1. Publicly Traded Company Challenges

2. Topics Role of Corporate Secretary and Supporting the Board
Preparing Minutes – Public Company Concerns
Regulation FD
Public Company Governance Considerations
Shareholder Engagement
Activist Shareholders
Shareholders’ Meetings
SEC Filings – Role of In-House Counsel
Securities Law and SEC Developments

3. Role of Corporate Secretary and Supporting the Board
Office of Corporate Secretary generally required by state corporation law
Role of Corporate Secretary’s Office
Combined with General Counsel or separate?
Coordinate Board and committee meetings and materials
Draft minutes
Liaison between directors and management
Maintain corporate and subsidiary records
Stock transfer records other shareholder matters
Role in Board evaluations
Setting Board/Committee Agendas
Agenda review process
Involvement of Chair, Lead Independent Director, committee chairs, senior management

4. Drafting Board and Committee Minutes
Legally required – official and permanent record of actions taken
Discoverable in litigation and enforcement actions
Evidence of directors exercise of business judgment and compliance with applicable rules and regulations
Taking the Minutes
Methodology – not intended to be a verbatim transcript; use agenda as outline
Director notes – not recommended; should be discarded after meetings; director portals
Content – specific circumstances (e.g., a proposed transaction or pending litigation) may dictate the content
Additional board materials – Secretary to have a copy
Exposure risk
Choosing words carefully
If Secretary is not the GC, GC should approve before distribution to the Board

5. Regulation FD
Intended to prohibit selective disclosure of material, nonpublic information
Pressure points:
Earnings calls
Investor meetings
Calls with analysts
Confirming prior guidance
Reg FD Policies
Role of IR and in-house counsel
What to do if you have a potential Reg FD violation

6. Public Company Corporate Governance Considerations
Sarbanes-Oxley governance requirements
Auditor independence
Corporate responsibility
Enhanced financial disclosures and internal control over financial reporting
Corporate and criminal fraud accountability
Prohibition on loans to insiders
Dodd-Frank governance requirements
Say-on-pay shareholder vote
Clawback and hedging policies
Compensation consultant independence
Other Dodd-Frank governance provisions yet to be implemented

7. Public Company Corporate Governance Considerations (continued)
Director Independence Requirements – NYSE and Nasdaq
Generally, a majority of the Board consist of independent directors
Common independence “traps”
Supplier/service provider relationships
Immediate family member relationships
Prior employment
Generally must have fully independent Audit, Compensation, and Nominating and Governance committees of the Board
Heightened independence requirements for Audit and Compensation Committee members
Watch out for consulting fees and related-person disclosures involving directors
Clayton Act “Interlocking Directorates”
Prohibits a director from also serving as a director of a competitor

8. Shareholder Engagement
Conducting an institutional investor outreach program
Generally occurs during proxy “offseason”
Who should be involved?
Investor Relations, Compensation, Legal, others
Board oversight and involvement with shareholder engagement program
Tips for engagement
Be proactive – don’t wait for a crisis or controversy
Discuss governance in the context of strategy
Maintain continuous cycle of engagement
Proxy advisory firms – ISS and Glass Lewis
Issue voting recommendations to institutional investor clients
Although large institutions increasingly follow their own proxy voting guidelines
Tips for engaging with proxy advisors
Listen and have a conversation
Include the experts

9. Shareholder Engagement (continued)
Proxy advisors and large institutional investors have helped to drive many common/emerging governance practices
Majority voting for directors
Proxy access
Ability of shareholders to call special meetings
Board leadership structure
Additional Board committees
Hot button topics for institutional investors
Executive compensation
Board skills/composition/diversity
Board “refreshment” and “overtenured” directors
Director “overboarding”
ESG (environmental, social, and governance) issues

10. Activist Shareholders
As opposed to traditional institutional investors, activists focused on creating short-term value
Tactics range from dialogue with board/management to formal proxy contests
Campaigns may focus on a variety of issues, including overall board governance, enterprise strategy, M&A activity, balance sheet issues, etc.
Increasingly targeting CEOs at start of campaigns, having found that just obtaining board seats is not always productive (e.g., American International Group, Inc., Arconic Inc., and CSX Corp.)

11. Activist Shareholders (continued)
While sometimes helpful and could improve governance, more often than not are disruptive and prevent from building long-term shareholder value
Stages of engagement: stakebuilding, engagement, proxy contest, litigation, takeover
Pay attention to warning signs: analyst reports suggesting structural changes, pointed questions on earnings calls or during investor conferences, changes in shareholder base and activist interest in other industry players
Important to have a well-coordinated response play (CEO vs Board; advisor involvement; confidentiality)

12. Annual Shareholders’ Meetings
Meeting logistics – location, security, admission policies, etc.
Agenda and rules of conduct
Quorum, voting and ballots
Shareholder proposals
Rule 14a-8 proposals
‘Floor’ proposals and advance notice bylaw provisions
Preparing for disruptions or unexpected events
Role of inspector of election
Adjournment and shareholder Q&A

13. SEC Reporting Obligations
Annual/Quarterly SEC Filings – Role of in-house counsel
Form 10-K and 10-Q
Proxy Statement and Annual Report to Shareholders
Disclosure controls and procedures
Disclosure Committee – role and composition
Role of Board and Board committees in reviewing and approving SEC filings
Section 16 filings
Directors and officers required to report transactions in company stock within 2 business days
Typically filings are facilitated by company
Section 16 liability and insider trading policies

14. SEC Reporting Obligations (continued)
Current Reports on Form 8-K – common triggering events
Entry or termination of a material definitive agreement
Acquisition or disposition of assets
Earnings releases
Financial obligations and off-balance sheet arrangements
Material impairments
Unregistered sales of equity securities
Change in auditors or financial restatements
Appointment or departure of directors or certain executive officers
Amendments to articles or bylaws
Amendments to or waivers of the code of ethics
Shareholder voting results

15. Securities Law Developments – What to Expect
Dodd-Frank Reform/Repeal Efforts
CEO Pay Ratio disclosure
Pay for Performance disclosure
Conflict Minerals
SEC Enforcement Priorities