Our Blog: The Podium

The Sharon Merrill Associates team is excited and proud to share our own unique connection to the 2014 Sochi Winter Olympics. Julia Marino, daughter of agency CEO and founder Sharon Merrill, will be competing for a medal in the Women’s Slopestyle Skiing competition. Julia is representing her birth country, the Republic of Paraguay, as the first athlete ever to represent the South American country at the Winter Olympics. A student at the University of Colorado, Julia will be proudly carrying Paraguay’s tricolor national flag during the opening ceremonies at Fisht Olympic Stadium on Friday, February 7. The 2014 games mark the first time slopestyle, a freestyle skiing event featuring a downhill obstacle course consisting of jumps and rails, is included in the Olympics. The Women’s Slopestyle Skiing event is scheduled to air on NBC at 8 p.m. ET on Tuesday, February 11. Please join us in cheering on Julia as she takes on Sochi!

To follow Julia’s Olympic journey, find her on Facebook and Twitter.

By Maureen Wolff, President and Partner, Sharon Merrill Associates

When the SEC last month charged First Solar’s former head of investor relations with violating its fair disclosure rules, the announcement gave more than a few IROs pause. And for good reason. Lawrence Polizzotto paid a $50,000 fine for the violation. Although corporate IROs and the financial press have focused on the settlement with Polizzotto, perhaps more critical for public companies is the SEC’s treatment of First Solar itself.

Rather than charge the company separately, the SEC said it decided to forego corporate enforcement because of First Solar’s “extraordinary cooperation.” This included the company self-reporting the violations to the SEC and its “environment of compliance," which First Solar developed through its disclosure committee and additional Reg FD training for employees managing the company's public disclosure.

But how many public companies are actively training their staff in Reg FD, insider trading or even the general responsibilities that come with working for a public company? For example, while instruction against insider trading is something every public company should be providing, there are numerous examples of public filers whose employees claimed they did not know they were violating insider trading laws. Many companies expect their managers and reporting staff to understand what it means to be a public company employee, but may not take the time to teach it. And if it is taught, the training may consist of just a single session right before the IPO – perhaps never to be offered again.

By Maureen Wolff, President and Partner

When The Men’s Wearhouse dismissed George Zimmer, the company’s high-profile pitchman and executive chairman, this summer, observers were left wondering what had caused the split. The company announced it had parted ways with Zimmer, who founded The Men’s Wearhouse in 1973, on June 19, five hours before its annual stockholders meeting was scheduled to take place. It provided an extensive explanation from the board of directors via press release – six days later. In the interim, and for several days thereafter, fans of Zimmer and his iconic commercial appearances took to social media with cries of “foul.” Zimmer himself commented on his ouster through a number of media channels.

Zimmer’s split must have been particularly damaging from a communications and branding perspective. After all, it is difficult to even think of the men’s retailer without hearing Zimmer and his classic phrase, “You’re gonna like the way you look. I guarantee it.” But the travails of communicating succession aren’t limited to high-profile executives. In the past several weeks, we have seen changes or controversy at the top of a number of public companies, including J.C. Penney, Microsoft, Office Depot, Royal KPN and Vivendi.

Finding the next CEO or chairman is one issue. Communicating to investors that the board of directors has a sound plan for succession is quite another entirely. This means the challenge is two-fold: overcoming the stigma associated with internal succession discussions while a CEO – especially a successful one or a company founder – is still in place; and crafting a message that will ultimately calm investor fears about uncertainty caused by a pending transition.

By Howard Berkenblit, Partner, Sullivan & Worcester LLP
By Maureen Wolff, President and Partner, Sharon Merrill Associates

As you may have heard, the SEC has stated that public companies may announce material, non-public news on social media outlets like Facebook and Twitter, provided that companies take appropriate steps to alert investors which outlets they will use. Depending on your perspective, that may sound either intriguing or daunting.

But if that’s as far as it goes for your company – a quick reaction followed by little else – then all of the recent discussion spawned by the SEC’s ruling will have been little more than a wasted opportunity.

Sharon Merrill and the law firm Sullivan & Worcester recently co-hosted an educational seminar with investor relations and corporate communications officers on using social media for public companies. We presented an overview of the legal issues related to using social media for disclosure purposes, and we also provided six building blocks for developing an investor relations social media strategy.

By Maureen Wolff, President and Partner

Annual reports are so 1997.

When the National Investor Relations Institute recently asked me for my thoughts on the public company practice of producing a glossy annual report, the premise of the question was not, “How can companies do this better?” or “Please provide some helpful tips for designing annual reports.” It wasn’t even as minimalist as “What’s the least expensive, most simplified way to produce an annual report?” No, the question was much more fundamental: Why, in this age of technology and pressured IR department budgets, should companies bother to create an annual report at all?

By Maureen Wolff, President and Partner

Three years ago, on the heels of the greatest collapse U.S. financial markets have experienced in decades, in conjunction with IntelliBusiness/eventVestor, we published a study, “The Guidance Effect: Improving Valuation” (PDF 875 KB), that evaluated the impact of increased transparency on equity valuation during the turbulent first quarter of 2009.

The findings supported the thesis that issuing quantitative financial guidance contributes to improved stock performance. Given the climate of fear and uncertainty that permeated Wall Street during the study period, we hypothesized that providing guidance – and thereby increasing transparency for investors – likely had an unusually pronounced affect on stock price behavior at the time.

By Maureen Wolff, President and Partner

Companies planning to go public need to be able to hit the ground running on the day of the IPO pricing with an investor relations program. In order to prepare, Sharon Merrill President and Partner Maureen Wolff provides tips on what to do before and after the S-1 filing in the videos below.

By Maureen Wolff, President and Partner

Nothing has more power to change a boardroom’s dynamics than the election of dissident directors – especially when they arrive as a twosome. I had the honor of moderating a panel discussion on shareholder activism at the National Association of Corporate Directors New England Chapter breakfast event earlier this month, where seasoned board members talked about the lessons they’ve learned in battling high-profile proxy contests over the years.

One of the stories, told by a former board chairman, involved the legendary corporate raider Carl Icahn. A manufacturing glitch had resulted in a steep drop in his company’s share price. After repeated attempts, Icahn was finally successful in having two of his nominees elected to the board. This occurred not long after the principal of another activist institution had been elected as a director, and not long before the company received an unsolicited tender offer at a substantial premium to the then-current share price.

The former chairman painstakingly recreated the scenarios that unfolded over the next few months as the board considered the takeover offer. At first, he focused on the gulf in interests and motivations between the newly elected “directors” and long-time members of the board. Unlike the established directors, who had long been personally committed to the company’s vision, mission and business strategy, the dissidents’ only interest was in immediately monetizing the company’s value for shareholders, he said. Predictably, these conflicting goals led to tremendous stress and friction on the board.

When it comes to corporate governance, board members and shareholder activists are usually on opposite ends of the spectrum. But at separate conferences in New York and Boston this month, the two camps expressed a surprisingly similar view about the most effective way to deal with the anticipated increase in shareholder activism in 2011: better communication.

According to a study by law firm Schulte Roth & Zabel (SRZ), 76% of activists surveyed identified “dialogue/negotiations with management” as the most effective activist strategy to achieve desired results. None of the other proposed strategies – shareholder resolutions, publicity campaigns, proxy contests or litigation – received more than 16% of the vote.

Results of the study were highlighted at SRZ’s Shareholder Activism Conference in New York, which I attended as part of an invited group comprised mainly of hedge fund and private equity fund managers.

Hello again. We took a bit of a hiatus from blogging this summer, but we are now back to share a Halloween story sure to scare you straight!

Unless you are one of the 33 Chilean miners that were trapped underground for the past two months, you have likely been watching the drama unfold on Capitol Hill as the Business Roundtable and the U.S. Chamber of Commerce challenged the legality of the SEC’s new proxy access rule 14a-11, which allows qualifying shareholders to nominate directors for election at shareholder meetings and requires the corporation to include those nominees in the standard proxy statement. The petitioners claim that the new rules are subjective and violate federal and state law and the United States Constitution, and that the SEC did not assess the effect of the rules on efficiency, competition and capital formation. As a result, implementation of the rule has been delayed pending a resolution of the Court of Appeals. So the new proxy access rules will most likely not be implemented until the 2012 proxy season, at the earliest. Upon hearing this news, public corporations across the nation let out a collective sigh of relief.