March 14, 2005

More Internal Controls Sample Disclosures…

As the appetite for internal control disclosure samples seems insatiable, here we go:

Glenayre Technologies’ 10-K – uses the 45-day extension, hints that it may not be able to meet the extended date, and gives an extensive risk factor.

Calvary Bancorp’s 10-K – uses the 45-day extension indicating that management is not aware of a problem

Gorman Rupp’s 10-K – gave itself a “not effective” opinion based on a material weakness related to one of its subsidiaries

Maxtor Corporation’s 10-K – has ineffective internal controls and as a result, ineffective disclosure controls (also has a risk factor re: the control problems)

Bassett Furniture’s 10-K – Here’s a good sample using the 45-day extension for non-accelerated filers (there are a few bad ones out there, with no conclusions. Be careful!)

“Steps to Take” Transcript is Up!

On, we have posted the transcript from the popular webcast: “Steps to Take: How to Avoid Director Liability After WorldCom, Enron and Disney.”

ISS Announces Position on Shareholder Proposals Re: Majority Vote Requirements

Late last week, ISS issued a new voting policy outlining how they intend to generally support non-binding proposals seeking majority vote requirements in boardroom elections. The overarching rationale for the change was that “implications of ‘Majority Vote’ proposals are potentially far-reaching, as they could recast the way in which directors are elected.”

ISS has created a resource center on majority-vote proposals, that contains its new policy on this issue and a transcript from a roundtable on the topic from last month.

It is notable that the Carpenter’s union recently withdraw its majority-vote proposal at ten companies because they all agreed to sit down with union representatives in a work group to study the feasibility of majority elections for corporate directors. This development follows the formation of the related ABA Majority/Plurality Voting Task Force that I blogged about on February 25th. In addition, we have just posted Marty Lipton’s memo on majority vote provisions in our “Shareholder Access” Practice Area.

Disney’s Succession

Although CEO succession is one of the board’s primary tasks, I would argue that its the least understood – and most challenging – of the board’s duties. This is reflected during the recent controversy over Eisner’s successor at Disney, who was selected over the weekend to be inhouse candidate Robert Iger. Now, dissidents Stanley Gold and Roy Disney believe that Eisner railroaded the succession process and have released this statement calling for removal of the entire board and saying “Mr. Mitchell’s approach to good governance is no better than a carny at the fair, enticing words but in the end the game is rigged.”

The lack of understanding is also reflected in the fact that I have only seen one article written about CEO succession in my five years as editor of the Corporate Governance Advisor and managing all these websites. Learn more about CEO succession in our “CEO Sucession” Practice Area.