The Board Place burnslev.com theboardplace.com (c) 2010 Russ Hansen Corporate Governance Provisions of Dodd-Frank Board of Directors XYZ, Inc. August 25, ppt

The Board Place 1 Dodd-Frank Short Title: “Dodd-Frank Wall Street Reform and Consumer Protection Act” 2300 pages, 16 titles change regulation of financial services industry, banks, financial institutions, credit rating agencies, Fed, SEC, Consumer Affairs and Two subtitles on Corporate Governance with other provisions sprinkled throughout.

The Board Place 2 Agenda Corporate Governance Provisions Shake and Bake Compliance Provisions Paradigm Shift Compliance Provisions No Change in Fiduciary Duties How to Respond Compliance Back to Basics Corporate Governance Review and Update Increased Need for Investor Relations Be Prepared for Trickle Down of Shareholder Activism

The Board Place 3 “Shake & Bake” Compliance & Control Provisions Board Leadership Disclosure Broker Discretionary Voting Swap Committee Compensation Committee Composition, Consultants, Budget and Authority Clawback Policy Hedging Policy Whistleblowers Reg. FD Disclosures re credit rating agencies Credit rating agency consents Accelerated filing deadlines for Forms 3 and 13D

The Board Place 4 Compliance & Paradigm Shift Provisions Proxy Access (3% - 3 years; > 1 nominee or 25% of board) No Majority Voting Say on Pay & Parachutes (only 3 out of 250 companies lost in 2010) Pay for Performance Disclosure Internal Pay Ratio Disclosure Broker Voting Institutional Investment Mgr Vote Disclosure

The Board Place 5 Basics: Shareholder Objectives For Retail and Institutional Investors: Total Shareholder Return (“TSR”) For Special Interest Shareholders: A Seat at the Table (Power)

The Board Place 6 Special Interest Shareholder Issues Sustained poor performance “Excessive” executive compensation “Over boarding” Board Meeting Truancy Board Diversity Majority Voting Separate Chair Declassify Board Shareholder Right to Call Special Meetings Succession Planning Risk Management

The Board Place 7 Basics: Board Objectives (from XYZ Board Corporate Governance Principles) “….represents the stockholders’ interest in perpetuating a successful business and optimizing long-term financial returns…” (TSR) “…in a manner consistent with …legal requirements and ethical considerations.” (Compliance) “….the best interests of the Company and the stockholders.” (All Shareholders as a Group)

The Board Place 8 Three Key Divisions to Maximize TSR and Shareholder Best Interests Operating Results, including M&A Investor Relations Corporate Governance To maximize TSR and to protect and enhance the interests of all shareholders requires good operating results, successful investor relations and effective corporate governance – in difference proportions.

The Board Place 9 Corporate Governance Initiatives Check By-Laws re advance notice, shareholder qualifications, descriptions, nominee info, voting requirements for say-on-pay & other votes; Monitor SEC “proxy plumbing;” incorporate in By- Laws/other Corporate Governance docs; Check Poison Pill status; Evaluate Staggered Board Structure after SEC release on proxy access; Review (and Amend) Guidelines & Charters; Evaluate 1, 2 or 3 year say on pay votes

The Board Place 10 Investor Relations Initiatives Personal 1 on 1 relationship and communication with enough vote decision makers, investment decision makers & influencers if possible, otherwise mass communication techniques. Board Awareness & Support Level of Engagement will increase Need to carry all management proposals. (Losing any vote or having any major business problem in a proxy season opens Pandora’s Box in the next one).

The Board Place 11 Occidental Petroleum: Consequences of losing say-on-pay vote TSR is outstanding. Still lost say-on-pay vote. Now CalSTRS (2d largest) and Relational Investors (hedge fund) sent letter seeking 4 board seats. Nominally complaining about executive compensation and succession planning. Hold only 1% together.

The Board Place 12 Massey Energy example Heavy Shareholder campaign in 2010 Will hold Oct 6 special meeting Declassify board Remove supermajority voting Eliminate cumulative voting Eliminate prohibition on shareholder called special meetings. Other changes CEO board members cannot serve on more than 2 other boards No director may serve on more than 5 other boards Tax gross-ups to be eliminated Safety & Environment committee to consist only of outside directors Public Policy Committee must have majority of outside directors Already has Majority Voting Policy

The Board Place 13 What is the Shareholder Profile? No. shares and percent owned: current, hi & lo; first ownership date Compliance/Corporate Governance Contact Investment Contact Proxy Advisers Proxy Voter Type: Mutual, GovPnsn, Union, Social, Hedge Values Shareholder’s Voting Policy & “Hot” Buttons

The Board Place 14 1 on 1 Determinants of Scale of Diplomatic Effort Size of Company Number, Complexity & Activism of Key Investors and Proxy Voting Advisers Company’s Personnel and Organizational Structure Personal Styles and Philosophies of Participants

The Board Place 15 Scaleable Investor Relations IR Group External Advisers IR Multi Group Task Force C-Suite Involvement (including Division heads) Board Involvement

The Board Place 16 Examples of Investor Relations at Different Market Caps See Investor Relations Examples

The Board Place 17 Board and Management Timeline Ongoing Developments Throughout the next 2 years. See Timeline. Compliance Aspects Easy But Time Consuming. Board Basics: TSR, Best Interests of Company and Shareholders. Key to Success: Genuine, Personal, 2-Way Communication With Critical Number of Key Constituents by Whatever Method Mutually Works.