Last week Baruch College in New York City hosted a panel of leaders from NASDAQ, NYSE and NIRI (National Investor Relations Institute) for a discussion aimed at investor relations officers and how they should begin preparing for implementation of the Dodd-Frank Act — arguably the most significant piece of financial legislation to be passed since the great depression.

The 60 minute format only allowed for 23 pages of the 2300+ word document to be covered. The discussion focused on section 951 on Governance and Disclosure.

Highlights:

• Say-on-pay.  At least once every three years (could be as frequent as every year) shareholders will be asked to approve the executive compensation included in the proxy.  This basically makes it much easier for shareholders to show dissent on executive pay.  Effective in 2011.

• Golden parachute.  Any executive compensation payable based on a transaction (proposed acquisition, merger, consolidation or sale of the company) is subject to a vote in context of that transaction (exception being if it is already subject to annual say-on-pay vote).  In other words, shareholders must separately approve this executive pay package. This will be effective six months after the legislation is enacted.

Macro question: Would a change in control of Congress this November alter any of this?  

The majority don’t think so. Even if Republicans take control of the House in November that would likely not significantly impact the bill and its implementation. While there could be technical corrections, and there are already some of those in progress, it would be difficult to make significant changes to Dodd-Frank.

The video recording of the event is available here.

I hope for this to be a series of blog posts as we continue to make sense of the 500+ rules stemming from this bill.

As a media relations specialist, knowing the media who are on Twitter and following their interests, upcoming stories, etc., has become an important part of my jobs and is a value-add that I provide my clients.

At the NIRI conference this week social media is being discussed from the perspective of IROs as they examine how to properly utilize and measure the impact of this medium, including the reality that aspects of social media’s ROI remain at times unquantifiable.

Consider these stats (from muckrack.com):

278 business journalists are using Twitter, and a significant portion of them are from the leading business/financial media outlets:

• 15 Financial Times
• 28 BusinessWeek
• 41 Forbes
• 66 WSJ
• 108 NY Times

 (Note:  Muckrack.com is an excellent site for finding reporters who are on Twitter.)

This means that through social media PR specialists can better understand the interests, story ideas and perspectives of editors and reporters in a much more timely and informal way than we ever could before.  And this access and understanding allows us to do what many clients hire us for - cultivate stronger and lasting relationships with the media that cover our clients’ companies and industries.

• 85% of financial services professionals under age 50 use social media (source: Ledermark)
• 47% of institutional investors read financial blogs for investing and research ideas

So why are some companies still hesitant to utilize social media as part of their IR program?   Investor relations professionals broached this very topic at the NIRI conference this week.

Here is a quick chart from the conference outlining the top reasons IR departments give for avoiding use of SM, and the counter argument:

Coincidentally, just a few days ago Forrester released its report affirming that financial services in particular should be using social media: http://www.nlcsocialmedia.com/forresters-reports-financial-services-marketers-should-use-social-media

The bottom line: no more excuses for not leveraging the impact and reach of social media on your investors and other audiences. We can’t blame SEC rules either. If you aren’t using social media, statistics show you are missing out on an important and direct communication channel to reach very important audiences.

Day One:  Monday, June 7:

Update from Corp Finance Division of the SEC:
“Notice & Access” Disclosure Process Remains Up for Debate

The annual NIRI conference officially opened today with more than 1,200 members convening in San Diego. To start this morning, Meredith Cross of the Corporate Finance Division of the SEC gave the group an update on the SEC’s focus right now in terms of enforcement changes and investor protection.

In brief summary:
• Proxy issues, or “Proxy plumbing” -  As this issue prevails, Ms. Cross reports the SEC is currently seeking solutions and will address NOBO/OBO, share lending, the best way for investors to have proxy access, accuracy of elections, etc.
• Disclosure requirements – In general some of these are 30 years old. The SEC is examining those requirements that may be antiquated and will be proposing updates.
• Notice & Access – In short, the ability for a company to inform the public of earnings and other material disclosures via its website (versus paid release over the wire). Is this being utilized broadly and is it working? Ms. Cross emphasized that investor feedback in particular should be considered here, as some have expressed dissatisfaction with how they are learning about such disclosures.

On this topic, just last month a NIRI survey revealed that Senior NIRI members found SEC guidance on corporate website use [as a means of material disclosure] too vague to be actionable. The overall conclusion of the survey suggests that respondents often view additional communications channels as supplemental to traditional channels rather than replacements for them.

See more on the NIRI survey findings here: http://mob.niri.org/Main-Menu-Category/resource/publications/Executive-Alert/Use-of-Non-Traditional-Disclosure-Channels-52710.aspx

As the credit debacle and volatile market lag on, those in the buyout industry have been forced to find new ways to manage this economic state and continue to close deals. 

I’ve been lucky enough to learn how it can be done from my client, Carl Thoma, a Chicago-based PE vet leading Thoma Bravo LLC.   Now about 1,000 investors, fund managers and players in the world of private equity attending the Private Equity Analyst Conference later this month will have the chance to hear Carl, along with a panel of leaders in private equity, discuss how PE has had to adjust in order to get deals done, and what they predict is in store for the industry over the coming years.

Put on by Dow Jones, this year’s conference on September 16-17 in New York City appropriately carries the theme of “PE at the Crossroads”.   For more details on the conference visit: http://peaconference.dowjones.com/

Having focused my career in public relations, perception is a significant part of what I do professionally. How are my clients perceived by their audiences and how can I help shape that audiences’ perception of my client?

In a nutshell, you can have a solid company and make a great product with true benefits to the customer, but if your target audience doesn’t perceive your product the right way, you won’t sell it. That’s where PR can have quite an impact on perception, which directly impacts a company’s bottom line.

Last week I listened to Howard Marks of Oaktree Capital speak about the economy – a talk he called “this mess… and getting out” - at a gathering in New York. And what I took from his comments was that the economic recovery will also largely be about perception.

Marks, who is well-known for his musings via “memos” to clients, feels we should be confident that the cycle will invariably turn and the root of the recovery might by any of the items listed below. Note the majority of those items are perception-based:
• Appearance of bargains (perception)
• Emergence of optimism (perception)
• Some nugget of good news (perception)
• Inadequate return on cash (somewhat perception)
• Capital in the hands of possible buyers

Thus, economic recovery may be catalyzed by perception. And, in close, one of my favorite lines from the talk: “sooner or later the fear of losing comes to be balanced by the fear of missing out.”

As a sidenote, amidst all this talk about “perception” something a bit more tangible related to economic recovery has been released.  LIBOR dropped the most it has in 2 months, and while still historically high, in simple terms: banks/financial institutions are more confident and thus more likely to lend.  Check out the Bloomberg report:
http://www.bloomberg.com/apps/news?pid=20601102&sid=aS_wbJukwWI4&refer=uk

I attended an FWA event recently where the panel discussion was on corporate social responsibility and microfinance. What was interesting was that the all-female panel represented Citi, Morgan Stanley, Merrill Lynch and AMEX.  Financial companies we hear a lot about these days for reasons other than their philanthropic efforts. A couple of points particularly caught me:

• CSR can be a grassroots reputation management tool:  According to some of these panelists, the relationships their companies have built with communities thru CSR have provided them with credible third party validation in not-so-good times. In other words, while everyone is bashing Citi, the bank has real relationships and proponents around the globe — those less fortunate individuals whom they have empowered economically.  This has helped their reputation during a time of corporate turmoil.

• CSR isn’t being cut:  In a time when cutbacks are very popular – be it employee programs and benefits, employees themselves, consultants and other “extras” - CSR programs aren’t taking a hit, at least at these big financial entities, because their value is seen all the way at the top. CSR has become a “strategic asset”.

During a media interview today, an experienced private equity firm partner made a prediction about when we’ll see deals begin to happen again. In a nutshell, the current market has public valuations down approximately 50% and sellers won’t sell for today’s market prices. So M&A isn’t happening. But this investor believes that the more companies trade at these levels, the more sellers will realize it’s necessary to sell at this level. He based his prediction on his experience doing deals in the software industry during the tech bubble in early 2000 which resulted in a “dramatic reset”…
• Software industry had a reset in 2000-2002, similar to the reset we’ve seen;
• After the March 2000 market crash very few deals took place for nearly two years;
• Not until the latter half of 2002 did the deal stream really begin to pick up and then it grew from 2003 - 2007. 

So according to this, if Q4 2007 was our breaking point to start this “reset”, deals should begin to pick up again in 2010.

People are cutting back financially wherever they can. It’s gotten so bad according to a survey released this week that people may even revise their cell phone plans and cut out mobile internet access.

Survey finds:
• About 19 million Americans, or one in five cell phone users with extras, have considered cutting back on extras or have already, while 41% of cell phone users said it is very likely or somewhat likely that they will cut down on extras if the economy worsens.

And it’s not just all talk…
• 8,740,000 Americans — that is 19% of consumers with a cell phone — report that they already have ‘discontinued cell phone service in the last six months because of actual job loss, fear of job loss, the recession, or any other related financial concerns.’

Check out more details of the survey results:
http://www.consumeraffairs.com/news04/2009/03/recession_cellphones.html

I had the pleasure of sitting in on a middle market private equity company’s annual meeting recently in Chicago. It’s always interesting to get different perspectives and predictions on the state of the economy and the timeframe of its recovery… as well as how that recovery will actually happen.

A private equity investor with a 30+ year tenure in the industry finds the following:

• PATIENCE: We must be patient – this is a process, not an event.

• LOW GROWTH: for the next three to five years we will be in an “L” recovery (versus U or V) and experience low growth.

• SAVINGS: We must change the way we look at our assets and how we both spend and invest our money.  For Americans, homes were once our primary asset, but now we need to become savings driven, not real estate driven.

• THINK LOCAL: Recovery will begin at the local level with small business and grow outward from there. Innovation is key to helping move this recovery along.

It’s tough to be optimistic about the economy today.  The market remains volatile on a daily basis, the unemployment rate is the highest it has been in 25+ years, G.E. is in trouble (read the NY Times article from this past Sunday), I could go on and on.

However, Justin Fox from TIME magazine had some thoughts this morning about why he is optimistic right now.  While he’s not particularly convincing, and even a little wishy washy on some of his points, if you’re looking for some hope consider his 3 reasons why you should be optimistic about the economy:

1. Stock market not overpriced (Fox says don’t just look at one year of earnings.)
2. Government involvement in fixing the economy (While many would say yikes to this, Fox claims we should be thankful that the government is being proactive, realistic and moving us forward.)
3. Consumer savings rate up (This is good in the long term and even in the short term because it helps us get to the bottom quicker so we can move into recovery.)

Here’s the full CNBC segment with Justin Fox: http://www.cnbc.com/id/15840232?video=1057945685&play=1