Nearly 75 percent of approximately 350 board members polled during the NACD conference expected increased shareholder communications to be mandated. Both Senator Barack Obama and John McCain have voiced some level of support for say on pay legislation and if Obama is elected, some expect a comprehensive shareholder bill of rights in the first 100 days of an Obama administration.

“Investors are angry. And when they’re angry, they sue somebody,” said Michael Smith, president of AIG Executive Liability. He also noted that institutional investor lawsuits will take longer to resolve and are not often settled out of court.

Where do we go from here? How do we adjust our approach, because the government is in fact, as of last week, a significant shareholder in nine very large corporations,” said Charles Elson, chair of the corporate governance program at the University of Delaware, who also serves on the HealthSouth and AutoZone boards, told FinancialWeek.

Despite the agreement among most board members to open up communication lines between boards and shareholders, many still think there should be limitations. One month limits geared to shareholders with primarily larger shareholder with big blocks of shares. “Wealth has its privileges,” said Peggy Foran, general counsel at Sara Lee Corporation, to FW.

The NACD principles stated that boards should reach out to “large, long-term shareholders” about governance issues and long-term strategy, and that these communications should involve at least one independent director, preferably the lead director, in addition to the CEO.

During the presidential debate in Tennessee on Tuesday, both candidates, Senators John McCain and Barack Obama, were asked who they would appoint since Henry Paulson said he would not be staying another term.

McCain toted that the individual assigned the job would have to be trusted by the American people. “Buffett has already weighed in and helped stabilize some of the difficulties in the markets and with companies and corporations, institutions today,” said McCain.

Obama said, “Warren would be a pretty good choice—Warren Buffet, and I’m pleased to have his support,” he said. “But there are other folks out there.” He did not proceed to mention any other potential candidates he’s pursue.

Peter J. Solomon, the chairman of a boutique investment banking advisory firm sent a public letter on Tuesday, suggesting that rather than putting Neel Kashkari in charge of the government’s $700 billion bailout fund, that Buffett might be a better person for the task.

However, at age 75, and with one of the largest companies in America to run, the likelihood that Buffett would take on the job is more than unlikely. Buffett already plays an advisory role to not only the current, but to former U.S. presidents.

In a recent interview with Directorship, Alice Schroeder, author of Snowball: Warren Buffett and the Business of Life, said that Buffett wields significant sway over world economic matters. “He is so influential–politicians and leaders from all over the world consult with him,” she says. “Behind the scenes he has an incredible amount of influence on what happens in this country and around the world. You may not hear about it in the headlines, but it is very real.”

With all the talk of Buffett’s new possible role, when asked if he’d actually take the job—he just smiled, according to NYT.

It’s likely that broader measures also will emerge from the regulatory gale that swept through in the wake of the historic financial market interventions that began in September. While it’s too early to predict exact changes, it seems clear that companies and boards should brace for a new era of government oversight and scrutiny. Likely areas include stronger rules for the ratings agencies, tougher accounting standards in order to expose excessive debt, beefed-up oversight for risk takers in the financial markets, and perhaps even new rules for executive compensation.

New rules for compensation consultants are high on the list for Democrats, as is even more disclosure on total pay packages. A full-blown shareholder bill of rights is also a possibility.

No matter who wins, investors now have a better chance of prevailing on several signature issues they’ve been battling for on the governance front. Executive pay will be in the gun sights of politicians from both parties. Giving shareholders an advisory vote on compensation already has been endorsed by both presidential candidates, and Barack Obama was a sponsor of the Senate bill on the subject.

Senator John McCain actually topped his rival by suggesting such a vote should be mandatory when he first spoke out on the topic in the early summer. He hasn’t repeated that strong language, so it may have been mostly campaign rhetoric, but he would be hard-pressed to not go along with a law requiring companies to hold advisory votes. “McCain may not want to pick a fight on an issue he said in the popular press he’s in favor of,” says Patrick McGurn, special counsel at RiskMetrics.

The real question is whether a Congress that looks likely to remain in Democratic hands will ram through even stronger pay control measures. If Obama takes over, he may well pursue the sweeping bill that Hillary Clinton introduced in April that would put a $1-million cap on deferred compensation, include stock options backdating in clawback provisions and extend their length, and expand pay rules to cover more corporate executives. New rules for compensation consultants are high on the list for Democrats, as is even more disclosure on total pay packages. A full-blown shareholder bill of rights is also a possibility.

An Obama victory would also usher in a party switch at the Securities and Exchange Commission, likely leading to reversals on many of the issues that Chairman Christopher Cox has held in check. That scenario would open the door to shareholder proxy access, a bitterly fought battle over the past few years. A Democratic controlled SEC also would be likely to go along with new rules restricting broker votes in those elections, which would deprive the management slate of a built-in block of support. “If there’s a blue state sweep, it will be like Christmas for us,” says Richard Ferlauto, corporate governance director at the American Federation of State, County, & Municipal Employees (AFSCME).

Of course, a McCain administration would undoubtedly soften any law that might come out of Congress. Still, major changes are in the offing for next year, no matter who’s in power.

Allison and Moffett, according to The Wall Street Journal, are being handed the task of restoring the credibility and financial strength of the troubled mortgage groups and both have long careers in financial services, but have never led major organizations through periods of extensive turmoil. Nor have the two executives led mortgage companies — a gap, the WSJ suggests, perhaps but one that also helps distance them from the industry’s recent woes.

Allison, 65 years old, who becomes chief executive of Fannie Mae, spent most of his career at Merrill Lynch & Co. He later served five years as head of TIAA-CREF.Moffett, 56, who becomes chief executive of Freddie Mac, comes from banking, where he worked since 1993 as a top deputy to former U.S. Bancorp chief Jerry Grundhofer.

Moffett stepped down as U.S. Bancorp finance chief and vice chairman last year.

Without any current, direct ties to the mortgage business, Allison and Moffett can devote their time to figuring out “how can we get out of this hole,” rather than defending past mistakes, Robert S. “Steve” Miller, a corporate turnaround specialist told the WSJ.Allison declined to comment, except to say: “It is going to be a 24/7 thing for me from here on in.” Moffett has not commented.

Allison was named president of Merrill Lynch in 1998 and resigned a year later after overseeing extensive layoffs. Allison also cut TIAA-CREF’s workforce by eight percent. His cutbacks were nicknamed “Herbicides” after firing 500 employees.

Roger Ailes, Fox News

Sharon Allen, Deloitte & Touche

Herbert M. Allison Jr., Director

Gavin Anderson, GMI

Philip A. Armstrong, GCGF

Norman R. Augustine, Director

Stephen Bainbridge, UCLA

Maria Bartiromo, CNBC

David Batchelder, Relational Investors

Lucian A. Bebchuk, Harvard Law

Irv Becker, Hay Group

Beverly Behan, Hay Group

Richard Bennett, The Corporate Library

Robert S. Bennett, Skadden Arps

Dennis R. Beresford, U. of Georgia

Ethan Berman, RiskMetrics Group

Ben Bernanke, The Federal Reserve

John Biggs, Director

Leon Black, Apollo

Lloyd C. Blankfein, Goldman Sachs

Richard Blumenthal, State of Conn.

Magnus Bocker, Nasdaq OMX

John C. Bogle, Hall of Fame

Richard Breeden, Breeden Partners

Catherine L. Bromilow, PwC

Beth A. Brooke, E&Y

Warren Buffett, Berkshire Hathaway

Peter Butler, Governance for Owners

Marshall Carter, NYSE Euronext

Martha Carter, RiskMetrics Group

John J. Castellani, Business Roundtable

William B. Chandler III, Chancery Court

Ram Charan, Charan Associates

Peter Clapman, Governance for Owners

John C. Coffee, Columbia Law School

Frederic W. Cook, Frederic W. Cook & Co.

J. Michael Cook, Director

Christopher Cox, SEC

Jim Cramer, TheStreet.com

Andrew Cuomo, State of New York

Kenneth Daly, NACD

Julie Hembrock Daum, Spencer Stuart

George L. Davis, Egon Zehnder Intl.

Stephen M. Davis, Millstein Center

James L. Dimon, JPMorgan

Samuel A. DiPiazza, Jr., PwC

Christopher Dodd, U.S. Senate

Amy Domini, Domini Social Investments

William H. Donaldson, Hall of Fame

Thomas J. Donohue, Chamber of Commerce

Ed Durkin, United Brotherhood of Carpenters

Theodore L. Dysart, Heidrick & Struggles

Jay Eisenhofer, Grant & Eisenhofer

Charles Elson, U. of Delaware

John Engler, NAM

Richard Ferlauto, AFSCME

Timothy Flynn, KPMG

Margaret “Peggy” Foran, Sara Lee

Cynthia M. Fornelli, CAQ

Barney Frank, U.S. Congress

William F. Galvin, State of Mass.

William W. George, Harvard Business School

Kayla Gillan, RiskMetrics Group

Robert J. Giuffra, Jr., Sullivan & Cromwell

Scott Goebel, Fidelity

Holly Gregory, Weil, Gotshal & Manges

Robert Greifeld, Nasdaq OMX

Joseph Grundfest, Stanford Law School

Steven Hall, Steven Hall & Partners

Robert Hallagan, Korn/Ferry Intl.

Laurence P. Hazell, Standard & Poor’s

Edward Herlihy, Wachtell Lipton

Robert Herz, FASB

John A. Hill, Putnam

Paul Hodgson, The Corporate Library

Christopher Hohn, TCI

Michele J. Hooper, Director

Anthony J. Horan, JP Morgan

Carl Icahn, Icahn Investments

Ray R. Irani, Occidental Petroleum

Edward Kangas, Director

Adam Kanzer, Domini Social Investments

Henry Keizer, KPMG

Donald Keough, Director

Joe Kernen, CNBC

Richard Ketchum, FINRA

Charles King, Korn/Ferry Intl.

Catherine Kinney, NYSE Euronext

Jannice L. Koors, Pearl Meyer & Partners

Richard H. Koppes, Jones Day

Henry Kravis, KKR

Frederick J. Krebs, ACC

John A. Krol, Director

Robert Kueppers, Deloitte & Touche

Arthur Levitt, Hall of Fame

Martin Lipton, Wachtell Lipton

Jay W. Lorsch, Harvard Business School

Joann Lublin, Wall Street Journal

Steve Mader, Korn/Ferry Intl.

Ken Marzion, CalPERS

Mary Pat McCarthy, KPMG

Bill McCollum, State of Florida

Robert McCormick, Glass Lewis

Blythe J. McGarvie, Director

William McGuinness, Fried Frank

Patrick McGurn, RiskMetrics Group

W. James McNerney, Jr. Boeing

James P. Melican, PGI

Pearl Meyer, Steven Hall & Partners

Bill Miller, Legg Mason

Ira Millstein, Hall of Fame

Nell Minow, The Corporate Library

Robert A.G. Monks, author, Corpocracy

Peter Montagnon, ABI

Gretchen Morgenson, New York Times

Anne Mulcahy, Xerox

Anne Mule, Sunoco

Rupert Murdoch, News Corp.

Alan Murray, Wall Street Journal

Jim Naughton, Corporate Governance Blog

Thomas Neff, Spencer Stuart

Duncan Niederauer, NYSE Euronext

Joseph Nocera, New York Times

Floyd Norris, New York Times

Mark Olson, PCAOB

James Owens, Caterpillar

Michael Oxley, Hall of Fame

William Patterson, CtW

Henry M. Paulson, Jr. U.S. Treasury

Harry Pearce, Director

Harvey L. Pitt, Kalorama Partners

Becky Quick, CNBC

Carl Quintanilla, CNBC

David Rubenstein, Carlyle Group

Paul Sarbanes, Hall of Fame

Charles E. Schumer, U.S. Senate

Stephen A. Schwarzman, Blackstone

Mary Shapiro, FINRA

Damon Silvers, AFL-CIO

David W. Smith, SCSGP

Michael Smith, AIG

Jeffrey A. Sonnenfeld, Yale School of Management

Larry W. Sonsini, Wilson Sonsini

Andrew Ross Sorkin, New York Times

Myron T. Steele, Delaware Supreme Court

Leo E. Strine, Chancery Court

David N. Swinford, Pearl Meyer & Partners

John Thain, Merrill Lynch

Andrew Tuch, Corporate Governance Blog

James S. Turley, E&Y

E. Norman Veasey, Weil Gotshal & Manges

Stephen Wagner, Deloitte & Touche

Carol Ward, Kraft Foods

Henry Waxman, U.S. Congress

Ralph Whitworth, Relational Investors

John Wilcox, TIAA-CREF

Note: More than 100 individuals are named because some listings contain more than one person at the same company or in the same industry.

For the complete 2008 Directorship 100 article, click HERE.

With presidential campaigns in full swing, Obama and McCain have voiced their dissatisfaction with hefty CEO pay packages. Obama’s Shareholder Vote on Executive Compensation has passed in the House and would likely become law should the Illinois Senator win the election.

Just where McCain stands on say on pay, however,  is still unclear. In June, he told BusinessWeek: “All aspects of a CEO’s pay, including any severance agreements, must be approved by shareholders.” That would seem to set an even higher standard than the non-binding advisory vote that Obama’s bill calls for. But despite repeated calls, Rogers would not clarify whether McCain will implement any type of regulatory actions to give shareholders voting rights on executive compensation.

Peter Gleason, CFO and managing director of research for the National Association of Corporate Directors (NACD), says while it is understandable that shareholders are disgruntled at some executive compensation packages, CEO talent is a valuable commodity. “Compensation is so complex, it needs to be understood that acquiring talent, retaining it, and motivating it is necessary,” says Gleason.

For now, Obama has clarified his support of say on pay, which many corporate directors oppose. McCain has yet to confirm whether he intends to support Obama’s bill, propose a bill of his own, or oppose legislative action on the issue.

McCain recently denounced those CEOs who have left troubled companies with substantial pay packages, telling Businessweek: “All aspects of a CEO’s pay, including any severance agreements, must be approved by shareholders.” Whether McCain will support Obama’s bill remains to be seen, but what is clear is that both candidates favor shareholder voting rights.

While most corporations would prefer to keep the government out of such business practices, legislation appears liklier. Last summer’s credit-crisis resulted in increased scrutiny over say on pay. Shareholder activists increasingly want CEOs to be held accountable for their performances and be compensated accordingly.

McCain has said action needs to be taken, but so far has not yet committed to supporting Obama’s bill.

Some of McCain’s critics believe his recent support of say on pay is merely an attempt to avoid the image of being a candidate for Corporate America.

Greg Valliere, a chief strategist at Stanford Washington Research Group, which tracks politics for investors, believes McCain could be hurting himself in the long-run. Valliere told BW, “It’s a tightrope he has to walk. He runs the risk of antagonizing the base, and in particular, his contributors.”

]]> http://www.directorship.com/presidential-candidates-back-say-on-pay/feed/ 0 http://www.directorship.com/would-you-hire-a-ceo-as-old-as-mccain/ http://www.directorship.com/would-you-hire-a-ceo-as-old-as-mccain/#comments Thu, 01 Jan 1970 00:00:00 +0000 Joseph McCafferty http://www.directorship.com/?p=2371 Executive recruiter CTPartners surveyed its clients and found more than half would hire a qualified 72-year-old CEO. That’s the age Republican presidential nominee John McCain will be if elected in November.

McCain would also become the oldest candidate elected president. Ronald Reagan was 69 when first elected in 1980 and 73 when re-elected to the nation’s highest office.

According to CT Partners’ survey of 158 senior executives, 53 percent say they would hire a qualified 72-year-old CEO; 47 percent said they would not.

The split, said CTPartners’ Chairman and CEO Brian Sullivan, reflects the uncertainty of hiring older CEOs, especially for what arguably is one of the toughest jobs in the world.

“Companies recognize that an older CEO might bring valuable experience to help guide them, especially through a tense economic environment. But companies also want to invest in CEOs who will contribute over the long term,” he said.

Sullivan added that companies must weigh qualifications against corporate priorities.

“There is no substitute for experience, the more the better,” Sullivan said in an email.  “The only way to get 20 years experience is by spending the time, which gives one the vision and confidence to realize that both good and bad times come and go.  As a CEO’s role is to protect and grow assets, it is this experience that helps them know how and when to do these different strategies.”

Presidential candidate Barack Obama ratcheted up his support for Say on Pay and called on Congress to pass legislation he has co-sponsored that would give shareholders a non-binding vote on executive compensation. 

The legislation would not permit shareholders to veto a compensation package offered to an executive, nor would it put caps on how much individual executives could make. “This isn’t just about expressing outrage,” Obama said last week in prepared remarks. “It is about changing a system where bad behavior is rewarded so that we can hold CEOs accountable, and make sure they’re acting in a way that’s good for their company, good for our economy, and good for America, not just good for themselves.”

Fellow Democratic presidential hopeful Hillary Clinton also supports Say-on-Pay legislation. Shareholders have submitted nearly 80 Say-on-Pay proposals to companies so far during this year’s annual meetings, according to RiskMetrics. Legislation to adopt it universally, similar to a law that has been passed in the United Kingdom, is generally opposed by business groups. The debate over such proxy proposals and potential litigation is beginning to get more fierce.

“It is about changing a system where bad behavior is rewarded so that wecan hold CEOs accountable, and make sure they’re acting in a way that’sgood for their company, good for our economy, and good for America, notjust good for themselves.” –Barack Obama

While likely Republican nominee, John McCain hasn’t taken a stance on the Say-on-Pay legislation, he too has peppered some of his stump speeches with warnings about “corporate greed” and outsized executive compensation. McCain’s senior policy adviser, Douglas Holtz-Eakin, recently told the Wall Street Journal’s JoAnn Lublin that the Senator believes the private sector needs to take steps to “end the cozy relationships that surround these pay packages. McCain offered the idea of splitting the chairman and CEO job as one way to accomplish that.

Roughly five companies, including Aflac and Verizon, have adopted Say on Pay into their bylaws after shareholders passed proxy proposals calling for the non-binding resolution.