April 30, 2009

Survey Results: D&O Questionnaires

We recently wrapped up our Quick Survey on D&O Questionnaires practices. Below are our results:

1. When we update our D&O questionnaire each year, the following groups review it before it’s sent to the D&Os:
– Outside law firm – 37.1%
– Independent auditor – 5.7%
– Finance department – 1.4%
– General counsel – 57.1%
– Executive compensation department – 4.29%

2. Our _______ has overall responsibility for the “master” D&O Questionnaire to be sent out each year:
– Legal department – 64.9%
– Finance department – 0%
– Corporate secretary – 21.1%
– Outside counsel – 14.0%

3. Before we distribute our D&O Questionnaires, the company “pre-completes” responses in the following sections for review and acknowledgement by each individual respondent:

– We ask respondents to provide all information without pre-completing – 9.0%
– Compensation information, except for the perks – 16.7%
– Compensation information, including the perks – 16.7%
– Equity ownership, including beneficial ownership – 53.9%
– Section 16 compliance – 24.4%
– Biographical information – 59.0%
– Related-party transactions – 18.0%
– Independence – 16.7%
– Audit committee financial expertise – 18.0%

4. To assist respondents in identifying related-party transactions, we provide the respondents with a list of the company’s vendors, customers or other counterparties:
– Yes – 14.6%
– No – 85.5%

5. To assist in identifying related-party transactions, we compare known information about respondents’ affiliations with a list of the company’s vendors, customers or other counterparties:
– Yes – 59.6%
– No – 40.4%

6. After sending the D&O Questionnaire, the company’s follow-up with respondents consists of:
– Reviewing responses with all respondents individually – 1.8%
– Reviewing some responses with respondents individually if questions or issues arise – 86.0%
– Answering questions from respondents about particular questions or issues if they arise – 66.7%
– Little or no interaction with the respondents – 10.5%

7. After receiving the D&O Questionnaire responses, the company reviews the responses (or a summary report) with the following:
– Full board of directors – 23.4%
– Governance and nominating committee – 57.5%
– Compensation committee – 4.3%
– Disclosure controls committee – 14.9%
– Relevant departments – 36.2%
– Outside counsel – 42.6%

8. Our company retains the D&O questionnaire responses for a period of:
– Until the proxy statement is filed (we essentially don’t retain them) – 1.8%
– For about one year (roughly until the next year’s questionnaire is drafted) – 5.3%
– Between 1 and 3 years – 21.1%
– Between 3 and 5 years – 19.3%
– Between 5 and 7 years – 28.1%
– More than 7 years – 24.6%

Use of Corporate Plane for Directors to Attend Board Meetings

As we are reminded by this recent note from the “The Race to the Bottom” Blog – and this DealBook piece on how Verizon is ending free plane use for ex-CEOs ahead of next week’s shareholders meeting – personal use of corporate aircraft continues to be a controversial issue. But what about when outside directors get flown to – and/or from – board meetings? How do companies deal with that?

That is the subject of our latest “Quick Survey – Corporate Airplane Use by Outside Directors.” Please take a moment to answer the question posed.

“4th Annual Proxy Disclosure Conference”: Early Bird Follow-Up

The early bird offer that expired Friday resulted in great momentum, with a record number of members signed up so far for the “4th Annual Proxy Disclosure Conference” (whose pricing is combined with the “6th Annual Executive Compensation Conference”) – that will be held in San Francisco and via Live Nationwide Video Webcast on November 9-10th.

Our New “Early Bird” Rates – Expires May 22nd: Still recognizing the hard economic times we face—and in response to requests from members who were not able to submit their registrations by the deadline—we are offering a reduced rate for the Conferences through May 22nd.

For example, you can attend in San Fran for only $995 if you register by May 22nd (reg. rate is $1295) – and it’s only $495 if you also attend the “17th Annual NASPP Conference” (which starts right after the Proxy Disclosure Conference). Here is the Conference registration form – and here is the agenda.

With Congress poised to consider legislation mandating say-on-pay (expected to be introduced by Sen. Schumer soon) – and SEC Chair Schapiro recently stating that there will be new proposals to change the executive compensation rules in the near future – this year’s Conferences are a “must.” Register now and take advantage of these favorable rates.

– Broc Romanek