Transcript D.F. King & Co., Inc. Overview of Services

2010 Proxy Season
Year in Review
September 14, 2010
Presenter:
Thomas A. Germinario
Senior Vice President
D. F. King & Co., Inc.
2010 RR Donnelley SEC Hot Topics
Important Changes for 2011: Dodd-Frank Wall Street Reform and
Consumer Protection Act
 Proxy Access: Shareholders permitted to include nominees for director
elections within issuer’s proxy solicitation materials.
• Deadline to submit nominations: no later than 120 and no more than 150 days prior
to anniversary of previous year’s mail date
• Ownership Threshold: limited to shareholders or groups with 3% ownership for at
least three years
• Who will use?: pension funds, labor funds, individual activists
 Say on Pay: Companies will be required to seek non-binding shareholder vote
on compensation package of named executive officers at first meeting held on or
after January 21, 2011. Companies will also be required to seek a vote on a
frequency proposal of future “say-on-pay” votes - one, two or three years.
 Elimination of the Broker Discretionary Vote on Executive Compensation:
Brokers will not be able to vote client shares without instructions on say-on-pay
proposals or any compensation proposals.
 Golden Parachutes: On a merger agenda, shareholders will be permitted to
vote on a separate non-binding proposal on any executive pay related to a
change-in-control they have not previously approved in addition to the merger
proposal itself.
2010 RR Donnelley SEC Hot Topics
2
Proxy Plumbing
 Street Name Proxy Distribution: Review NYSE fee schedule and
potentially eliminate it in favor of allowing market forces to determine
appropriate fees.
 Non-Objecting Beneficial Owner (“NOBO”) / Objecting Beneficial Owner
(“OBO”): Cost of anonymity may be borne by the shareholder rather than
by the issuer.
 Stock Loan: Recall shares in time to vote on important matters.
 Over Voting / Under Voting / Empty Voting: Disclosure of pre or post
reconciliation.
 Advance Notice of Meeting Agenda: Issuers should give advance notice
of matters to be voted on to institutions.
2010 RR Donnelley SEC Hot Topics
3
Proxy Plumbing
 Voting Audit: Require vote tabulators, securities intermediaries, and proxy
service providers to provide each other with access to vote data so investors
and issuers can confirm that votes have been received and tallied according
to investors’ voting instructions.
 Dual Record Date: One record date for determining who is entitled to
receive notice of the meeting and a later one for determining who can vote at
the meeting. Holders without an economic stake in the matter should not be
able influence the outcome of a vote (issue of reconciliation is used in
Europe).
 Proxy Advisory Firms: Should proxy advisory firms register with SEC to
alleviate potential conflicts of interest and lack of accuracy and
transparency? Should they disclose any potential conflicts?
 Enhance Fund Voting Disclosure: Provide actual shares voted in N-PX
filing.
2010 RR Donnelley SEC Hot Topics
4
Proxy Fight Trend Analysis
As of August, 2010
160
140
134
125
120
108
100
100
91
Total- Definitive Filed
Total- All Proxy Fights
80
70
56
71
58
60
51
42
40
33
20
Source: FactSet Research
Systems Inc.
0
2005
2006
2007
2008
2009
2010
2010 showed a drop in number of contentious activist situations especially in large cap proxy contests.
2010 RR Donnelley SEC Hot Topics
5
# of Directors Receiving Against/Withhold
Recommendations from ISS
As of August, 2010
3,000
2,708
2,500
2,000
1,685
1,724
1,500
1,174
1,000
500
* Increased
recommendations
due to tax gross
up policy
2007
2008
2009*
2010 RR Donnelley SEC Hot Topics
2010
6
# of Directors with Less than 50% For Vote
As of August, 2010
90
84
80
70
60
50
43
40
30
20
16
10
0
2008
2009
2010
* Russell 3000
2010 RR Donnelley SEC Hot Topics
7
Management Compensation Proposals
As of August, 2010
Management Compensation Proposals
ISS Recommendation Comparison
2008-2010
ISS- FOR
ISS- AGAINST
700
681
600
631
500
527
400
Number of Companies
300
254
200
193
100
165
0
2008
ISS - FOR
ISS - AGAINST
2009
Support Level
2008
85.53%
70.07%
2010
2009
84.36%
71.76%
2010 RR Donnelley SEC Hot Topics
2010
85.21%
72.52%
Source: Institutional
Shareholder Services
(ISS)
8
Shareholder Proposal: Say-On-Pay
As of August, 2010
80
80.00%
70
70.00%
60
60.00%
50
40
50.00%
Number of Proposals
Average Support
30
40.00%
20
30.00%
10
0
20.00%
2007
2008
2009
2010 RR Donnelley SEC Hot Topics
Source: Institutional
Shareholder Services (ISS)
2010
9
Management Proposal: Say on Pay
As of August, 2010
Say on Pay
ISS Recommendation Comparison
2006-2010
ISS- FOR
ISS- AGAINST
120
100
80
Number of Companies 60
40
20
0
2006
ISS - FOR
ISS - AGAINST
2006
N/A
51.60%
2008
2009
Support Level
2008
92.95%
53.60%
2010
2009
92.15%
74.61%
2010
91.80%
73.01%
Source: Institutional Shareholder Services (ISS)
2010 RR Donnelley SEC Hot Topics
10
Shareholder Proposal: Majority Voting
As of August, 2010
140
80.00%
75.00%
120
70.00%
100
65.00%
60.00%
80
55.00%
Number of Proposals
Average Support
60
50.00%
45.00%
40
40.00%
20
35.00%
0
30.00%
2007
2008
2009
2010
Source: Institutional
Shareholder Services (ISS)
2010 RR Donnelley SEC Hot Topics
11
Shareholder Proposal: Declassify Board
As of August, 2010
80
80.00%
70
70.00%
60
60.00%
50
40
50.00%
Number of Proposals
Average Support
30
40.00%
20
30.00%
10
0
20.00%
2007
2008
2009
2010 RR Donnelley SEC Hot Topics
2010
Source: Institutional
Shareholder Services (ISS)
12
Shareholder Proposal: Call Special Meeting
80
As of August, 2010
80.00%
70
70.00%
60
60.00%
50
40
50.00%
Number of Proposals
Average Support
30
40.00%
20
30.00%
10
0
20.00%
2007
2008
2009
2010

All proposals in 2010 were at the 10% threshold

Issuers were granted a relief from the SEC on the shareholder proposal if there was a
management proposal for 25%
2010 RR Donnelley SEC Hot Topics
Source: Institutional
Shareholder Services (ISS)
13
Shareholder Proposal: Act by Written Consent
As of August, 2010
80.00%
80.00%
70.00%
67.70%
63.80%
67.50%
70.00%
63.1%
60.00%
57.4%
56.7%
53.1%
49.6%
50.00%
60.00%
56.9%
55.3%
53.6%
48.2%
48.2%
45.5%
40.00%
50.00%
40.00%
35.9%
30.00%
30.00%
20.00%
20.00%
10.00%
10.00%
0.00%
0.00%
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2010 RR Donnelley SEC Hot Topics
c.
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Source: Institutional
Shareholder Services (ISS)
14
Shareholder Proposal: Independent Board Chair
80
As of August, 2010
80.00%
70
70.00%
60
60.00%
50
40
50.00%
Number of Proposals
Average Support
30
40.00%
20
30.00%
10
0
20.00%
2007
2008
2009
2010 RR Donnelley SEC Hot Topics
2010
Source: Institutional
Shareholder Services (ISS)
15
Independent Chairman of the Board (S&P 500)
90
85
80
74
70
66
60
57
50
47
43
40
32
30
20
10
0
2004
2005
2006
2007
2008
2010 RR Donnelley SEC Hot Topics
2009
2010
Source: The
Corporate
Library
16
Shareholder Proposal: Eliminate Supermajority Provision
80
As of August, 2010
80.00%
75.00%
70
70.00%
60
65.00%
50
60.00%
40
55.00%
Number of Proposals
Average Support
50.00%
30
45.00%
20
40.00%
10
35.00%
0
30.00%
2007
2008
2009
2010 RR Donnelley SEC Hot Topics
2010
Source: Institutional
Shareholder Services (ISS)
17
Shareholder Profile Example
Shareholder Profile
26,524,765 Shares Outstanding
Share Holdings
% of O/S
Officers & Directors
490,421
1.8%
Registered Retail
449,844
1.7%
"Street" Retail
12,455,379
47.0%
# 1 Institutional Holder
1,968,405
7.4%
# 2 Institutional Holder
1,847,736
7.0%
# 3 Institutional Holder
1,274,000
4.8%
# 4 Institutional Holder
810,491
3.1%
Shareholder Category
# 5 Institutional Holder
800,000
3.0%
Hedge Funds & Proprietary Trading Desks
3,345,802
12.6%
Remaining Institutional Investors
3,082,687
11.6%
26,524,765
100.0%
Total:
"Street" Retail
46.96%
Registered Retail
1.70%
Officers &
Directors
1.85%
Remaining
Institutional
Investors
11.62%
Hedge Funds &
Proprietary
Trading Desks
12.61%
2010 RR Donnelley SEC Hot Topics
# 5 Institutional
Holder
3.02%
# 3 Institutional
Holder
4.80%
# 4 Institutional
Holder
3.06%
# 1 Institutional
Holder
7.42%
# 2 Institutional
Holder
6.97%
18