In this month’s episode of the Governance Matters podcast, Bruce Goldfarb, president and CEO of Okapi Partners, discusses lessons for boards and governance professionals from two of the most high-profile proxy contests of the year, involving The Walt Disney Company and Starbucks.
Okapi Partners represented Nelson Peltz’s Trian Partners in the Disney case. The firm also worked with the Strategic Organizing Center, a coalition of labor unions that nominated three director candidates to the Starbucks board before withdrawing them after an agreement was reached with the company to work toward a framework on collective bargaining.
The contests were notable for several reasons including that both Disney and Starbucks have large retail shareholder bases, and Goldfarb looks at what that means in terms of shareholder engagement – including the use of the universal proxy card, which many retail investors are unfamiliar with. Among other things, this entails a greater focus on the director candidates and a need for them to play an active role in outreach during the contests.
Goldfarb also talks about the importance of boards in ensuring their company implements any changes agreed to as part of a proxy contest: ‘Part of a board’s role is to make sure that a promise made is a promise kept or there’s some explanation as to why something can’t happen the way it was originally promised, in a manner that’s not going to create additional risk to value for the company or is not going to be problematic…
‘[A] board that doesn’t hold management accountable to following through on promises is a board that’s vulnerable to attack.’
New DoJ programs
In this episode we also hear from Michael Hantman, partner with Holland & Knight, about the likely impact of two new US Department of Justice (DoJ) initiatives designed to encourage executives to tell the government about potential wrongdoing at their company.
Deputy Attorney General Lisa Monaco in March announced the creation of a new program that will greatly expand the range of violations where whistleblowers could earn rewards. Then in mid-April the DoJ announced a pilot program it says will clarify the circumstances in which prosecutors will offer non-prosecution agreements (NPAs) to individuals who voluntarily disclose information about certain criminal conduct. The pilot includes potential immunity in some cases for individuals who’ve been involved in the wrongdoing.
Hantman discusses how the NPA and whistleblower benefits programs differ from previous DoJ policies, what lessons general counsel should draw and what they mean for corporate compliance policies.
‘[The] DoJ isn’t necessarily looking to drop the hammer on companies that are trying to do things the right way,’ he says. ‘It doesn’t insist on perfection. It insists on progress and it insists on effort... Generally speaking, if you are making efforts and you are making strides, there are enormous incentives to have you call [the DoJ] before it calls you. And if you don’t take that approach and don’t put forth the effort, it will drop the hammer on you. So I guess compliance is here and it is likely here to stay.’
The Governance Matters podcast from Governance Intelligence provides listeners with insight into cutting-edge issues of the day for corporate secretaries, general counsel and other governance professionals. The series looks at how the roles of governance professionals and the board – as well as the landscape in which they operate – are evolving.
From ESG and entity management to shareholder engagement, regulation and technology, hear from governance experts and leading advisers about the latest public company governance matters.
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Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
