the broker discretionary vote.

> read more
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