Our Blog: The Podium

We’ve called upon our resident body language expert, Sharon Merrill EVP & Partner David Calusdian, to teach us to become better speakers – whether at meetings, investor conferences or in more personal settings. This four-part conversation provides a taste of the good, and bad, habits of executive presenters, with a few tips for improvement along the way. Today’s post is Part II in the series.

The Podium: Hello, David. Today we’re going to discuss eye contact and how we can use it effectively during our presentations. Why don’t we start with improving eye contact when using a projection screen, as with a PowerPoint presentation?

DC: Maintaining good eye contact with the audience is a necessity. You should look at a screen only if you need to see the bullet points or graphic on the slide in order to speak to it. Glance very quickly to the screen, then back to your audience -- so that you can direct the audience to the screen but maintain their attention.

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.

The term “shareholder activism” can sometimes send a shiver down your spine and conjure up all kinds of unwelcome events – unhappy shareholders, proxy contests, shareholder proposals, 13D filings and withhold vote campaigns, to name just a few.

I recently moderated a NIRI Virtual Chapter webinar on “Shareholder Activism Trends.” The participants, consisting mainly of IROs at mid- and small-cap companies, were polled on several questions. The first question was, “Do you have a detailed plan in place for dealing with shareholder activism?” The majority answered “no.”

It may not be feasible to have a detailed plan for dealing with a threat that can take so many different forms. The lawmen and bandits who fought it out at the infamous O.K. Corral in 1881 had no idea how the showdown would play out – and neither will you if your company becomes an activist’s target. But that doesn’t mean you can’t be prepared. Here are four steps.

With proxy season on the horizon, a new SEC rule will be requiring companies to justify the structure of the board’s leadership. That could have some companies thinking about whether the roles of chairman and CEO should be separated – an issue that’s been hotly contested for years.

Proponents of taking an axe to the two positions contend that combining them puts too much power in the hands of one person and creates an inherent conflict of interest. Their preference is to seat an outside director as chairman to ensure the board stays truly independent from management. The CEO can then focus on running the business while the chairman is tasked with protecting the interests of shareholders, including evaluating management’s performance.

To whom is the corporation accountable? Before SOX, majority voting, proxy access and “say on pay,” director elections were democratic in name only, and the lines between board and management were blurry at best. Except for the occasional gadfly at an annual meeting, boards rarely communicated with shareholders directly.

Today, after nearly a decade of turmoil in the markets and changes in the regulatory environment, the insulated board is a thing of the past. Shareholders are coming to view directors as leaders whose perspectives may diverge from those of management, who are empowered to exercise independent judgment on matters of consequence, and who are accountable for corporate performance.

A small but growing number of boards, recognizing that investor expectations have changed, have made dialogue with shareholders a formal priority. They are experimenting with new approaches for nurturing this interaction and learning from the experience. Although systematic programs for board-shareholder communications are still atypical in Corporate America, it is not too early to make some observations about what the more successful efforts have in common.