Editor: What is the state of the Society in today's tough economic environment?
Smith: The Society continues to be healthy. Although our numbers are down a bit right now, we have the majority of our renewals coming up in April. We will have a better fix on our numbers by the time of our National Conference in June.
There is no doubt that the tough economic environment is having a financial impact on organizations generally. Some companies are asking people in their legal and corporate secretary's departments to focus in on one membership where they now have multiple memberships - for example, if they're members of ABA, ACC and the National Investor Relations Institute (NIRI), they are being asked to select one membership.
We feel that we provide the best value and anticipate that people, given that dilemma, will select the Society. The $545 (or $395 for additional members from an issuer's company) in annual dues is offset many times over by savings to the company. For example, one call to the national office or to a fellow member to get an answer to a question or to do benchmarking pays for itself in savings of outside counsel expense. These savings are particularly worthwhile in the tough times we are currently facing.
We're reaching out in other ways to help our members during these difficult times. If a member loses his or her job and is looking for a job, we waive dues for one year. We also have a job bank, which helps to place our members in companies looking for corporate secretary talent.
This year we established a new chapter in Mexico City - our first international chapter. It has about 25 members. Dennis Codon, one of our panelists at the Conference, is our liaison with that chapter. It's newsworthy because, while we have members from about 18 foreign countries, this is our first international chapter. We have always been international in the sense that we have a member or two from South Africa, a couple from Israel, some from the UK and quite a few from Canada, but they are not members of independent chapters like the new chapter in Mexico City. I am sure that more international chapters will follow. We can't help but be swept up in the current wave of globalization.
Editor: The Society's upcoming National Conference is coming at time when corporations are facing challenging issues. How are they being addressed at the Conference?
Smith: Appropriately enough, the theme for the 2009 National Conference, which is our 63rd, is "Governance Matters in Challenging Times." The Conference this year will be in San Diego from June 24th to June 28th at the Del Coronado Hotel. While it's a beautiful setting, we are always all business at our National Conferences.
We have a pre-Conference program on Wednesday, June 24, which includes an opportunity to get CLE credit at an ethics workshop conducted by Professor David McGowan from the San Diego University School of Law. The pre-Conference program is free to all attendees.
We open the Conference on Thursday with a business program that continues through to noon on Saturday. We have stand-alone speakers, panels, breakout sessions, committee meetings and a board meeting. Although we can look out the window and see the beautiful Pacific, we will be working very hard.
Editor: On Thursday, the Conference will be kicked off with a number of exciting events. Please tell us about them.
Smith: We will start with a dynamic speech by Matthew Fong that will immediately get us into the Conference's theme. Having served as California State Treasurer, Matthew will share with us insights into the governance of huge pension funds, which he gained as a result of his oversight role with respect to CalPERS and CalSTRS. Matthew is currently of counsel with Sheppard, Mullin, Richter & Hampton LLP.
Then we will follow up with something that is important to all of us, and that's the subject of a panel titled Economic Recovery Legislation, which is being chaired by Frank Zarb, Jr. We are very pleased that John White, the former director of corporation finance at the SEC, is going to be on that panel. He is currently with Cravath, Swaine & Moore L.L.P.
Then we have another very interesting panel titled Stockholder Engagement . It's a very current issue. Pfizer's board recently met with major investors. While it's not yet quite a trend, there has been considerable conversation about whether, when and how directors should meet face to face with shareholders. Doug Chia of Johnson & Johnson is the moderator. Also on that panel are Ed Durkin from the Carpenters Union and Cary Klafter, one of the leaders of the Society. Cary is Vice President, Legal and Corporate Affairs; and Corporate Secretary, Intel Corporation.
This is followed by a panel which is titled General Litigation Advice for the Corporate Secretary , which is being moderated by Dennis Codon, whom I mentioned earlier.
After these sessions we split off into breakout groups to spur interaction and exchange of views on a more personal basis. Because we are giving greater attention to the issues affecting our small and mid-cap companies, a breakout group titled Small and Mid-Cap Companies - Current Concerns will focus on their needs. The greatest concern of these companies is with Sarbanes-Oxley and the costs and complexities of compliance. Most have issues with such provisions as those relating to the independence of board members and compliance with Section 404. This breakout session is run by Karl Barnickol. Karl spent many years as corporate secretary of Monsanto and, when they did the spinoff of Solutia, he became its executive vice president, general counsel and secretary. We're delighted that Karl, a former chairman of the Society and the former chair of its securities law committee, is continuing to be one of the Society's leaders.
Because our members from small and mid-cap companies must work with fewer resources, less ability to travel and less likelihood of being able to attend chapter meetings because of limited budgets, we have created a committee to address their needs which meets quarterly by phone to concentrate on their concerns and engage in benchmarking.
Another breakout group is devoted to the timely subject of Using Corporate Websites for Disclosure where the participants will be able to explore with one another the many issues raised as more people turn to the web as their principal source of information. We also have a breakout session that deals with Subsidiary Management , another subject of great importance to our members. That session is led by Ken Wagner, a member of the Board of the Society. Ken was with Bank of America and is now with Peabody Energy in St. Louis.
The final breakout deals with a subject that is always important - but is particularly important in the current tough environment. It is titled Enhancing Your Value . To share the secrets of success, that session will be led by a group of corporate secretaries selected from among the Society's leaders.
Editor: I understand the Friday session also focuses on some core issues.
Smith: On Friday morning, we open with a panel called Stockholder Communications, and in that panel we're going to talk about the most important issues faced by issuers such as Say-on-Pay, Rule 452 (the broker vote), standards for proxy advisors, proxy access (including the recent Delaware legislation), the NOBO-OBO scheme, naked voting and over-voting.
Say-on-pay is particularly important because it is something the 400 TARP companies have to provide. We are part of the Shareholder Communications Coalition, which also includes the Business Roundtable, National Association of Corporate Directors, Securities Transfer Association and NIRI. The Coalition has taken the position that when you look at the proxy system that exists you have to deal with the whole system - you shouldn't just focus on Rule 452 without addressing all these other issues. The Society has written to the SEC and Barney Frank to point out the need for this kind of holistic approach and has met with SEC Commissioners to press this agenda. Representative Frank spoke recently at our New England chapter meeting in Boston, where I had the opportunity to stress this point to him in person.
Another important topic for a plenary session on Friday is titled Risk Management Compliance and the Board . Enterprise risk management is a major issue for directors. This panel will stress the concern that shareholders have about the need for boards to focus on the total risk picture and not just on the individual components. By addressing this at our Conference, we expect that the attendees will be better prepared to bring back this message to their CEOs and boards of directors. The relationship that corporate secretaries have with their boards and CEOs makes them effective communicators of important messages like this. That's our great strength.
On Friday afternoon we will present a panel titled Delaware Update that will discuss the recent amendments to the Delaware General Corporation Law that authorize companies to adopt bylaws that will permit nominations of directors by shareholders. This should be of great interest since most of our members' companies are incorporated in Delaware. The Delaware panel is being moderated by Neila Radin of JPMorgan Chase. Neila is a director of the Society and head of our securities law committee.
Next on Friday afternoon will be a panel discussing The Latest in Indemnification Practices and D&O Insurance . It's being moderated by Amy Goodman. Amy was at the SEC for 11 years in a number of high level positions and is now at Gibson, Dunn & Crutcher LLP.
Editor: Tell us about the breakout sessions on Friday afternoon.
Smith: That afternoon we have scheduled a continuation of Thursday's breakout session on the current concerns of small and mid-cap companies. Another breakout session will focus on the Basics of Crisis Management . Len Biegel will lead the session. The author of Never Say Never: The Complete Executive Guide to Crisis Management, he is an experienced expert in crisis management having played a key role in the Tylenol product tampering cases and other crises ranging from environmental to product safety. We will have a bread-and-butter breakout session on Corporate Minutes . Recent cases in Delaware have stressed the importance of process in determining whether directors discharged their duty of care. Just how the minutes should reflect that will be one of the topics discussed. Not only will taking minutes be the focus of that breakout session, but you can also find a very detailed tutorial about the subject on our website.
Editor: What happens on Saturday, the last day of the Conference?
Smith: On Saturday morning, the opening panel explores Executive Compensation - Avoiding Headlines . The moderator of this panel is Brian Lane, former director of the division of the division of corporation finance at the SEC and now a partner at Gibson, Dunn & Crutcher LLP. So, we have two former directors of the division of corporation finance on our panels. I mentioned John White's participation earlier.
The second panel deals with the subject of Best Practices for Advisory Firms. Unlike credit rating agencies, which will undoubtedly be subject to federal regulation, the prospect of any effective governmental regulation seems unlikely. Yet, advisory firms have a profound effect on the governance of corporations. Lydia Beebe, who is our immediate past chairman and secretary and chief governance officer of Chevron, is going to chair that panel.
This next event will be a Roundtable of Former Society Chairs - Their Top Concerns. That panel includes Lydia Beebe, Bill Mostyn, a previous chair, who is now at TIAA-CREF and Craig Mallick, our current chair. Moderating that panel is Paul Washington, a senior vice president at Time Warner, who will become our next chair at our annual meeting. This panel will provide us with a perspective on issues of the day, how the Society is addressing them and what the panelists think we should be doing in the future.
We end the Conference with an address by Elisse Walter, who is an SEC commissioner and a former member of the Society (November 1997 through November 2008). Before being selected and confirmed as an SEC commissioner she was senior executive vice president, Regulatory Policy & Programs, for FINRA.
Editor: Did you want to refer to what is planned for the kids and spouses?
Smith: Our national conferences are always family-friendly. Many spouses attend the event with their children. Last year we had over 100 children. We provide free of charge a program for the children during the day. It is run by KiddieCorp, and they have run it for years. We also have special programs for teens.
Editor: Tell us about the wonderful way attendees can spend Saturday afternoon.
Smith: We are planning to spend Saturday afternoon volunteering at the Monarch School in San Diego. It is a school that addresses the needs of homeless children. In San Diego, there are more than 2,000 homeless children. The school helps to break the cycle of poverty that has trapped these kids not only by educating them, but also by providing food and clothing and counseling and mentoring services. On the day that we are going to be there, a local radio show is hosting a rummage sale. Our members will not only be helping with the sale, but they and their companies may also contribute clothing and other products for the children.
As we have done in recent years, the Society will make a contribution on behalf of our speakers to the Heifer Fund. The Heifer Fund concept is that if you buy a cow or pig for a poor family and thereby allow them to be a little more self sustaining, the gift in a sense "keeps on giving."