IR therefore I AM

Next year will mark the ninth anniversary of the infamous Wall Street Settlement (I know
that “10th Anniversary” sounds better, but I couldn’t wait). As we know, the settlement forced
the separation of investment banking from securities research. The settlement followed an
investigation into whether some Wall Street analysts were providing misleading ratings of
the companies they covered to generate investment banking business for their firms. Are we
better off today? 

Some have called for a repeal of the settlement because it has hurt the competitiveness
of our country by denying small companies the access to research analysts.   Given
that small capitalization stock coverage became unprofitable, the separation of research
from banking eliminated banking compensation for analysts that was the last revenue source
used to offset the opportunity cost analysts incur by covering fewer large capitalization
stocks. Large cap stocks are held by armies of investors, many more times over than small
capitalization stocks and, hence, the opportunity for greater commission business. The loss
of investment banking-derived compensation for analysts has contributed to declines in research
coverage of small cap stocks, IPOs and new listings.

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The NYSE recently approved amendments regarding its corporate governance listing standards.
While these amendments become effective January 1, 2010, they basically conform to applicable
SEC rules and clarify existing listing standards.

We offer a summary of the most relevant amendments to NYSE’s listing standards:

Enhanced Notification Requirements. A company’s
chief executive officer must notify NYSE after an executive officer becomes aware of anynon-compliance
with NYSE corporate governance listing standards, regardless of its materiality.

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“All art is but imitation of nature,” said Lucius Annaeus Seneca, Roman statesman, in a
sentiment transformed into the often used quote:  “Art imitates life.”  Perhaps,
the inverse, “Life imitates art,” is also true (let’s skip the Zen thing, okay).  Assuming
one can call today’s movies “art,” this article will attempt to equate various movie references
with the five stages in the life of a company and what you as a investor relations counselor
or corporate communications executive must do to navigate each stage.

So sit back, grab some popcorn and read on.

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The boards of companies contemplating instituting or renewing shareholder rights plans (aka
“poison pills”) without seeking shareholder approval need to tread carefully in 2010. The
highly influential proxy advisory firm RiskMetrics Group has released an update to its proxy
voting recommendation guidelines for 2010 increasing the frequency with which RiskMetrics
will recommend a vote against directors for adopting or renewing most non-shareholder approved
rights plans.

Under the new guidelines, RiskMetrics will recommend that its clients vote against director
nominees at companies that adopt a shareholder rights plan with a term greater than one year,
or that renew any shareholder rights plan (including with a term of one year or less), without
seeking shareholder approval.

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Out of intellectual curiosity, I Googled the term “crisis communications.”  In 32 seconds,
some 148 million references were found, according to the “Googlameter.”  Wow!  Granted
many of them are a waste of time (no, I didn’t look through all of them); however, I’m sure
one could find some helpful hints as to how to navigate a crisis.  I wondered if those
in a position to advise golf great Tiger Woods, embroiled in a controversy himself, considered
doing this.  Apparently not…

Mr. Woods is often referred to as a “brand” and “Tiger Inc.”  His endorsements from
the likes of Nike, Procter & Gamble, and PepsiCo bring in about $100 million annually,
according to some accounts.  And, like any company, his handlers should have had a crisis
communications program in place.  If they did, I wonder how good it was.

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As we like to keep you informed about what your elected officials are up to, we bring the
second installment of Washington Watch…

The bulk of the financial reform bill entitled, “Restoring American Financial Stability
Act of 2009,” introduced by Senate Banking Committee Chairman Chris Dodd (D-CT), focuses
on the overhaul of financial industry regulation and agencies. However, nestled in
the more than 1,100 pages of the bill (I wonder if our Senators are getting paid by the word
these days) are significant corporate governance requirements for publicly-traded companies,
some of these provisions have been included with other proposed legislation introduced in
Congress earlier this year.

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Executive compensation is an issue that is going to be with us for a long
time and one that is bound to generate considerable debate (not to mention
legislation and rule changes that will keep corporate attorneys running their
meters over time).

Recently, Shelley Parratt, Deputy Director of the SEC’s Division of Corporation
Finance, delivered a speech at the 4th Annual Proxy Disclosure Conference regarding
the current state of executive compensation disclosure under the SEC’s rules
and what the SEC expects to see by way of disclosure for the upcoming proxy
season.

Read more…

Let the holiday festivities begin… But between friends, family, shopping,
eating, football games, parades, and all the attendant holiday things, I want
to take some time out to give thanks…

I’m thankful for:

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A recently issued study entitled, “A Wake-Up Call for America,” by the accounting
firm of Grant Thornton LLP highlights a major problem occurring with the US
capital markets these days… Namely, the markets are shrinking.  This critically
important report can be found here can
be found here.

The report notes that market structure changes implemented over the last decade
are causing significant, secular declines in the number of publicly listed
companies in the United States.  The study reveals how low-cost trade
execution has destroyed the ecosystem that once supported the small business
economy, undermining job creation, economic growth, and U.S. competitiveness.

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Have we had enough of social media yet? Apparently not, as more and more companies and their senior managements embrace applications such as Twitter as a way to communicate with various constituencies and promote their companies and products. And, it doesn’t look like it is going to end any time soon.

The Internet remains a vast untamed frontier where anyone with access to a computer can comment on just about anything. Information, once released, can’t be taken back and can remain online forever. Erroneous information can become “institutionalized” and accepted as truth, propagated throughout the blogosphere and find its way into the mainstream media. Corporate reputations can be destroyed in a matter of minutes.

Read more…