The year in governance: it was a full agenda for activists, regulators, and reformers--and the boards that had to react to them. A month-by-month timeline of year 2012 and the people, companies, organizations, initiatives and events that kept corporate governance in the headlines and on the move.

Author:Kristie, James
Position:2012 YEAR IN REVIEW - Chronology - Calendar
 
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JANUARY

Looking to rein in executive pay, the British government puts forward four proposals for revamping corporate compensation practices that would give shareholders greater power to vote on the pay of top executives.

At the Davos conference this month, nervousness has replaced despair among business leaders" reports the Financial Times (FT). There is still unease over Eurozone fiscal stability and global economic weakness.

According to a Deloitte poll of executives from a cross section of industries, with cash balances rising to "historic levels" companies are ready to deploy their mounds of cash to execute acquisitions, repurchase shares, increase dividends, or issue one-time dividends.

Perhaps foreshadowed when three directors resigned from the board in December 2011, Eastman Kodak files for bankruptcy. Going in the other direction, with robust sales of its iPhones and iPads, Apple tops ExxonMobil as America's most valuable company.

The Ethisphere Institute selects U.S. District Judge Jed Rakoff as No. 2 on its list the 100 Most Influential People in Business Ethics, recognizing him for setting "a new precedent when he ruled against a proposed settlement between the Securities and Exchange Commission and Citigroup [over claims the bank mislead investors in a risky mortgage financial product] because the settlement did not require Citigroup to admit or deny guilt." The SEC defends its "neither admit nor deny" settlement language but tinkers slightly with when it can be applied.

The AFSCME Employees Pension Plan files a shareholder proposal asking JPMorgan Chase & Co. to adopt an independent board chair. AFSCME views the proposal as "an important way to protect and enhance the economic value of its long-term investment" in the bank and as a way "to refocus the company on better managing its economic risks and protecting and improving the value of its shares."

Yahoo! Inc. hires Scott Thompson from eBay to be its new CEO. (It will end badly, see May.) Yahoo co-founder Jerry Yang severs his ties with the company.

Activist investor Bill Ackman ramps up for a proxy fight to oust the board of Canadian Pacific Railway Ltd.

The Chairmen's Forum, a group of prominent current and former chairs of corporate boards from the United States and Canada, adopts a model policy recommendation under which the chair and CEO roles would be split by default upon a leadership succession, and says it intends to promote the measure as a priority for 2012.

Embroiled in a financial scandal, Japan's Olympus Corp. sues 19 current and former board members after deeming them complicit in the company's $1.5 billion loss-hiding scheme.

An investor network of more than 40 funds co-organized by Walden Asset Management, a division of Boston Trust & Investment Management Co., files a resolution at 40 corporations for voting on at 2012 shareholder meetings urging them to report on lobbying expenditures, including indirect funding of lobbying through trade associations. An IIRC study finds that most companies do not provide even rudimentary disclosure on their lobbying expenditures and practices to investors.

Imprisoned former Tyco CEO L. Dennis Kozlowski is transferred from an upstate New York prison to a minimum security facility in Manhattan--"just feet from Central Park," as described by the New York Post (NYP)--where he will serve out the rest of his sentence. He was jailed in 2005 on an eight- to 25-year sentence for grand larceny and other charges.

FEBRUARY

New York joins a number of states that have passed legislation creating the "benefit corporation" as an alternative business model--a structure that protects boards for thinking and acting beyond simple profit maximization.

ISS launches a probe over revelations that one of its employees sold clients' confidential voting data in exchange for cash and gifts.

Apple Inc. reverses its previous resistance to adopting majority voting for directors and says it will support a proposal put forward by CalPERS to change the way it elects board members.

More turmoil at Yahoo: First a board shakeup, with Chairman Roy Bostock and three directors announcing they will be stepping down, and then dissident shareholder Dan Loeb of hedge fund Third Point LLC launches a fight for board representation by nominating himself and three allies (see page 60).

In other hedge fund activism, Starboard Value nominates five directors for the board of AOL Inc.; Starboard CEO Jeff Smith criticizes the company as "closed-minded to alternative value creation initiatives." And John Paulson puts pressure on Hartford Financial Services Group to split into two businesses.

Ending massive speculation as to the timing of its initial public offering, Facebook files for its IPO--which triggers intense criticism of the social networking firm's all-male board and its intention to go public with a dual-class share structure.

Big giveback: Facing withering criticism of what the Wall Street Journal (WSJ) says would be one of the largest termination payments in U.S. history, Eugene Isenberg waives a $100 million payment triggered when the board of Nabors Industries Ltd. replaced him as CEO while keeping him on as the company's chairman.

Good reason for emergency succession planning: Micron Technology Inc. Chairman and CEO Steven Appleton dies in a crash of an airplane that he was piloting; and Stryker Corp. President and CEO Stephen MacMillan resigns abruptly in a fallout with the board over his relationship with a former Stryker employee. Both were highly regarded executives.

The board of Walt Disney Co. comes under fire for allowing CEO Robert Iger to take on the additional role of chairman. Proxy advisor ISS claims that the move "reversed a commitment to independent board leadership."

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Pay raise: Ford Motor Co. boosts its board pay by 25%--with the annual retainer for directors rising from $200,000 to $250,000.

Top Tweeter: Former Medtronic Chairman and CEO Bill George, now a professor at Harvard Business School and a director of Goldman Sachs (and a past DIRECTORS & BOARDS author), makes the list of "Top 50 Business School Professors on Twitter." MBAPrograms.org compiled the list.

MARCH

In a "what to watch for in the 2012 proxy season" advisory, James Copeland, director of the Manhattan Institute's Center for Legal Policy, cites political spending proposals as an "alarming trend" in shareholder activism; such proposals, he says, are on the rise, noting that 41 were filed in 2011, up from 30 in 2010 and 22 in 2009.

With shareholder pressure being applied to split the chairman and CEO roles held by Lloyd Blankfein, Goldman Sachs taps James Schiro to be the board's lead director. A Goldman director since 2009, Schiro is the former CEO of Zurich Insurance Group Ltd. and, before that, Price Waterhouse LLP.

In its list of top topics that management and boards should be prepared to address at 2012 annual meetings, BDO USA includes the European debt crisis, political contributions, executive compensation, M&A plans/takeover defenses, CEO succession, cyber attacks, and China.

The Harvard Law School Shareholder Rights Project, an adviser to institutional investors in submitting shareholder proposals to declassify boards, notes that proposals to declassify boards have been submitted during this proxy season to more than 80 of the S&P 500 companies, and that 42 S&P 500 companies receiving proposals--about one-third of the S&P 500 companies that had a staggered board at the beginning of the proxy season--entered into agreements committing them to bring management proposals to declassify their boards.

A company chairman who blows off attending the annual meeting due to a schedule conflict? That looked like what was going to happen at Viacom Inc., but Sumner Redstone resolved the conflict that the company initially indicated might prevent him from attending the meeting. "Reports of my absence at this meeting have been greatly exaggerated," the 88-year-old media titan joked with the shareholders at the meeting in New York.

Amidst skepticism in Europe's business community of the merit of enforced quotas, the European Union announces that it plans to push ahead on legislation to increase the number of women on corporate boards. Only 12% of board members of large listed companies are women, according to EU data. And in its annual Women on Boards survey, GMI Ratings reports that 10.5% of directors in its surveyed universe of 4,300 companies in 45 countries are women, an "incrementally small improvement" of 0.7% from the previous year.

Doings at Delphi Financial Group lead to an attention-getting ruling from the Delaware Chancery Court when the CEO, who controlled an almost 50% voting interest in the company, wanted to be paid a premium over other shareholders in a sale of the company. The court permits the deal to go forward but signals that the plaintiffs, in suing the CEO, have a good chance of proving that he was not entitled to any premium under Delaware law.

Doubling their span of control: A Booz & Company! Harvard Business School study of Fortune 500 CEOs shows that they are now taking on an average of 10 direct reports versus 5 in the mid-1980s.

What's my D&O coverage? A key finding from a Towers Watson liability survey is a sharp increase in the number of directors and officers inquiring about the amount and scope of their D&O insurance coverage--"an indication they are growing concerned over the wide range of exposures confronting them." The firm also reports that 25% of public companies surveyed and 14% of private companies and nonprofits increased their D&O limits at renewal.

ISS fires an employee in its Boston office who admitted to selling clients' confidential voting data to employees at Georgeson Inc. in exchange for cash and gifts (see February).

APRIL

Stinging rebuke: Citigroup shareholders lodge a 55% negative say on pay vote for the bank's executive pay program. Citigroup becomes "the first...

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