Levick Weekly - Nov 30 2012


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In this Issue:

The 100 Most Influential People in the Boardroom

Social Media & The Boardroom: Critical Questions Directors Need to Ask

Michael Volkov on Whistleblowers

What's Next? The Top Issues of 2013 and Beyond

H-P: Is There a Miraculous Recovery Ahead?

The Future of Directorship: Key Takeaways

Buy Me, Sell Me, Sue Me

Paul Ferrillo on Post Dodd-Frank Priorities

Jeff Rosenblum on The Naked Brand

The Next Big Superstorm Sandy Story: Are We Really in Good Hands?

Blogs Worth Following

LEVICK in the News


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Levick Weekly - Nov 30 2012

  1. 1. EDITION 18 Weekly November 30, 2012 Special Issue: Boardroom Challenges Social Media & The Boardroom: Critical Questions Directors Need To AskMonth 1Month 2Month 3 34% 58% 28%Month 4LinkedIn Network Weekly Growth Twitter Favorite Rate Twitter Retreet Rate Twitter Monthly Growth Rate Facebook Yearly Activity = 10 New Connections Likes Friends Posts Shares
  2. 2. This November, the National Association of Corporate Directors (NACD) released its annual list of The 100 Most Influential People in the Boardroom. In this special edition of LEVICK Weekly, we are pleased to present that prestigious list in its entirety along with in-depth articles and interviews discussing the challenges and opportunities facing boards today. 03 Contents 04 The 100 Most Influential People In the Board Room 12 SOCIAL MEDIA & THE BOARDROOM: Critical Questions Directors Need To Ask 19 MICHAEL VOLKOV on Whistleblowers 20 What’s Next? The Top Issues of 2013 and Beyond 30 H-P: IS THERE A MIRACULOUS RECOVERY AHEAD? 33 THE FUTURE OF DIRECTORSHIP: Key Takeaways 34 Buy Me, Sell Me, Sue Me also in this issue... Month 1 39 PAUL FERRILLO on Post-Election Dodd-Frank Priorities 40 Month 2 Month 3 34% 58% 28% JEFF ROSENBLUM Month 4 on The Naked Brand LinkedIn Network Weekly Growth Twitter Favorite Rate Twitter Retreet Rate Twitter Monthly Growth Rate Facebook Yearly Activity 42 The Next Big Superstorm Sandy Story: = 10 New Connections Likes Friends Posts Shares Are We Really in Good Hands?COVER Image: Social media employ web- and mobile-based technologies to support interactive dialogue and “introduce 47 Blogs Worth Following 48substantial and pervasive changes to communication between organizations, communities, and individuals.” AndreasKaplan and Michael Haenlein define social media as "a group of Internet-based applications that build on the ideological LEVICK In the Newsand technological foundations of Web 2.0, and that allow the creation and exchange of user-generated content.
  3. 3. the 100 NACD Directorship Mathis Cabiallavetta Kent Foster Most Influential People Chair, Finance and Risk Chair, Human Resources and 100: Directors Committee; Swiss Re Compensation Committee; J.C. Penney Josef Ackermann Norm Champ in the Boardroom Chairman of the Board; Zurich Director, SEC Division of Investment Management Brenda J. Gaines Director; Office Depot Gilbert F. Amelio Arthur D. Collins, Jr. Raymond V. Gilmartin Chair, Human Resources; Chair, Compensation Chair, Corporate Governance; AT&T Committee; Boeing General Mills James L. Barksdale Scott Cook David R. Goode Chair, Information Technology Chair; Innovation Technology Chair, Personnel and NACD B. Kenneth West Lifetime Achievement Award Oversight; FedEx Procter & Gamble Compensation Committee; Delta Air Lines Jack B. Lowe, Jr./ Edward Barnholt Robert W. Cook Chairman; Zale Corporation; TDIndustries Chair, Compensation Director; SEC Division William H. Gray, III Committee; eBay of Trading and Markets Chair, Corporate Governance Lowe became CEO and board chair of TDIndustries, one of Americas premier spe- and Ethics; Prudential cialty contracting companies in 1980. For 15 consecutive years, the company has Gordon M. Bethune Alexander M. Cutler appeared in Fortune magazines list of the "100 Best Companies to Work in Amer- Chair, Compensation Director; DuPont Cheryl Grise ica". In his career, Lowe has been active in many civic and industry organizations Committee; Sprint Nextel Chair, Governance and and is a former trustee of the Dallas Independent School District. Domenico De Sole Corporate Responsibility; W. Frank Blount Director; Gap MetLife Chair, Nominating/ Governance Committee; KBR Susan L. Decker Myra M. Hart Lead Director; Intel Governance, Membership NACD Directors of the Year Samuel F. Bodman, III and Public Affairs Committee; Chair, Compensation Robert E. Denham Kraft Foods Committee; Weatherford Intl. Lead Director; Chevron William S. Ayer Linda Rabbitt Chairman; Alaska Air Group Founder, Chairman and Chief Michael Boskin Jane E. Henney, M.D. Executive Officer; Rand Con- Nick Donofrio Chair, Nominating/ Chair, Audit Committee; Director; Delphi Automotive A veteran of more than three struction Corp. Lead Indepen- Governance Committee; ExxonMobil decades in aviation, Ayer dent Director, Towers Watson AmerisourceBergen is the incoming chairman David W. Dorman Rabbitt is the current chair of James T. Brady Chairman of the Board; CVS Enrique Hernandez, Jr. of the NextGen Advisory Chair, Audit Committee; Council, a panel of aviation the Federal City Council, is on Chairman of the Board; industry leaders who are working with the the board of the Economic Club of Washington T. Rowe Price Group Dina Dublon Nordstrom and is a trustee of George Washington Univer- Chair, Audit Committee; FAA to modernize the nations air traffic con- Gregory D. Brenneman sity. She is a director and deputy chair of the PepsiCo Bonnie G. Hill trol system and improve airport and airspace Chair, Compensation efficiency. In addition, he is vice chairman of Federal Reserve Bank in Richmond, Va. Chair, Nominating Governance Committee; Home Depot William J. Fallon Committee; Home Depot the Museum of Flight and serves on the Angel Chairman of the Board; Flight West Foundation board. He is a regent Peter C. Browning CounterTack Mellody L. Hobson at the University of Washington and vice chair Chair, Nominating/Governance of the University of Washington Foundation. Director; Groupon Committee; Nucor Oscar Fanjul Chair, Finance Committee; Irvine O. Hockaday, Jr. Ursula M. Burns Marsh & McLennan Director; Ford Motor Co. Director; American Express Companies NACD Directorship 100: Hall of Fame Mary K. Bush Edward Neville Isdell Bill Ford, Jr. Director; General Motors Director; Discover Financial Chairman of the Board William B. Chandler, III James D. Robinson, III Services Ford Motor Co. Partner; Wilson Sonsini Goodrich & Rosati Chair, Directors and Corporate Governance; Coca-Cola04 05
  4. 4. Weekly Shirley Ann Jackson Alex J. Mandl Georgia R. Nelson Susan C. Schwab Christine T. Whitman, Spencer T. Bachus Chair, Audit Committee; Lead Director & Chair, Audit Chair, Compensation Committee; Director; Boeing Governor Chairman, House Financial Marathon Oil Co. Committee; Dell Cummins Chair, Governance and Services Committee; Congress H. Hugh Shelton Stockholder Relations; Suzanne Nora Johnson Siri S. Marshall Donald T. Nicolaisen Chairman of the Board; Texas Instruments Stephen Bainbridge Director; Pfizer Chair, Nominating/Governance Chair, Audit Committee; Red Hat William D. Warren, Committee; Ameriprise Verizon Communications Donna F. Zarcone Distinguished Professor of Jim Kilts, Jr. Financial Ronald L. Skates Chair, Audit Committee; Law; UCLA School of Law Chair, Compensation Harald J. Norvik Director; Courier Corporation CIGNA Committee; Pfizer Arthur C. Martinez Director; ConocoPhillips Maria Bartiromo Lead Director; International James A. Skinner Carlo V. di Florio Anchor, Closing Bell; CNBC Ellen J. Kullman Flavors & Fragrances Charles H. Noski Chairman of the Board; Director; SEC Office of Chairman of the Board and Chair, Audit Committee, Walgreen Compliance Inspections David H. Batchelder CEO; DuPont Deryck Maughan Microsoft and Examinations Principal, Founder, member Director; Glaxo SmithKline Joan E. Spero of Investment Committee; Maria Lagomasino Sam Nunn, Jr. Director; IBM Relational Investors Chair, Compensation Stanley A. McChrystal, Chair, Public Responsibility; Committee; Coca-Cola Ret. USA General Electric Judith Sprieser NACD Directorship Lucian Bebchuk Director of the Program on Fred Langhammer Director; JetBlue Airways Chair, Audit Committee; 100: Governance Corporate Governance; Dean R. OHare Allstate Chair, Compensation Douglas H. McCorkindale Chair, Audit Committee; Professionals and Harvard Law School Committee; Walt Disney Chair, Nominating/Governance H.J. Heinz Thomas Stemberg Institutions Irv Becker Committee; Lockheed Martin Chair Compensation Sherry Lansing Samuel J. Palmisano National Practice Leader of Chair, Governance Committee; Committee; Lululemon Greg Abott the Executive Compensation Blythe J. McGarvie Chairman of the Board; IBM Athletica Attorney General; State Qualcomm Chair, Audit Committee; Viacom Practice; Hay Group of Texas Helmut Panke Randall L. Stephenson Jan Leschly Terry McGraw, III Chair, Antitrust Compliance; Richard A. Bennett Chair, Compensation & Chairman, President, Wiliam Ackman Chairman; GMI Chair, Nom Gov Committee; Microsoft CEO; AT&T CEO, Founder; Pershing Benefits; American Express Phillips 66 Square Capital Management Robert Bennett William D. Perez James S. Tisch Stuart R. Levine Andrew J. McKenna, Sr. Chair, Nominating/Governance Partner; Hogan Lovells Chair, Nominating/Governance Director; General Electric Joseph Adams Chairman of the Board; Committee; Johnson & Johnson Managing Partner, CEO Committee; Broadridge McDonalds Max W. Berger Financial Solutions Solomon D. Trujillo McGladrey Partner; Bernstein Litowitz David S. Pottruck Chair, Corporate Heidi Miller Chair, Compensation Committee; Berger & Grossman LLP Arthur Levinson Responsibility; Target Luis A. Aguilar Director; General Mills Intel Commissioner Chairman of the Board; Apple Carolyn Berger Laura DAndrea Tyson SEC Justice; Delaware Supreme M. Christian Mitchell Linda Rice Director; AT&T Ann M. Livermore Chairman of the Board; REIS Director; Kimberly-Clark Court Director; UPS William T. Allen Peter Ueberroth Director; NYU Pollack Center Stanley D. Bernstein Nicholas G. Moore Patricia F. Russo Director; Coca-Cola Edward J. Ludwig Chair, Audit & Examination; Lead Director; General Motors for Law and Business Partner; Bernstein Liebhard Lead Director and Chair, Wells Fargo Investment and Finance Craig Weatherup Charles Allen Kenneth A. Bertsch Thomas O. Ryder Lead Director; Starbucks CEO; Crowe Horwath Committee; Aetna Anne M. Mulcahy Chair, Audit Committee; Amazon President and CEO; Society Director; Johnson & Johnson of Corporate Secretaries & Christopher S. Lynch Arthur F. Weinbach Donna F. Anderson Paul Sagan Chairman of the Board; Vice President and Corporate Governance Professionals Chair, Audit Committee; AIG Leo F. Mullin Chair, Nominating and Corp CA Technologies Governance Specialist; T. Glenn Booraem Chair, Public Policy; Johnson Governance; iRobot Fred V. Malek & Johnson Rowe Price Fund Controller, Principal; Chair, Compensation Robert E. Weissman Ronald F. Sargent Chair, Nominating/ Francis J. Aquila Vanguard Group Committee; CBRE Group Richard B. Myers, Ret. USAF Chair, Audit Committee Governance Committee; Partner; Sullivan & Cromwell Director; United Technologies Kroger Cognizant Technology Solutions06 07
  5. 5. Weekly Carol Bowie James Copland Michael Dowd Abe Friedman Bonnie W. Gwin Brad S. Karp Head, Compensation Director, Center for Legal Partner; Robbins Geller Former Head of Vice Chairman; Heidrick & Chairman; Paul, Weiss, Rifkind, Policy; ISS Policy; Manhattan Institute Rudman & Dowd LLP Governance; BlackRock Struggles Wharton & Garrison Richard C. Breeden Richard Cordray Theodore L. Dysart Eric Friedman Steven E. Hall David A. Katz Founder, Chairman, CEO, Director; Consumer Financial Vice Chairman; Heidrick & Executive Partner; Partner, Managing Director Partner; Wachtell, Lipton, Chief Investment Officer; Protection Bureau Struggles Skadden, Arps, Slate, Steven Hall & Partners Rosen & Katz Breeden Capital Management Meagher & Flom Meredith Cross David K. Eaton Robert E. Hallagan William Kelly Duke Bristow Director, Division of Corporate Vice President of Proxy Robert M. Galford Managing Director, Vice Corporate Partner; Davis Associate Professor of Finance; SEC Research, Glass Lewis & Co. Managing Partner; Center Chairman-Board Leadership Polk & Wardwell Clinical Finance and Business for Leading Organizations Services; Korn/Ferry Economics; USC Marshall Keith T. Darcy Richard Edelman International Robert Khuzami School of Business Executive Director; Ethics President and CEO; Edelman Daniel Gallagher Director, Division of and Compliance Officers Commissioner; SEC Kamala Harris Enforcement; SEC Catherine L. Bromilow Association Michelle Edkins Attorney General; State of PwC Partner; PwC Center for Global Head of Corporate Gary Gensler California David H. Kistenbroker Corporate Governance Julie Hembrock Daum Governance and Responsible Chairman; Commodity Managing Partner; Dechert, Co-Head, North American Investment; BlackRock Futures Trading Robert M. Hayward Chicago Office Beth Brooke Board and CEO Practice; W. Neil Eggleston Commission Partner; Kirkland & Ellis Global Vice Chair, Public Spencer Stuart Arthur Kohn Partner; Kirkland & Ellis Samuel Glasscock , III Paul G. Hodgson Policy; Ernst & Young Partner; Cleary Gottlieb Steen Steven Davidoff David Einhorn Vice Chancellor; Delaware Chief Research Analyst; GMI & Hamilton Stephen L. Brown DealBook Professor, The New Co-Founder, President; Court of Chancery Director of Corporate York Times Professor, Moritz Eric H. Holder Jannice L. Koors Greenlight Capital Arthur F. Golden Attorney General; United Governance; TIAA-CREF College of Law, Ohio State Managing Director; Pearl Meyer University Partner; Davis Polk & States of America & Partners Martha Carter Jay Eisenhofer Wardwell Managing Director, Co- Randy Holland Global Head of Research; ISS George L. Davis, Jr. Robert J. Kueppers Founder; Grant & Eisenhofer Amy L. Goodman Justice; Delaware Supreme Executive Committee Member, Deputy CEO; Deloitte Emily Chasan Co-Leader of Global Board Charles M. Elson Partner; Gibson, Dunn Court Senior Editor, CFO Journal; Practice; Egon Zehnder & Crutcher David F. Larcker, Professor Edgar S. Woolard, Jr., Chair Carl C. Icahn Wall Street Journal International Co-director, Arthur and University of Delaware; Michael D. Greenberg Chairman; Icahn Enterprises Toni Rembe Rock Center for Stephen Chipman Weinberg Center James W. DeLoach Director, RAND Center Corporate Governance; CEO, Grant Thornton Managing Director; Protiviti for Corporate Ethics and Darrell Issa Stanford Law School John M. Engler Governance Chairman, 112th Congress David Chun President; Business Mike DeWine Oversight Committee; United J. Travis Laster CEO, Founder; Equilar Roundtable Holly J. Gregory States Congress Attorney General; State of Ohio Vice Chancellor; Delaware Partner; Weil, Gotshal Court of Chancery James M. Citrin Phyllis Deiso Roger W. Ferguson, Jr. & Manges Jack Jacobs President, CEO; TIAA-CREF Co-Head; North American National SEC Practice Leader; Justice; Delaware Supreme Richard S. Levick Board and CEO Practice McGladrey Robin A. Ferracone Robert Greifeld Court President and CEO; LEVICK Spencer Stuart President, CEO; Nasdaq Executive Chair, Founder; Tim Johnson Thomas J. Donohue OMX Craig Lewis Mary Ann Cloyd Farient Advisors Chairman, Committee on President and CEO; U.S. Director, Division of Risk, Leader; PwC Center for Chamber of Commerce Laurence D. Fink Joseph Grundfest Banking, Housing and Urban Strategy and Financial Corporate Governance Senior Faculty, Arthur and Affairs; Senate Innovation and Chief Chairman, CEO; BlackRock James Doty Toni Rembe Rock Center for Economist; SEC John Coffee Chairman; Public Company Cynthia Fornelli Corporate Governance; Adolf A. Berle Professor of Accounting Oversight Board Executive Director; Center for Stanford Law School James P Liddy . Law; Columbia Law School U.S. Vice Chair, Audit and Audit Quzality Americas Regional Head of Audit; KPMG08 8 09
  6. 6. Weekly Daniel S. Loeb Alan Murray Punit Renjen Timothy Smith Dennis T. Whalen Brian V. Breheny Founder, CEO; Third Point Deputy Managing Editor, Chairman of the Board; Senior Vice President Partner in Charge and Partner; Skadden, Arps, Slate, LLC Executive Editor of Online; Deloitte and Director of ESG Executive Director; KPMGs Meagher & Flom Wall Street Journal Shareowner Engagement; Audit Committee Institute David Louie Henry duPont Ridgely Walden Asset Management David Green Attorney General; State David A. Nadler Justice; Delaware Supreme Ralph Whitworth Director; U.K. Serious Fraud of Hawaii Vice Chairman; Marsh & Court Jeffrey Sonnenfeld Founder, Principal, Investment Office McLennan Companies Senior Associate Dean for Committee Member; Relational Joann S. Lublin Eileen Rominger Executive Programs; Investors Keir D. Gumbs Management News Editor; Charles M. Nathan Director, Division of Yale School of Management Partner; Covington & Burling Wall Street Journal Of Counsel; Latham & Watkins Investment Management; Christianna Wood SEC Larry Sonsini Chairman; International Darrin Hartzler Jon Lukomnik Duncan Niederauer Chairman;Wilson Sonsini Corporate Governance Manager, International Executive Director; IRRC CEO, director; NYSE Euronext Marc S. Rosenberg Goodrich & Rosati Network Finance Corporation Institute Partner and Co-Chair John Noble Corporate Governance and Andrew Ross Sorkin Ann Yerger Christopher Hohn Stephen P Mader . Vice Chancellor; Delaware Board Advisory Group; Chief Mergers & Executive Director; Council of Founder; Childrens Vice Chairman, Managing Court of Chancery Cravath, Swaine & Moore Acquisitions Reporter, Institutional Investors (CII) Investment Fund Director, Board Services Dealbook Editor and Practice; Korn/Ferry Justus OBrien Mary L. Schapiro Columnist; The New York Benjamin Lawsky International Head of Board Practice; Egon Chairman; SEC Times Superintendent; New York Zehnder International NACD Directorship Department of Financial Robert McCormick, JD Eric Schneiderman Myron Steele Services Chief Policy Officer; Glass John F. Olson Attorney General; State of Chief Justice; Delaware 100: People to Watch Lewis & Co. Partner; Gibson, Dunn & New York Supreme Court James McRitchie Crutcher Mark Beasley Publisher; CorpGov.net William G. McGuinness Andrew E. Shapiro Leo E. Strine, Jr. Deloitte Professor of Chair of The Litigation Jonathan Oviatt Founder, President, Chancellor; Delaware Enterprise Risk Management; Henry Mintzberg Department; Fried Frank Chief Legal Officer; Mayo Clinic Portfolio Manager; Court of Chancery North Carolina State Professor; McGill University Harris Shriver & Jacobson Lawndale Capital University, ERM Initiative Troy Paredes Management David Swinford Ellen Moskowitz Patrick S. McGurn Commissioner; SEC President and CEO; Pearl Paul A. Beswick Partner; Brunswick Group Executive Vice President, Anne Sheehan Meyer & Partners Acting Chief Accountant; SEC Special Counsel; ISS Donald F. Parsons Director Corporate Ann C. Mule Vice Chancellor, Delaware Governance; CalSTRS Anton Valukas Errol L. Biggs Associate Director, Weinberg Keith Meyer Court of Chancery Chairman; Jenner & Block Instructor, Director of Center for Corporate Vice Chairman, Head Richard Shelby Graduate Programs in Governance; University of of Global CEO & Board George B. Paulin Ranking Member, Senate Bruce Vanyo Health Administration, Delaware Practice; CTPartners Chairman, CEO; Frederic Committee on Banking, Partner; Katten Director of Center for Health W. Cook Housing and Urban Affairs Administration; University of Jeffrey Rudman Nell Minow Congress John B. Veihmeyer Colorado Partner; WilmerHale Director; GMI Nelson Peltz Chairman, CEO; KPMG- Founder and CEO; Trian Fund Anne Simpson Americas Henry L. Boerner Jason Schloetzer Scott L. Mitchell Management Senior Portfolio Manager Chairman, CEO; Governance Professor; Georgetown Chairman; OCEG and Director for Corporate Mike Wallace & Accountability Institute University Becky Quick Governance; CalPERS Director, Global Reporting G. Mason Morfit Co-anchor, Squawk Box; CNBC Initiative’s (GRI) Focal Bradley J. Bondi Andrew J. Sherman Partner; ValueAct Capital Michael W. Smith Point USA; Global Partner; Cadwalader, Partner; Jones Day Jed Rakoff President of Executive Reporting Initiative Wickersham & Taft Jeff Morgan Chief Judge; US District Court Liability; Chartis Adair Turner CEO; National Investor Southern District of New York Elisse Walters Neil S. Braun Chairman; Financial Services Relations Institute (NIRI) Commissioner; SEC Dean; Pace University Lubin Authority, London L School of Business Charles Weinstein CEO; EisnerAmper10 11
  7. 7. Social Media T he last 10 years have seen extraor- of a survey that examined how 180 top CEOs, dinary evolutions in the respon- senior executives, and corporate directors ap-& The Boardroom: sibilities boards of directors must proach the opportunities and risks associated assume. From Sarbanes-Oxley to with social media’s meteoric rise. The findings Dodd-Frank, directors have been are startling: subjected to new liabilities and new mandatesCritical Questions Directors Need To Ask Ninety percent of respondents report a basic for elevated levels of transparency and ac- understanding that what is said on social me- countability. But during that time, another dia can have a major impact on their organiza- development has had perhaps an even greater tion; but only 32 percent of their companies impact on directors’ day-to-day duties than monitor social media to identify risks and only any strictures from Washington, D.C. It’s the 14 percent utilize social media sentiment to social media revolution—and no public com-Richard S. Levick, Esq. measure corporate performance. pany, large or small, has eluded its impact.Originally Published on Fastcompany.com Only 24 percent of senior managers and 8 Social media are no longer novel stakeholder percent of directors request regular reports and consumer outreach tools; they are the on the company’s social media engagement ef- new normal in the modern business opera- forts and stakeholders’ social media sentiment. tions environment. The brand-building op- About half of the respondents do not collect portunities they present are nearly limitless. this information at all. The risks they introduce are just as expansive. They affect everything from reputations to Even here in 2012, only 59 percent of com- value propositions. And to many corporate panies surveyed use social media to interact leaders, they remain somewhat of a mystery. with customers. Only 49 percent use them to advertise. Only 35 percent use them for cus- Social networks are the venues where pur- tomer research purposes. And only 30 percent chasing decisions are increasingly made, use social media to research competitors, new investment opportunities are increasingly products and services, or communicate with weighed, and corporate adversaries—such as employees and other stakeholders. social activists and the plaintiffs’ bar—increas- ingly gain public support for their agendas. At the same time, 65 percent of respondents But despite that fact, the latest data indicate use social media for personal purposes and a significant divide between director engage- 63 percent utilize them for business purposes. ment on social media issues and social media’s Of that forward-thinking group, 80 percent impact on their companies. maintain a LinkedIn account and 68 percent are active on Facebook. At first glance, these Last month, Stanford University’s Rock Center numbers may seem encouraging; but, in real- for Corporate Governance released the results 13
  8. 8. Weekly lways smart to look at what others in your need to know where the boundaries of accept- market are doing to leverage social media. able commentary may lie; but the risks are so Only 24 percent of senior managers and 8 percent of With the analytical tools available today, far outweighed by the opportunities that most companies can access a wealth of informa- boards are well-advised to encourage senior directors request regular reports on the company’s tion about the tactics their audiences respond leadership to build consumer and employee social media engagement efforts and stakeholders’ to, what drives them to take desired actions, loyalty via social media outreach.” social media sentiment. About half of the and the strategies that establish the strongest 4. What are our policies on employee use of so- connections both online and off. At the end respondents do not collect this information at all. of the day, both you and your competitors are cial media? Are we appropriately training employees on in this critical brand protection attempting to reach the same people. and promotion area? How often do we update From that perspective, your competitors the policies to ensure they are keeping up are providing you added insight with every with technology? ity, they make the above cited statistics all the 1. How do we use social media to engage Facebook post they publish, every tweet more alarming because familiarity with social with customers, open new markets & recruit Bromilow places a great deal of emphasis on they transmit, and every piece of video they media has not translated into C-Suite or board- the top talent? the importance of a carefully crafted social upload to YouTube or another video platform. room action. media use policy. “A number of directors I’ve “Social media engagement has evolved to Unfortunately, data from the PwC 2012 An- spoken to are concerned about employee social The good news is that there are a number of the point it is absolutely essential in today’s nual Corporate Directors Survey show that media use. There are productivity concerns, to questions directors can begin asking today marketplace,” says Bromilow. “A few years this point is lost on a number of board mem- be sure, but it goes even further than that. How that will immediately help them, and their or- ago, social media was something companies bers—77 percent of respondents answered can a company protect against accidental leaks ganizations, get up to speed. To formulate a list engaged in to provide themselves a com- “not at all,” “not sufficiently,” or “don’t know” of confidential information? How can it prevent of the 10 most critical, I enlisted the assistance petitive advantage. Now, it’s something that when asked how their companies monitor employees from sending inadvertent signals of three thought leaders who understand the they have to do to keep from falling behind. competitors’ social media activity.” by “liking” a certain article or “re-tweeting” crossroads of corporate directorship and so- Whether you’re looking to promote products, 3. How are our executives utilizing social controversial commentary? With the advent of cial media as well as any in the business world recruit talent, or introduce yourself to a new media? Who are they communicating with? location-based social media platforms, how can today. Catherine Bromilow, a partner in PwC’s market, your audience is on social media—so What are we allowing them to say? a company ensure that potentially damaging Center for Board Governance in the United your company needs to be as well.” conclusions aren’t drawn simply because an States; Chris Wood, a Senior Manager in PwC “Executives that engage with customers, 2. How are our competitors utilizing social executive is in a certain city? Companies need Canada’s Audit Committee Connect; and Neil employees, investors, and other stakeholders media to achieve the goals outlined above? formal policies to ensure that every employee, Manji, a partner and leader in PwC Canada’s via social media provide themselves an air of What can we learn from their efforts? at every level of the organization, understands Audit Committee Connect, shared insights and accessibility that simply doesn’t come across and follows the rules of the road. experiences that illuminate the opportunities Wood argues that competitors’ social media with other, one-way forms of communica- and risks inherent in social media engagement activity provides a great deal of insight into tion,” says Manji. “Social media are conver- “As important as this point is, the PwC 2012 An- and provide the foundation by which directors what works and what doesn’t with respect sational venues that empower the audience nual Corporate Directors Survey again shows can start asking the questions that set a strong to diverse industries that have varying audi- because it really feels it is being listened to. that most board members are not fully engaged strategic course. ences and different outreach goals. “It’s a Some topics may be off-limits, and executives on the issue--69 percent of respondents an-14 15
  9. 9. Weekly swered “not at all,” “not sufficiently,” or “don’t story could go “viral” before the company even know” when asked how their companies em- knows it’s out there.” Bromilow adds that social ploy social media use training and policies.” media monitoring isn’t just about reputational risk management; but brand building as well. 5. Does our social media outreach comply “When a consumer does put something out with existing and potential regulations? What there that could be damaging to the brand, are the implications in terms of Regulation companies need to remember that it is only the Fair Disclosure? start of a conversation. If they respond quickly “We haven’t seen much yet from regulators and act fast to resolve the problem, they of- such as the SEC, FTC, or FDA in terms of con- ten win points for their care and attention to crete guidance as to what is constitutes ap- the matter—and they do so in a public venue propriate social media usage in the investor where others can see just how seriously they relations realm or in industries where market- take customer service. ing and communications are tightly controlled, Even with all the ways that social media can such as pharmaceuticals,” says Bromilow. make or break corporate reputations, the PwC “With so many concerns related to Regulation 2012 Annual Corporate Directors Survey once FD and other questions of compliance, boards again shows a disconnect on the issue, with 69 need to be reassured that 1) company social percent of board members answering “not at media engagement comports with all exist- all,” “not sufficiently,” or “don’t know” when lems in the bud before any of these adver- 8. What are we doing to build a burgeoning com- ing regulations, and 2) that they know how to asked how their companies monitor social me- sarial parties can leverage them to damage the munity of support in the social media space— respond should an external connection such as dia for adverse publicity.” company in the courtroom, the Court of Public one that is large enough to enable direct stake- a Facebook fan or Twitter follower post com- Opinion, or in terms of customer loyalty.” holder communications that can circumvent the mentary that could be problematic.” 7. Are we actively monitoring plaintiffs’, activists’, traditional media filter? and regulators’ social media activity for clues as It’s important to note as well that the plaintiffs’ 6. Are we actively monitoring popular social bar and even regulators engage in the same to where our next crisis might arise? To Wood, amassing multitudes of Facebook media platforms for negative publicity about type activity—and provide the level of insight fans, Twitter followers, or YouTube subscrib- the company? Manji sees social media monitoring not just into their plans. When plaintiffs’ attorneys ers is about more than a mere demonstration as a tool that allows for rapid response should “It used to be that companies really only had write blog posts that help them lay the ground- of brand strength. “When a company draws reputational problems arise, but as an early to worry about a damaging headline in the work for their next class action or regulators stakeholders to its key social media properties, warning system that can alert the company daily paper or a negative report on the nightly take to social media to discuss enforcement what it is really doing is creating a conduit by to problematic issues before they evolve into news,” says Wood. “Now, they have to be on the agendas, those companies that are listening which the company can directly communicate something worse. “You’ve got activists using lookout for individual stakeholders who may understand—and can plan for—what’s with its customers, shareholders, employees, social media to build groundswells of support comment about a negative experience on social coming next. and others. In this context, social media are around issues of corporate social responsibility. media platforms, because the inter-connected avenues that enable companies to bypass the That activity represents actionable intelligence nature of social networking means that the traditional media filter and transmit messages that companies can use to nip potential prob-16 17
  10. 10. Weekly precisely as they are intended. That’s an asset that is particularly valuable in crisis or in situ- ations where misinformation is permeating the “race to be found.” With so much clutter on- line, today’s companies are constantly looking for ways to ensure that their online properties Michael Volkov on Whistleblowers marketplace; but it is also one that can’t be put rank high on the most popular search engines. into action unless the company has used peace- As Google, Bing, Yahoo, and others evolve their time to build its audience.” algorithms to include social media content to greater and greater extents, the value of smart 9. What is our strategy for reaching out to the social media strategy rises exponentially—as most influential social media voices covering our it not only strengths corporate reputations, industry? Are we treating them with the same but increases the chances that those enhanced respect we would show 60 Minutes or the New brands will be noticed amid a constant and York Times? highly competitive contest for online attention. “Just like in the traditional media, social As the latest data indicate, there are still a media are venues where some voices matter number of directors that are concerned about more than others,” says Manji. “That means the risks associated with social media engage- companies need to know who controls percep- ment today. In some cases, that’s a prudent tions related to their industries and do what is perspective. But as Wood reminds us, “The necessary to build productive working relation- greatest risk of all is failing to capitalize on all ships with those influential voices. It might be of the brand-building opportunities that social a blogger with 10,000 daily readers. It might media present. These online venues are where be pundit with 20,000 Twitter followers. But consumers, investors, regulators, and the full no matter the person or the venues he or she gamut of corporate stakeholders make deci- might populate, it is incumbent on companies Michael Volkov, a shareholder in LeClairRyan, discusses the tough whistleblower laws that sions. To be absent from the conversations that to understand that the most powerful commen- were passed as part of the Dodd-Frank financial reform package. Whistleblowers that meet impact your industry is a hazard simply too tators on social media have the same reach, certain criteria are now entitled to as much as 30 percent of all recoveries that result from their dangerous to invite.” L and speak with the same authority, as most cooperation with the government. That’s a powerful incentive—and it dictates an urgent need for traditional media outlets today.” Richard S. Levick, Esq., President and CEO of LEVICK, repre- companies to ensure that employees report problems internally, before turning to regulators. sents countries and companies in the highest-stakes global 10. How are we integrating social media strategy communications matters—from the Wall Street crisis and the with our Search Engine Optimization (SEO) and Gulf oil spill to Guantanamo Bay and the Catholic Church. Marketing (SEM) efforts? Are we taking steps to ensure that these critical initiatives support each other on an ongoing basis? It is important to remember that social media engagement is now a key element in the online18
  11. 11. Boardroom Intelligence The Top whats next? Issues The transition from the age of Sarbanes-Oxley to the age of Dodd-Frank has ushered in yet another massive expansion of director roles and responsibilities. Under the new regime, directors need to be engaged in the full gamut of issues that impact corporate reputation and, ultimately, shareholder value. At the same time, the host of new regulations of 2013 And born of 2008’s financial crisis is just now dramatically escalating personal liability and introducing new exposures that boards must be prepared to successfully protect. Beyond To help directors fulfill their fiduciary and reputational obligations, we spoke with eight leading attorneys on issues from M&A and IPOs to data loss and theft. These feature interviews delve into the marquee challenges of 2013 and beyond—providing not only insight into how they can best be solved, but tips on how companies and directors can best communicate their steadfast commitment to compliance, value, and responsible oversight. To that end, we have appended our own suggestions for best communications practices to each interview.
  12. 12. Weekly Activist Investors: Schulte Roth Marc Weingarten: The most common mistake Bankruptcy & Restructuring: see that trend continuing. Filing with an exit & Zabel’s Marc Weingarten is for a board to refuse to give the activist a Kaye Scholer’s Tyler Nurnberg plan already negotiated enables the company hearing. It’s fine to evaluate your defenses, but to shorten the time it spends in bankruptcy, Marc Weingarten, a partner in Tyler Nurnberg is a Partner stiff-arming or fighting the activist from the maintain control over the process and reduce the New York office of Schulte in Kaye Scholer’s Bankruptcy start and refusing to engage is generally not restructuring costs. Roth & Zabel, is chair of the & Restructuring Group and well-received by the other stockholders. Managing Partner of the firm’s Another piece of practical advice is that the Business Transactions Group Another common mistake is to attack the ac- Chicago office. board needs to stay focused on the business and a member of the Invest- tivist as merely a short-term opportunist look- plan during the bankruptcy. While external ment Management Group. ing for a quick pop in the stock price at the How can directors best serve a company factors may have contributed to the need to file, What are the reasons behind increased inci- expense of long-term value creation. Share- during bankruptcy or restructuring? larger underlying problems with the business dents of shareholder activism? holders will be happy to take any gains they model or the balance sheet likely drove the deci- Tyler Nurnberg: A board will want practical can get, even if short-term. As such, a com- sion. Those issues need to be resolved for the Marc Weingarten: The principal reason is the outside advice early in the process on how to pany under attack needs to put itself in the company to emerge as a viable business and, increased willingness of major sharehold- fulfill its fiduciary duties, and how those duties mindset of its shareholders and come up with while bankruptcy can be a powerful tool, it is ers, both institutional investors and pension may change when the company is insolvent or responses that explain prior performance and not a panacea for the problems that led the com- funds, to support activists. Historically, they approaches insolvency. The board will want to realistically support a more promising future. pany to file bankruptcy in the first place. simply “voted with their feet” and sold out. maintain a proper supervisory role and not ex- But they’ve become so big that now they really ercise undue influence over day-to-day opera- own the market, and rather than selling and tions. Prior to filing bankruptcy, the board and having to look to reinvest somewhere else, its advisors should also assess the adequacy they join the activists in pressing for improve- BEST COMMUNICATIONS of the D&O insurance policies. Also, directors BEST COMMUNICATIONS ments. PRACTICES: PRACTICES: should be alerted to the discrete areas where In the age of transparency, boards need they could potentially be liable personally for When markets are down, investors are unhap- 1. to direct their Investor Relations and the bankrupt company’s debts. 1. Boards must ensure that exit strategies py and will turn to activists for help. Several and future growth are the hallmarks communications team to focus on more of communications during bankruptcy, of the most successful financial activists now than just the analysts. The democratization How can a company best position itself for beginning with the initial announcement. have several billion dollars in assets, and can of the market is underway, investors are post-bankruptcy operations? When companies control the “new day” newly empowered, and companies need target even the largest-cap companies. Given narrative, internally and externally, they to think differently about how they engage Tyler Nurnberg: The company should deter- activists’ success rate in recent years, many keep stakeholders focused on future potential activist threats. mine its exit strategy before it files bankruptcy success, not past mistakes. more hedge funds that are not typically “activ- Don’t let the shuttering of MoxyVote fool wherever possible, and view the process as an ist” are now trying out the strategy on their 2. you; the activists are online and they use 2. Boards must understand the power of opportunity to fix both financial and opera- social and digital media to disclose. poor-performing positions. the Web to drum up support. Boards need Teams need to be ready to respond to direct their teams to better understand tional problems. Get as much negotiated in publically from the very moment a What are some of the most common mis- how WikiInvest, Seeking Alpha, and other advance of filing as possible. There has been company begins to seriously consider takes that boards of directors make when social and digital media have an impact an increase in the number of “prepackaged” or restructuring—in other words, go on the on their value. faced with pressure from activist investors? “pre-negotiated” cases in recent years and we offense so you don’t have to play defense.22 23