EDITION 14Weekly   October 26, 2012THE FISCALCLIFFLook Who’s Leading Now
03 Contents                                                                                                               ...
The Fiscal Cliff:         Look Who’s Leading Now                 Richard S. Levick, Esq.                 Originally Publis...
Weekly     CEO Jeffrey Immelt’s comments are predict-         By contrast, the preparatory measures now               Thir...
Weekly                                                                                                                    ...
Weekly                                            buisness     CEO                                  terms                 ...
Weekly     What’s next with regard to     M&A law? Are there issues or                                                    ...
Weekly     Gene Grabowski     Originally Published on LEVICK Daily     Throughout October, Susan G. Komen for            N...
BLOGS worth following                                                                                            Thought l...
IN THE NEWS     ArticlesPR Daily | October 27, 2012The finalists in our Digital PR & Social Media Awards 2012Centre Daily ...
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LEVICK Weekly - Oct 26 2012


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The Fiscal Cliff - Who's Leading Now?

CFIUS Review with Mark Cowan

Proxy Proposals - Reading Disclosure of Political Activity

Susan G. Komen - Decentralized Communications Puts the Focus Back Where it Belongs


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LEVICK Weekly - Oct 26 2012

  1. 1. EDITION 14Weekly October 26, 2012THE FISCALCLIFFLook Who’s Leading Now
  2. 2. 03 Contents 04 The Fiscal CLiff Look Who’s Leading Now 09 CFIUS Re view With Mark Cowan 10 Mergers & Acquisitions With William Wynne 13 Proxy Proposals Regarding Disclosure of Political Activity 14 Susan G. Komen Decentralized Communications Puts the Focus Back Where it Belongs 17 Blogs Worth Following 18 LEVICK In the newsCOVER Image: In late February 2012, Ben Bernanke, chairman of the U.S. Federal Reserve, was the first person to use the term“fiscal cliff” for this crisis. Before the House Financial Services Committee he described “a massive fiscal cliff of large spending cutsand tax increases” on January 1, 2013.
  3. 3. The Fiscal Cliff: Look Who’s Leading Now Richard S. Levick, Esq. Originally Published on Forbes.com Leadership doesn’t usually happen in a vacuum. Often, the soundest decisions cannot be implemented absent some compelling pretext. In February 2012, Federal Reserve Chairman Flash forward eight months. This week General Ben Bernanke provided business with just such Electric announced a $7 billion bond sale (the a pretext when he coined the now familiar first such by GE in five years) and a $5 billion phrase “fiscal cliff.” Bernanke was referring refinancing of bonds reaching maturity early to the $600 billion in spending cuts and tax next year. The move was deemed important increases that will be triggered on January 1, enough by the Financial Times to warrant page 2013, according to a provision of the Budget one above-the- fold coverage. According to CFO Control Act of 2011 (BCA). That legislation Keith Sherin, GE has been strengthening its bal- created a “super-committee” to decrease the ance sheet against the risk of “choppy” condi- deficit by $1.2 trillion over the next 10 years or, tions early next year. It’s a prudent exercise alternatively, enforce harsh austerity measures in risk management by a company that lost its that will likely drive us into another deep re- triple-A credit rating and cut its dividend dur- cession by levying a 4% gross domestic product ing the financial crisis. reduction in 2013. 05
  4. 4. Weekly CEO Jeffrey Immelt’s comments are predict- By contrast, the preparatory measures now Third—particularly instructive as a measure the very same austerity measures might only ably germane. He calls the fiscal cliff the “big being taken by GE and the others sends a most of proactive leadership —major corporations deepen the current pessimism and even cause variable” for 2013—and Immelt is “ready” welcome counter-message—that we know are seizing on the current crisis to do what some panic were there no fiscal cliff to force if that situation is not resolved—even as he what might happen next and that, under those they are going to have to do anyway. “Busi- their hand.” avers that 2013 will look a lot like 2012. circumstances, we will safeguard the interests nesses are trying to accommodate an inevi- The further irony is that many large corpora- of our investors and other stakeholders. table belt-tightening,” says Andrew Zausner, Importantly, other corporations have been fol- tions don’t actually anticipate a real crisis. On a member of Dickstein Shapiro’s Public Policy lowing a similar path. Dealogic reported that, Second, these businesses seem to be taking a the one hand, we have Goldman Sachs CEO & Law Practice, who specializes in legislative last week, large companies sold $26 billion in rather forbearing approach with respect to Lloyd Blankfein telling CNBC that the fiscal activities. “To that end, they are being very investment grade bonds. Meanwhile, Oracle Beltway decision-makers. While there’s no cliff is “specifically…one of the major ways in responsive to a situation that is not of their sold $5 billion at some of the lowest yields doubt some tumultuous behind-the-scenes which the slow recovery that we have could ever recorded in the corporate sphere while be completely derailed… We just met with a United Health Care and Xstrata were among dozen of the largest high-tech company CEOs other big names acting in advance of any po- in the country. Not only are they hoarding tential tumble over the fiscal cliff. cash—all their customers, all their suppliers “...the very fact that many big businesses are. They’re scared to death we’re going to go True, as indices of resolute leadership, cor- porate bond sales aren’t exactly the stuff of seem so strategically like-minded a few over this cliff and it could be a catastrophe.” high Churchillian drama. Yet the very fact that months ahead of a legislative drop-dead On the other hand, a survey by the National many big businesses seem so strategically like- day (literally) suggests a quieter brand of Association for Business Economics (NABE) minded a few months ahead of a legislative shows that economists from Ford, DuPont, drop-dead day (literally) suggests a quieter leadership, one wholly appropriate to the JPMorgan Chase, and others, are confident brand of leadership, one wholly appropriate current exigent circumstance.” that the worst fiscal cliff impact is unlikely. A to the current exigent circumstance. whopping four-fifths of respondents do not anticipate draconian spending cuts, while 55% First, caution rather than bold initiative is say the Bush tax cuts will be extended next the order of the day. Think Eisenhower, not year for all taxpayers. Caution may be the Churchill. Think too about the real bellwether conversations occurring between corporate making, but that does serve as a pretext for watchword but the economists surveyed do of perceived corporate irresponsibility dur- lobbyists and lawmakers, the public demeanor the specific measures they need to take to get anticipate a 0.5% increase in economic growth ing the last five years. It’s been all about is, again, prudent. The implicit message is that them where they need to be.” in 2013 over the 2012 rate. financial speculation, rapacious (rather than business will support any sane agreement strategic) risk-taking, and wild gambling with legislators reach, and won’t at this critical Business leaders may thus welcome the fiscal Meanwhile, Morgan Stanley Wealth Manage- other people’s money. As a result, many of the juncture publicly impose untenable pressures cliff crunch as a salient opportunity. “Because ment’s Global Investment Committee takes world’s major financial institutions utterly that only make it tougher to achieve the they are responding proactively to an impend- an even more markedly different tone from relinquished any credible presumption to fairest, most disinterested deficit reduction ing crisis, they are able to inspire confidence Blankfein’s. On Monday, the committee wrote marketplace leadership. plan possible. in the marketplace,” adds Zausner. “Ironically, in a note that “regardless of who wins the06 07 07
  5. 5. Weekly Mark Cowan “Some people might call that on CFIUS Review prevarication, not leadership. We disagree. As Machiavelli advised, the prince must imitate the fox as well as the lion.” White House, we expect action to both mitigate There is no monolithic business view of the and delay higher taxes and spending cuts… fiscal cliff nor are the motives behind even Congress has already approved a continuing straightforward prognostications like Gold- resolution to fund the government into 2013.” man’s or Morgan’s necessarily what they seem In fact, Morgan Stanley simply doesn’t think on the surface. That’s the whole point. Busi- Congress will implement the automatic cuts. ness is playing this “crisis” close to its vest in order to maximize its immediate options even Somewhere between these two polarized visions, as its reassures the marketplace in a way it’s companies like Caterpillar are reducing their failed to do since 2008. current earnings outlooks—a cautious approach in line with what GE and others have done in the Some people might call that prevarication, bond market—but very judiciously commenting not leadership. We disagree. As Machiavelli In this LEVICK Daily video interview, we look at the CFIUS (Committee on Foreign Investment in that, as Chairman and CEO Doug Oberhelman advised, the prince must imitate the fox as the United States) process with Mark Cowan, Senior Executive Vice President for International put it, “We’re not expecting rapid growth, and well as the lion. L Business with Cassidy & Associates. When foreign companies consider transactions that could po- we’re not predicting a global recession.” tentially impact national security, it is always best to initiate the CFIUS application process as early Richard S. Levick, Esq., President and CEO of LEVICK, as possible so problems can be addressed before they damage the brand. represents countries and companies in the highest-stakes Hardly the sentiments of a man who expects global communications matters—from the Wall Street to fall off a fiscal cliff. To the contrary, like GE crisis and the Gulf oil spill to Guantanamo Bay and the (which also trimmed its 2012 forecast), Cat- Catholic Church. erpillar says it expects next year to look very much like this year: the tone is neither Gold- man Sachs’ dire anxiety nor Morgan Stanley’s glib assuredness.08
  6. 6. Weekly buisness CEO terms How can boards best serve a How can boards of directors ef- shareholder company seeking to make itself fectively prepare for inadequate attractive to potential buyers? hostile takeover bids? cash inventory William Wynne: The fastest way to derail a William Wynne: Boards should periodically M&A sale process is to have a compliance problem review their companies’ structural defenses to “discovered” in the course of a buyer’s due an unsolicited offer: a staggered board, abil- diligence. Given the ever-increasing size of the ity of shareholders to act by written consent, penalties being extracted by governments, even poison pills, etc. Just as important, however, is routine compliance issues take on a dispropor- being comfortable with the transaction process tionate dimension. A board contemplating a and not panicking upon receipt of a hostile sale process is well advised to update its compli- offer. A team of advisors that has the board’s ance review and have well-prepared answers to confidence should be immediately available. any questions that may be uncovered. This team should not just include bankers and liabilities lawyers, but public relations professionals and accounting What steps can boards take to convince shareholders that they got the best deal in the wake of a proxy solicitors as well. Boards should also review what similar companies in their space have done in re- major transaction? Mergers & Acquisitions William Wynne: The board must be seen to sponse to hostile transactions. This will let directors know what to expect and allow them With William Wynne have asserted itself to control the transaction to learn from their competitors’ successful process. If the board is seen to have been reac- tactics and missteps. Richard S. Levick, Esq. Originally Published on LEVICK Daily tive, activist shareholders are more likely to Finally, maintaining good relationships with question and challenge the transaction. Share- major shareholders is always good business; ver the next several weeks, and acquisitions, international corporate debt holders, and indeed the general public, are O but it pays particular dividends once a hostile LEVICK Daily will share select- restructurings, and public and private securi- questioning management’s motives more ag- offer is made. A shareholder who is familiar ed interviews from our recent ties offerings. As lead counsel for principals gressively. There is also growing malaise about with management’s strategy and aware of the NACD Directorship article in mergers and acquisitions transactions, Mr. corporate governance. Again, it is imperative board’s involvement in setting that strategy entitled “What’s Next? The Top Wynne is involved in all aspects of structuring, that the board be seen to take charge. That will be much more receptive and supportive Issues of 2013 and Beyond.” Today, we feature negotiating, and documenting deals. means forming a committee of independent di- than the shareholder who only hears from the a discussion on mergers & acquisitions with rectors; participating in the retention of finan- At the conclusion of the interview, you can board once the hostile offer has arrived. William Wynne, a Partner in the New York of- cial and legal advisors; and requiring periodic find LEVICK’s own communications best fice of White & Case. updates on the transaction process. practices appended. Mr. Wynne represents principals in major corporate transactions and financings, mergers10 11
  7. 7. Weekly What’s next with regard to M&A law? Are there issues or of interest, both actual and perceived. Boards should record their deliberations over the pros NACD BoardVision opportunities on the horizon and cons of each potential conflict in the con- Proxy Proposals Regarding of which all public companies need to be aware? text of how the proposed relationship will bring value to the shareholders in spite of the conflict. Disclosure of Political Activity Without evidence that such conflicts have been William Wynne: Merger-related litigation has considered by the board, exposure to sharehold- reached epic proportions. In 2007, 53 percent er litigation increases significantly. L of mergers valued at $500 million or greater Richard S. Levick, Esq., President and CEO of LEVICK, attracted litigation. In 2011, almost all deals represents countries and companies in the highest-stakes (96 percent) attracted litigation. The reality is global communications matters—from the Wall Street that parties to a merger will get sued and need crisis and the Gulf oil spill to Guantanamo Bay and the to be prepared. Catholic Church. Process is paramount. Boards should hold This post is excerpted from Richard Levick’s recent NACD meetings to discuss and decide all materials Directorship feature “What’s Next? The Top Issues of 2013 and Beyond.” To read the full article and learn more about issues, and careful minutes should be taken. the most significant issues impacting boardrooms today, Courts will hesitate to overturn board deci- click here. sions if there is a solid record. In particular, boards need to be acutely aware of conflicts BEST COMMUNICATIONS PRACTICES: This week’s edition of NACD BoardVision focuses on proxy proposals. Join Steve Kalan, associate Boards need to ensure that every employee understands the confidential 1. nature of M&A transactions—and that they know what can and cannot publisher of NACD Directorship, and Ken Gross, partner at Skadden Arps, as they discuss proxy be said, especially in the social media (and then be certain aggressive proposals regarding disclosure of political activity. monitoring is in place to detect even a hint of a leak). Boards that are seen as in control of the transaction process are best 2. positioned to deflect criticism and defend against the inevitable litigation. Financial Communications 3. Directors that demand strong investor relations in peacetime will build a Litigation trust bank among stakeholders that will serve the company well, especially if a hostile offer is made. Corporate & Reputation Public Affairs Crisis12 13 Sign Up Today
  8. 8. Weekly Gene Grabowski Originally Published on LEVICK Daily Throughout October, Susan G. Komen for Noticeably absent from the online, print, and messaging to its local chapters. In places such the while, central leadership resisted the urge the Cure has been leveraging the opportunity earned-media effort is embattled founder and as Austin, Tucson, Reno, and Arkansas, volun- to defend itself and remained virtually silent. afforded by National Breast Cancer Aware- former CEO Nancy Brinker, who transitioned teers with local affiliates have been fielding As a result of this decentralized approach, ness Month to rebuild a brand tarnished into a “new management role” in August. In- angry calls, responding to outraged emails, a brand that may have been destroyed has by controversy. stead, the spotlight has been firmly affixed on and meeting face-to-face with donors whose survived to fight the good fight another day. everyday cancer survivors who are still here support could have dried up entirely in the Since the national non-profit made, and then While Komen still has a long way to go and today because of the new treatment options wake of the Planned Parenthood fiasco. reversed, its decision to halt funding for will no doubt have to apply other creative that Komen fundraising helped bring about. Planned Parenthood back in February, dona- Having had no say in the decision to defund communications strategies to regain its former tions are down approximately 30 percent. That’s a smart move for two reasons. First, it Planned Parenthood, these local messengers prominence, the organization has reminded Participation in the organization’s marquee takes the focus off past mistakes and the leaders delivered Komen’s crisis messages with a de- every other group facing crisis that your fundraising races is down as much as 35 per- who made them. And second, it’s the continua- gree of caring and credibility that the organi- messengers are often more important than cent in some parts of the country. Now, Komen tion of a decentralized communications strat- zation’s central leadership simply could not your message. L is counting on an advertising blitz to reverse egy that might very well have saved the organi- attain. In the end, they were uniquely quali- Gene Grabowski is an Executive Vice President at LEVICK these troubling trends and remind the public zation during the controversy’s earliest stages. fied to criticize the decision from afar, even as and a contributing author to LEVICK Daily. of the important work at the heart of its life- they reminded Komen stakeholders of all the For much of the past year, Komen’s central saving mission. cancer-fighting work that remains undone. All leadership has wisely ceded control of its14 15
  9. 9. BLOGS worth following Thought leaders Industry blogs Amber Naslund Holmes Report brasstackthinking.com holmesreport.com Amber Naslund is a coauthor of The Now Revolution. A source of news, knowledge, and career The book discusses the impact of the social web information for public relations professionals. and how businesses need to “adapt to the new era of instantaneous business. NACD Blog blog.nacdonline.org Brian Halligan The National Association of Corporate Directors hubspot.com/company/management/brian-halligan (NACD) blog provides insight on corporate HubSpot CEO and Founder. governanceand leading board practices. Chris Brogan PR Week prweekus.com Chrisbrogan.com PRWeek is a vital part of the PR and communications Chris Brogan is an American author, journalist, industries in the US, providing timely news, reviews, marketing consultant, and frequent speaker about profiles, techniques, and ground-breaking research. social media marketing. PR Daily News David Meerman Scott prdaily.com davidmeermanscott.com PR Daily provides public relations professionals, David Meerman Scott is an American online social media specialists and marketing marketing strategist, and author of several books communicators with a daily news feed. on marketing, most notably The New Rules of Marketing and PR with over 250,000 copies in print in more than 25 languages. Guy Kawasaki BUSINESS Related guykawasaki.com FastCompany Guy Kawasaki is a Silicon Valley venture capitalist, fastcompany.com bestselling author, and Apple Fellow. He was one Fast Company is the world’s leading progressive of the Apple employees originally responsible for business media brand, with a unique editorial marketing the Macintosh in 1984. focus on business, design, and technology. Jay Baer ForbesPacked with decades of knowledge and billions of dollars of successful outcomes in jaybaer.com Forbes.comantitrust litigation, this reference guide is a must-have for any litigator or litigation Jay Baer is coauthor of, “The Now Revolution: 7 Forbes is a leading source for reliable businesssupport professional. In it, you’ll find: Shifts to Make Your Business Faster, Smarter and news and financial information for the Worlds More Social. business leaders.• 100 pages of valuable antitrust litigation and trial technology related articles Mashable Rachel Botsman• 25 articles packed with litigation tips and trial tactics mashable.com rachelbotsman.com Social Media news blog covering cool new web-• This book is for those who try antitrust cases or those who support the people who do Rachel Botsman is a social innovator who writes, sites and social networks. consults and speaks on the power of collaboration and sharing through network technologies.This e-book is offered as a free download for a limited time. Don’t wait to downloadand miss out. Seth Godin sethgodin.typepad.com Download Here: A2LC.COM Seth Godin is an American entrepreneur, author and public speaker. Godin popularized the topic of permission marketing.
  10. 10. IN THE NEWS ArticlesPR Daily | October 27, 2012The finalists in our Digital PR & Social Media Awards 2012Centre Daily | October 26, 2012University leaders focus on positive at one-year Sandusky markCMO Council | October 25, 2012JCPenney: Tomorrow Is A Work In ProgressMontreal Gazette | October 24, 2012Live Chat: Lance Armstrong THE URGENCY OF NOW. 19