October 21, 2005
Delaware Law and Compensation Issues
The “2nd Annual Executive Compensation Conference” will open with a videotaped panel on director duties and liabilities featuring Delaware Supreme Court Chief Justice Myron Steele; Delaware Vice Chancellor Stephen Lamb; and Professor Charles Elson, Director of the U. of Delaware Center for Corporate Governance
Here is a teaser of just a few of the many issues that will be addressed by this panel:
– Meaning of the Disney opinion – “The opinion should be read as a warning signal rather than a free pass.”
– Hiring compensation consultants – “If you interview a compensation consultant and all they bring to the table are benchmarking surveys to establish a pay package – I would be very leery.”
– Reliance on experts – “Simple reliance on the comp consultant I don’t think gets you there. You’ve got to go beyond that.”
– Director independence – “I think if you have a charitable link to the company or to the manager of the company, it does influence your thinking”
– Minute-taking and board materials – “What’s important to note in the minutes – if there’s a dissenting opinion, I think the dissenting opinion needs to be recognized.
With one week to go, act now to register to attend in Chicago or by video webcast.
Implementing a Majority Vote Governance Guideline
Watched a rousing panel on the majority vote movement at ISS’ Annual Conference yesterday – so far this year, shareholder proposals on this topic have averaged support of 44%, a high level for a “first run” type of proposal. If you haven’t been following developments – and the arguments involved – it’s time to get up-to-speed. Here is an ISS article on how the access rule might have crawled out of the grave.
Recently, Microsoft joined the growing list of companies to adopt some form of voluntary governance guideline pertaining to the majority vote standard. In this podcast, John Seethoff, Vice President and Deputy General Counsel of Microsoft Corporation, explains how to implement a corporate governance guideline regarding the tender of a resignation from a director that receives a majority of votes withheld, including:
– What exactly did Microsoft do? And why?
– Under what circumstances do you think a board might exercise its judgment not to accept a director’s tender?
– In what form would you expect directors to tender their resignation under this type of guideline?
– Do you think the tender of a resignation would trigger a Form 8-K filing?
– What do you recommend that the rest of us do to become educated and more involved regarding the majority vote movement?