July 18, 2007

Some Thoughts on Board “Engagement” with Shareholders

Recently, Pfizer made an announcement – see “Press Release – Directors to Initiate Face-to-Face Meetings with Institutional Investors” – that has generated some interesting commentary, with legal titans Marty Lipton and Ira Millstein squaring off on whether shareholders should meet with directors. These memos are posted in our “Shareholder-Director Communications” Practice Area.

In this podcast, Peggy Foran of Pfizer explains the company’s new policy regarding board engagement, including:

– What does Pfizer’s new policy entail?
– How will the board’s activities under the new policy differ from what the Pfizer board has done in the past?
– Some commentators have urged that the Pfizer board’s “engagement” be webcast so that more shareholders can participate. Why won’t it be?

Management-Shareholder Engagement: The Results Are “In”

Speaking of “engagement,” did you catch this WSJ article on Monday that summarizes how the proxy season unfolded? This quote from ISS’ Pat McGurn encapsulates the piece: “We’ve never had a season that had so much activity going on in the wings and much less taking place center stage.”

What really struck me was that “24% of shareholder proposals for annual meetings were withdrawn this year, as of July 6.” Wow! That’s truly amazing, particularly given that there are many proponents with whom it’s a waste of time to even attempt to negotiate a proposal “out.” But clearly, more and more companies are realizing it’s worth the time to “engage” with those proponents who are willing to meet somewhere in the middle on the issues raised (and remember, those issues are not always those presented in a shareholder proposal – many proponents have ulterior motives, which they cannot include in a proposal because it might be excludable under the bases in Rule 14a-8).

In our “Shareholder Proposals” Practice Area, I encourage you to check out the piece – “Negotiation and Settlement of Proposals” – that Beth Young and I wrote a while back that is a pretty good primer on how to conduct successful negotiations with proponents.

Internal Controls Update: AS #5, Management Reports and All that Jazz

Tune in tomorrow for our webcast – “Internal Controls Update: AS #5, Management Reports and All that Jazz” – to hear Linda Griggs, John Huber and Armando Pimental discuss the latest guidance from the PCAOB and SEC on internal controls.

– Broc Romanek