And Offer Some Practical Tips On Things To Do And What To Watch Out For As You Shop The Marketplace…
Abandoned Property Experts: Call it “abandoned”…or “unclaimed property”, or property of “lost shareholders”… or whatever you will; The fact is, as we’ve been warning our readers for years, if you have a file called by any of these names, you might as well re-label it with a big “STEAL ME” sign, ‘cause that’s what’ll happen, we guarantee, after watching more such scams unfold, year after year, than you’ll ever know.
Last year, for example, a Fortune-50 company hired an “expert” on the strength of a pitch letter, and a quick scan of his website, that cited “over 100 years of experience”…only to learn shortly thereafter that the “finder” had run off with all the money himself! Talk about a career-breaker! Yikes!
That’s not to say you should hunker down and do nothing. Quite the contrary; As the UPRR article in this issue makes clear, doing nothing can expose you to audits, fines, penalties…and lawsuits, not to mention your continued vulnerability to thieves and “masqueraders” who are often your own fellow employees. “After all”, they rationalize, “it was abandoned, so why let it just sit there when I could use it?”
As if this isn’t enough already, the publicity surrounding the Taylor v. Westly case is suddenly bringing a large number of people out of the woodwork who lived and/or worked in California – or elsewhere – and who are asking, “Didn’t I have XYZ or PDQ stock? And did I maybe lose track of it?” And sometimes they DID.
So make sure you do tackle this issue – but that you know who and what you’re dealing with, we warn yet again…And make sure they ARE really “experts”. And the best – and the safest thing to do, by far, is to FIND the lost people – or their legitimate heirs – and give them what they are rightfully due.
Data Security – Safety, Sanity Testing and Red-Flag Programs: WE think this is one of the HOTTEST TOPICS OF ALL for publicly traded companies – and for their key suppliers too. A failure to have proper safeguards in place is something that can, quite literally, BURN YOU TO DEATH, as readers will learn in our next issue. (We wrote extensively on this - and about what key vendors about - in 2005, and again in our 3rd Quarter ’08 issue. If you’d like to see copies of the articles, email the editor, cthagberg@aol.com)
Director Communications Tools:
As we’ve all been noting over the past few years, Directors have been having more and longer meetings than ever before. And lately - no surprise – the numbers are increasing faster than ever. And lately – no surprise here either - Directors have been asking for much more information than ever before - and demanding that it arrives faster than ever.
So one would think that those automated “Board Book Systems” would be growing like Topsy – and that increasingly, even the stodgiest old-school Directors would be looking for online delivery of materials - if only to have their A-As print them out and hand them over - to get a jump on the paper packages.
But no…this doesn’t seem to be the case at all, even though WE, the eternal optimists, believe that a simple, welldesigned product – with low-key but impeccable tech-support – would prove to be a major Career-Maker for the Corporate Secretary and/or Governance Officer who delivered the goods.
Is the potential Career-Breaking aspect of offering something that Directors would consider a too-complex offering - or a weak and wimpy offering – the problem here? Are the many vendors simply “selling what they have” instead of what Directors really need? Are corporate citizens concerned that the overcrowded space, and the rather confusing array of offerings, presents too big a risk that the vendor they choose might fold? A real career-breaker, that! Tune in again next year for an update on this “theoretically hot product.” And readers if any of you have had an exceptionally good experience here, please let us know.
Employee Stock Plan Agents:
A few months ago we attended a NASPP session where the moderator asked, “How many people in the room are fairly well satisfied with the kind of 423-b Plan services that you, or your suppliers are providing for Employee Stock Ownership Plans?” Not one hand went up. “How many of you are dissatisfied to extremely dissatisfied?” she asked. About 250 hands went up.
Wow! Sad to say, this is pretty representative of the current state of satisfaction with Stock Plan services – whether one uses an outside vendor, or does all or most of the work in-house! We always say it’s partly because “you’re dealing with all the wrong people.” Employee owners DO feel a sense of entitlement to good service…and gripe like mad at perceived shortcomings… even when a lot of the “problems” are due to their own oversights, and/or to their own general lack of understanding of the way the Plans are meant to work.
Another big problem is that it’s only natural for issuers to want to concentrate ALL their Stock Plan activities in one place. But sad to say, there’s no single vendor out there that WE know of who’s good at all of the fast growing Plan varieties, wrinkles and complex, customized bells and whistles that gum things up the most.
And most vendors have failed – quite seriously – to either tell the client “No…we can’t keep doing one-off deals that our automated systems are not geared to handle” (the industry even has its own name for this; “workarounds”) - or to make the investments that are needed to handle oddball plan provisions in a safe and sound manner. Sad to say, we don’t see a good solution to this in sight anytime soon. So “shop before you drop” we say…and go the “single-vendor route” at your own peril.
And while we’re on the subject of Employee-Owners - who, after all, really DO deserve red-carpet treatment from us - and whose proxy votes can be critically important to achieving one’s corporate objectives - please don’t fail to read the article from Ellen Philip Associates on Employee-Plan voting… with lots of practical tips on how to handle it with the punctilious attention to the fine details that should be “givens”.
Financial Printers: We were deeply disappointed that so many printers from our usual circle of advertisers in this rather beleaguered industry decided to pull back their advertising this year…AT THE VERY TIME THE PRINTED WORD IS MORE IMPORTANT THAN EVER TO PUBLIC COMPANIES, we say!
We’re all in favor of Notice and Access – and of NOT pushing paper to people who say they don’t want to have it, whether by officially registering this preference with you – or of “registering their preference” with their behaviors – like not voting their proxy two years in a row, let’s say. We’re OK too with pushing paper to investors as a plain-paper 10-k or with a plain-vanilla “wrap”…IF there is nothing terribly important on your annual agenda, that is.
But if your company really needs to “tell its story” in a way that will maximize the chance that people will actually listen – and come away with the facts and figures you think they really need to have about your company – and maybe about the way you’d like them to vote too – there is absolutely NOTHING that will do so as effectively as a well-written, well-designed and well-printed “package” of information.
Law Firms: Astoundingly, law firms seem to be consolidating, restructuring and simply going out of business even faster that financial printers and transfer agents these days. And the bigger and more famous they are, the more likely they seem to be to run into trouble as ‘deal books’ dwindle and public companies look to pare down the big expenses that tend to come with big and famous outside law firms.
We know from long experience that having a long-term partnership with one or two really good law firms can and should be a huge time-saver…and a huge money-save too, all things considered. But with so many big firms folding – and with so many of the survivors slimming down and/or narrowing their focus – and with so many of the survivors willing to work harder than ever - and with a keener eye than ever on costs - to win your business, it really makes sense to shop the field. A great place to start – and something that will repay your subscription to the Optimizer many times over – read the article on “Bidding Out Your Legal Work” (it’s on our website, www.optimizeronline.com)
Memberships: Of all the tools a corporate citizen needs to have in his or her toolkit in order to succeed, memberships in the right industry organizations rank at the very top of the list.
Please read the letters in this issue from the Society of Corporate Secretaries and Governance Professionals – and from the SSA. And if you do not have a member from your company, take our advice and sign someone up in both of these organizations at once.
We guarantee that you’ll earn your full membership back in one quick swoop – the first time you take one of their courses – or tune in, or better, attend a meeting in person, where you will NEVER leave without learning something really valuable – or if you call on a fellow member for information – or pick up a moneysaving practical tip. Btw, another membership that’s really a must if you are involved in Employee Stock Plan administration is the NASPP.
Proxy “Distribution Agents” and Voting Agents: The SEC requirement that every single public company will have to post their Annual meeting materials on the web this year has turned
this into a HOT ISSUE, even before one starts to ask about Notice and Access, and what kind of distribution strategies will work for you…instead of delivering an unpleasant surprise instead.
As we’ve been reporting in the Optimizer, many “distributors” or “convertors” of printed proxy materials that are being hired to produce online materials are doing a horrendously bad job of posting readily searchable and readerfriendly materials…and doing so in a cost-effective and timely manner.
While the better transfer agents are well prepared, some of the others are simply not geared to posting all the necessary materials in a first-class manner for all their corporate clients - although, as usual, the “squeaky wheels” will usually get greased. But sometimes, please note, it’s the issuers themselves who fail to “deliver the goods” to their data-conversion agents and/or their proxy voting agents in a timely and proper manner.
So readers, we urge you to bone up on all the many articles in this issue that deal with the new SEC rules - and with N&A - and with the fine points of creating and converting documents – to make sure that YOUR agents, and your in-house people too, are adequately prepared for the 2009 proxy season…as all our authors and advertisers clearly are, by the way.
Proxy Solicitors and Advisors: A few years ago, we predicted that old-time proxy solicitation was essentially a dying industry. Most shares were held by institutional holders who HAD TO VOTE – and most of them HATED being “solicited” or being otherwise pestered, nagged or cajoled by old-time ‘proxychasers’. And individual investors – who typically hold an immaterial number of shares at most big companies – were hardly worth the chasing anymore. And in any event, they HATE being chased-down as much as the big voters do. And to top it all off, it seemed to us then that “check the box governance issues” that made up most of the shareholder proposals back then had basically run their course.
Did we ever imagine, in our wildest dreams, that proxy solicitors and advisors would become a HOT TOPIC?
We’d like to say yes…because we did indeed point out that it was the “oldtime proxy-chasing business” that was dying…even while the need for strategic and tactical advice, and for hard information about the potential swing voters - and for people who understood the “mechanics” of proxy voting systems – and more importantly, for people who could look around the corners, and think outside the box - was growing. But even we, we must confess, are amazed about how complex the proxy voting arena has become. And who ever could have envisioned the financial and governance catastrophe we’re witnessing as the 2009 proxy season begins?
Three or four years ago, only 20% or so of the 8,000 or so companies that had an annual meeting hired a proxy solicitor. And most of THEM did so mainly to stay in “fighting trim”: Most of them didn’t have a management proposal – or a shareholder proposal – that was even slightly controversial. Well those days are surely gone: The HOTTEST TICKET in today’s marketplace, we think, is a “guaranteed good seat” with a really good proxy solicitation firm.
Subsidiary Management Systems: Who ever would have thought that THIS would become a HOT TOPIC? Well, thanks to the waves of M&A activity that public companies have engaged in over the past few years – and thanks to SOX – and thanks too to the fact that more and more companies now have operating entities all around the globe – and thanks especially to the fact that NO company can be caught “unprepared” in this day and age, it IS. And, as you’ll learn in this issue, managing your subsidiary records in a highly systematic way – with good, and proven systems (and, fair warning, there’s a lot of vaporware out there at some of the newcomers to this space) - and with a focus on cost effectiveness – can save you some mighty big bucks besides.
Transfer Agents: As we near our press-time, the word on the street is that one of the world’s biggest transfer agents is all set to sell to another of the world’s biggest agents…And apparently, in a move we expect will backfire on them big-time, they’re looking to “run the clock down” to a point where customers will be over a barrel time-wise, and will have to stay on whether they want to or not.
If the news breaks before our mailing date, we’ll try to insert a bulletin with our “quick take” on it. But in any event, we will plan to analyze the state of the industry, and what it means to public companies going forward, in our 4th Quarter issue of the Optimizer.
Meanwhile, we are very pleased to have VERY STRONG STATEMENTS from most of the strongest transfer agents – that seem to us to provide a lot of insight into what makes them different from one another, what their respective strengths really are – and that will help to steer you in the right direction if, like so many companies each year, you decide you MUST shop around for a new agent. (P.S. We also have an excellent checklist of ‘shopping tips’ on our website).
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