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3/6/2008
2008 National Directors Institute
About NDI | Agenda | Sponsors | ArchiveSave the Date for the 2009 National Directors Institute!
Foley's Eighth Annual National Directors Institute
Tuesday, March 3, 2009
at the Westin River North, Chicago, IL
Foley's seventh annual National Directors Institute, the nation's leading forum for public and private company executives and directors, took place on March 6, 2008 and featured keynote speaker Paul Sarbanes, former U.S. Senator and co-author of the Sarbanes-Oxley Act. The day-long seminar included 20 insightful breakout and roundtable sessions that allowed national and global business leaders to discuss clear strategies for developing a business culture that supports accountability and transparency. Contact us at ndi@foley.com for more information.
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Audit Committee Trends
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The panel discussed the impact of the Public Company Accounting Oversight Board Auditing Standard No. 5 on issuers' establishment and maintenance of internal controls. Panelists also examined how audit committees organize through regular meetings, calendaring, and private sessions, and how they engage in continued education processes to meet their responsibilities. Also highlighted were the role of the audit committee in enterprise risk-management oversight and the experience of the audit committees in retaining their own counsel, including issues associated with attorney-client privilege. The session was moderated by Foley Partners Arthur Bill and Michael Matthews as well as Barry Franklin of Aon Global Risk Consulting and Rich Herlin of Deloitte & Touche LLP. Panelists were Isaac Kaufman of Advanced Medical Management, Inc., James Kackley of Orion Energy Systems, Inc., and Michele Hooper of The Directors' Council.
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Board Oversight of a New CEO
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The panel, which featured Foley Partner Thomas Hartman as well as George Bradt of PrimeGenesis and Joseph Griesedieck of Korn/Ferry International, discussed selecting the successor to a departing CEO — arguably the most important role of the board of directors. In order to minimize the risk of CEO failure, the board's involvement with the new CEO should not end upon his or her hiring. During the first 100 days of the CEO’s tenure, the board should focus on assisting the CEO with mastering the learning curve, demonstrating support for and confidence in the CEO, fostering relationships between the CEO and board members, and allowing the CEO to run the company without excessive intrusion. Ultimately, the board should help to establish a solid foundation upon which the new CEO can succeed, stay engaged with the CEO's progress, and allow the CEO to do his or her job, all of which will enable the board to focus on its mandate of guiding the company through changes and challenges.
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Bill Scherr’s Chicago 2016 Presentation
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Bill Scherr, a Vice President at Goldman Sachs, Chairman of the Board for World Sports Chicago, a board member of Chicago 2016, and a 1988 Olympic bronze medalist, addressed a general session at Foley’s seventh annual National Directors Institute on March 6, 2008 in Chicago. Mr. Scherr discussed the significant efforts of Chicago 2016, a group dedicated to bringing the 2016 Olympic and Paralympic Summer Games to the City of Chicago. Chicago 2016 has elaborate plans for its venues, most of which will be within 15 kilometers of its lakeside Olympic Village.
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Boardroom Best Practices
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The presentation focused on issues of concern for boards of directors and management regarding international/cross-boarder corporate governance. Panelists discussed how companies can ensure compliance with the Foreign Corrupt Practices Act and other laws so management can make the required Sarbanes-Oxley Act Section 404 certifications. The session also addressed the increased need for globalization of the board of directors; recommended best practices when organizing and managing foreign subsidiaries; recommended steps for a company pursuing a joint venture with a foreign counterpart; and the proper manner in which to establish relationships with foreign-government officials. Foley Partner Benjamin Garmer moderated this panel. Panelists included Terry Growcock, Chairman of The Manitowoc Company, Inc., Randall Hogan, Chairman and CEO of Pentair, Inc., Robin Johnson, Partner at Eversheds LLP, Cary Kochman, Managing Director of UBS Securities LLC, Timothy Sullivan, President, CEO, and Director of Bucyrus International, Inc., and Dennis Wheeler, Chairman, President, and CEO of Coeur d’Alene Mines Corporation.
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The Board’s Role in M&A
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The panel addressed the role of the buy-side board of directors in mergers and acquisitions (M&A) transactions, focusing on communication between management and the board, evaluation of a transaction in the context of capital allocation, effective strategies for integration of an acquired company, and the keys to being a successful strategic buyer. The panel also highlighted recent M&A trends. The panel was moderated by Foley Partner Steven Hilfinger as well as Bryan Armstrong of FD/Ashton Partners and Justin Friesen of UBS Securities. Panelists were Chris Brown of TechTeam Global and David Drury of Poblocki Sign Company.
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CEO/Chairman Roundtable
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The primary topics of discussion included CEO and management succession planning, interactions involving the board of directors (including interactions with an independent chairman), management of financial crises, and interactions with "difficult" shareholders. This engaging peer-to-peer discussion, moderated by Foley Partner Steven Barth, featured Corey Chambas, President and CEO of First Business Financial Services, Inc., Howard Engle, Partner at Deloitte Tax LLP, James T. Glerum Jr., Managing Director at UBS Securities LLC, Randall Hogan, Chairman and CEO of Pentair, Inc., and Glen E. Tellock, President and CEO of The Manitowoc Company, Inc.
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CFO Roundtable
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The peer-to-peer roundtable discussion was led by Foley Partners Christopher Cain and Joseph Tyson, Jr., along with Maneesh Arora of Third Wave Technologies, Patrick Condon of Deloitte & Touche LLP, Carl Laurino of The Manitowoc Company, Inc., Dennis Letham of Anixter International Inc., and Jason Wortendyke of UBS Securities LLC. The discussion addressed the growing role of the CEO in the executive compensation process; the impact of the subprime crisis on the economy, including the impact on liquidity, credit availability, and investment policies; and the potential corporate impact of the presidential election. Other topics included risk management, the role of the audit committee, and the use of International Financial Reporting Standards versus Generally Accepted Accounting Principles.
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Compensation Committee Roundtable
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The roundtable was led by Foley Partner Jay Rothman as well as Michael Kesner of Principal of Deloitte Consulting LLP, Ted Buyniski, Senior Vice President of Radford Consulting, Maureen Conners, Director of Deckers Outdoor Corporation, Patrick McGurn, Executive Vice President and Special Counsel of RiskMetrics Group, and Thomas Quadracci, Chairman of the Board of Directors of Orion Energy Systems, Inc. The roundtable addressed the importance of maintaining adequate compensation committee minutes; the content of the compensation disclosure and analysis for public companies; compensation issues faced by multinational companies; the CEO’s role with respect to the compensation committee; the compensation committee’s role in executive succession planning; the role of severance and change of control payments in executive compensation arrangements; best practices in director pay; and structuring public company compensation to focus executives on long-term objectives.
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Director and Officer Liability Trends
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The panel discussion was led by Foley Partner Gordon (Chip) Davenport as well as Michael Rice, CEO of Aon Financial Services Group, and Dan Fortin, Senior Vice President of CNA Financial Corporation. The panel presentation featured an overview of the latest trends in director and officer (D&O) litigation and the D&O insurance marketplace. Panelists discussed how insurance companies evaluate the companies for which they write D&O policies and steps a company can take to secure the best possible D&O insurance coverage.
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Director Recruiting
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Foley Partner Peter Underwood moderated the panel, which included Charles King, Managing Director and CEO of Korn/Ferry International, Christine Marx, General Counsel and Corporate Secretary of The St. Joe Company, Adam Ross, Associate Vice President of NASDAQ, and Stephanie Streeter, Director of Kohl’s Corporation. The presentation focused on the issues and challenges associated with recruiting qualified candidates for membership on a corporation’s board of directors. Among the issues discussed were the processes typically followed in recruiting a new director; obstacles and impediments frequently faced by corporations in the recruiting process, including the impact of the Sarbanes-Oxley Act and increased time commitment typically required of directors; and the definition and desirability of diversity in the board room.
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Executive Compensation Updates
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The panel addressed the prospects for and likely effects of advisory shareholder votes on executive compensation — so-called “say on pay” — through voluntary adoption or legislation. Panelists also discussed the impact of the U.S. Securities and Exchange Commission’s new executive compensation disclosure rules; the effect of stock-market declines on executive compensation; the usefulness of internal pay equity and wealth accumulation analyses in determining executive compensation; and the questions compensation committees should ask about existing and proposed executive compensation arrangements. The panel, moderated by Foley Partner Jay Rothman, included Ted Buyniski, Senior Vice President of Radford Consulting, Michael Kesner, Principal of Deloitte Consulting LLP, and Patrick McGurn, Executive Vice President and Special Counsel of RiskMetrics Group.
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General Counsel Roundtable
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Members of the panel shared their views on the cutting-edge issues facing today's general counsel (GC). The panel discussed how a GC most effectively can deal with his or her board and CEO as well as the GC's role in preparing the compensation discussion and analysis portion of the proxy statement. The panel also discussed how a corporation most effectively can ensure compliance with its own code of conduct; whether a GC should act as the chief compliance officer and the scope of that role; how a GC functions most effectively with respect to enterprise risk management within its corporation; and best practices for document retention and preparation. The peer-to-peer exchange was moderated by Foley Partners Edwin Mason and Patrick Quick, along with Suzanne Bettman of RR Donnelley, Bryan Blankfield of Oshkosh Corporation, Scott Cramer of Bucyrus International, Inc., John Dul of Anixter International Inc., Janet Kelley of Family Dollar Stores, Inc., and Marya Rose of Cummins Inc.
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Governance Committee Roundtable
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The roundtable participants discussed best practices and personal experiences relating to key corporate governance issues, including director, board committee, and CEO evaluations; director recruitment and term limitations; board and committee composition; separation of the chairman and CEO positions; the role of hedge funds and other shareholder activists; and the presence of third parties (e.g., experts and consultants) in the boardroom. The roundtable was moderated by Foley attorneys Jessica Lochmann Allen and Yvette VanRiper as well as Warren Batts of Methode Electronics, Inc., John Gimpert of Deloitte & Touche LLP, Bronson Haase of The Marcus Corporation, David Lambert of TD AMERITRADE, and Howard Malovany of Wm. Wrigley Jr. Company.
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Institutional Shareholder and Hedge Fund Relations and Issues
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The panel discussed the increasing ability of hedge fund and other activist shareholders to influence a corporation's management and board of directors, focusing on the interaction between the corporation and the activist shareholder. From a hedge fund's perspective, communication and access are key: Blocking access to requested information about the company or forbidding communication with key members of management or the board of directors is often a precursor to a proxy contest with an activist shareholder. Alternatively, a company that is prepared to respond effectively to contact from a hedge fund or other activist shareholder is significantly better positioned to manage the demands of such shareholders and generate a positive outcome for the company. The session was moderated by Foley Partners Phillip Goldberg and John Wilson as well as Richard Grubaugh of D.F. King & Co., Inc., Gordon McCoun of FD/Ashton Partners, Emily McNeal of UBS Securities LLC, and John Palmer of PL Capital LLC.
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Internal Investigations
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The Internal Investigations breakout session focuses on the importance and the consequences of the actions of a corporate actor preceding and during a regulatory investigation or an internal audit. Specifically, the discussion focuses on the preservation of the attorney-client privilege, the retention of appropriate outside experts and the appropriate communication strategies during such an investigation. Panelists for this session included Kirk Forrest, Minerals Technologies, Inc.; Dawson Horn III, Altria Corporate Services LLP; Bryan House, Foley & Lardner LLP; Robert Huff, Aon Consulting; Amy Jones, McDonald’s Corporation; Peter Kiernan, Eversheds LLP; Nancy Sennett, Foley & Lardner LLP; Scott Shaffer, Deloitte Financial Advisory Services LLP; and David Skidmore, NCR Corporation.
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International/Cross-Border Issues Roundtable
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Roundtable participants discussed strategies for multi-national companies to achieve worldwide compliance with ethical business practices and with such laws as the Foreign Corrupt Practices Act. Prior to entering a new geographic area, companies carefully should assess local business culture, train home-office and field personnel accordingly, and develop internal and external resources for monitoring the ethical performance of the company, its suppliers, and other business partners. Similar considerations apply when evaluating compliance issues in the context of mergers and acquisitions (M&A) transactions. Moderators were Foley Partner Timothy Sheehan as well as Clyde Ebanks and Bruce Wineman of Aon Global Client Network, Adena Friedman of NASDAQ, Robin Johnson of Eversheds LLP, Emily McNeal of UBS Securities LLC, and Jack Walker of Deloitte Financial Advisory Services LLP.
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Investor Relations Roundtable
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The roundtable addressed effectively managing communication with shareholders and analysts to achieve investor-relation and corporate-governance goals. This includes proactive preparation and training rather than reactive crisis management as well as tailoring communications to meet the widely varied investment goals of the shareholder constituents. Discussions also focused on the pros and cons of limiting earnings guidance. The peer-to-peer discussion was facilitated by Foley Partner Linda Kelso as well as Richard Grubaugh of D.F. King & Co., Inc., Christine Marx of The St. Joe Company, Gordon McCoun of FD/Ashton Partners, Mary Ryan of Aftermarket Technology Corporation, Brendan Sheehan of Corporate Secretary magazine, and Anna Snider of IR Magazine.
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Risk Management Roundtable
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This lively discussion of various risk management topics was facilitated by Foley Partners Thomas Krebs and John Landis as well as Ann Gariti of Aon Corporation, Eric Blanchard of United Stationers, Greg Hoff of ServiceMaster, Mary Ann Hynes of Corn Products International, Harlan Loeb of FD/Ashton Partners, James McGuire of Accume Partners, Scott Mitchell of the Open Compliance and Ethics Group (OCEG), Randall Nornes of Aon Risk Services, and Janice Ochenkowski of Jones Lang LaSalle. Issues discussed included current “hot topics” in risk management, tips for setting up an enterprise risk-management program, international risk management issues, and best practices in risk management.
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Private Equity Director Issues
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The presentation focused on the practical issues faced by private equity fund managers when serving on the board of directors of a portfolio company These issues include the proper role of the portfolio company board of directors; the importance of aligning objectives among the board of directors and company management; the appropriate board composition and oversight; the strategic use of outside directors and advisory boards; properly managing conflicts of interest; and the board of directors’ role in managing distressed portfolio companies. Foley Partners Paul Broude and Anne Ross moderated the panel, which included John Byrnes, Executive Managing Director of the Mason Wells Funds, David Payne of Aon Financial Services Group, Sona Wang, Managing Partner of Ceres Venture Fund L.P., and Paul Winters, General Counsel of Denham Capital Management LP.
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SEC, NYSE, NASDAQ, PCAOB Update
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The roundtable addressed recent initiatives of the SEC, including the possibility of adopting International Financial Reporting Standards (IFRS) for both foreign and private issuers. Panelists also addressed the globalization of the U.S. economy and the potential impact on the stock exchanges and auditing standards, including the consolidation of stock exchanges internationally and the possibility of the international centralization of accounting rule-making standards. The roundtable also discussed recent efficiency initiatives at the SEC’s Division of Enforcement, which include focusing on high-risk areas and centralizing the agency’s internal databases used to track enforcement cases. Moderated by Foley Partner Patrick Daugherty, the panel also featured Michael Emen, Senior Vice President of NASDAQ, James Duffy, Executive Vice President and General Counsel of NYSE, Jarett Decker, Deputy Director and Chief Trial Counsel for the Public Company Accounting Oversight Board, and Merri Jo Gillette, Regional Director of the U.S. Securities and Exchange Commission (SEC) Midwest Regional Office.
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Succession Planning and Crisis Management
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The panel discussed the board of directors’ responsibility in preparing and implementing an effective succession plan in the event of the sudden loss of a CEO. A company’s investment of time and money now — including proactively consulting professional advisors such as corporate communications firms and corporate counsel — will facilitate a significantly smoother succession of leadership should a contingency occur in the future. The panel included Foley Partner Gregory Monday as well as Robert Hallagan of Korn/Ferry International, Philip Huntley of Aon Financial Services Group, Thomas Kirk of Hanger Orthopedic Group, Inc., Betsy Neville of FD/Ashton Partners, Edward Pendergast of Pendergast & Company, Damian Walch of Deloitte & Touche LLP, and Jason Wortendyke of UBS Securities LLC.
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