AJORITY VOTING UPDATE SHAREHOLDER DEMOCRACY AM …...©2007 Foley & Lardner LLP MAJORITY VOTING...

©2007 Foley & Lardner LLP

MAJORITY VOTING UPDATE, SHAREHOLDER DEMOCRACY 11:15 AM AND HOW BOARDS SHOULD RESPOND TO HEDGE FUNDS AND ACTIVIST SHAREHOLDERS

Jeff Brown, Motorola, Inc.

Jim Duffy, NYSE

Justin Friesen, UBS Securities LLC

Richard Grubaugh, D. F. King & Co., Inc.

Pat McGurn, Institutional Shareholder Services

Patrick Quick, Foley & Lardner LLP


JEFFREY BROWN SENIOR CORPORATE COUNSEL MOTOROLA, INC.

Jeffrey A. Brown is Senior Corporate Counsel for Motorola, Inc., a global leader in providing wireless and broadband communications headquartered in Schaumburg, Illinois. Mr. Brown provides counsel to Motorola's senior management and Board of Directors and handles a broad range of matters relating to securities laws and corporate governance. In particular, Mr. Brown's practice focuses on disclosure issues, the issuance of public securities, structuring of strategic investments and Board of Directors matters. He has also served as a member of Motorola's 6-person Disclosure Committee throughout the Committee's existence.

Prior to joining Motorola in 1997, Mr. Brown was associated with Winston & Strawn in Chicago, Illinois, where his practice was focused in the areas of securities, mergers & acquisitions and corporate finance. He also has professional experience in industrial engineering and mathematical modeling. Mr. Brown received his J.D. with Honors from The Law School at The University of Chicago, where he was a member of the Order of the Coif. He also graduated with honors from Northwestern University, where he received a B.A. in Economics and a B.S. in Industrial Engineering/Management Sciences. Mr. Brown is a frequent speaker and author on a variety of corporate governance-related topics, including the practical impact of the Sarbanes-Oxley Act, effective compliance programs, the majority vote movement and shareholder activism.


JAMES DUFFY EXECUTIVE VICE-PRESIDENT &

GENERAL COUNSEL NYSE

James F. Duffy is an Executive Vice President and the General Counsel of NYSE Regulation, Inc. Since joining the New York Stock Exchange in 1999, Jim has been extensively involved in both domestic and international listings matters, market regulation and market structure issues. Jim was centrally involved in the formulation of the Exchange's expanded corporate governance listing standards, and in the changes to the Exchange’s own governance structure as well.

Previously, Jim served for ten years as General Counsel of the American Stock Exchange. Earlier he practiced corporate and securities law on the legal staff of GTE Corporation, and with the firm of Lord, Day & Lord in New York.

©2007 Foley & Lardner LLP 2

JUSTIN FRIESEN EXECUTIVE DIRECTOR, MERGERS & ACQUISITIONS UBS SECURITIES LLC

Justin Webb Friesen is an Executive Director, Mergers & Acquisitions in the Investment Banking Department of UBS and is based in Chicago. Mr. Friesen has been involved in a wide variety of strategic and capital raising transactions in the diversified industrials, consumer / retail and business services sectors. Mr. Friesen’s transaction experience includes hostile M&A defense, corporate acquisitions, mergers and divestitures along with high-yield, equity and private placement capital raising for Fortune 500 and middle-market companies. His most recent transactions include ADESA’s leveraged buy-out sale to a private equity consortium led by Kelso, Banta’s white knight hostile defense and sale to R.R. Donnelley & Sons, JLG Industries’ sale to Oshkosh Truck, Pentair Inc.’s acquisition of APW Limited’s thermal enclosure assets and The Shaw Group’s acquisition of 20% of Westinghouse Electric.

Prior to joining UBS in May 2004, Mr. Friesen was a Vice President at Credit Suisse First Boston where he participated in significant M&A assignments including: Cooper Industries’ successful defense of Danaher Corporation’s hostile raid; S.C. Johnson’s acquisition of Bayer AG’s global household insecticide business; Pentair’s acquisition of Everpure from Veolia Environnement; sale of Collegis, Inc. to Sungard Data Systems and Whitman Corporation’s asset realignment with PepsiCo and subsequent acquisition of PepsiAmericas. Mr. Friesen began his investment banking career in 1994 as an analyst at Dean Witter Reynolds Inc.

Mr. Friesen received his M.B.A. from The Wharton School at the University of Pennsylvania where he graduated with highest honors and was recognized as a Palmer Scholar. He graduated with distinction from the Indiana University School of Business earning a B.S. in Accounting.


RICHARD GRUBAUGH SENIOR VICE-PRESIDENT D. F. KING & CO., INC.

Richard H. Grubaugh is a Senior Vice President of D.F. King & Co., Inc. and co-manager of the firm’s Extraordinary Events Group. Primarily advises corporations involved in complex shareholder transactions specializing in corporate control situations such as proxy contests, mergers and hostile tender offers. Formulates and recommends shareholder communications strategies for public companies in crisis situations. Prior speaking engagements include programs sponsored by the Practising Law Institute, the American Society of Corporate Secretaries and Governance Professionals and at Georgetown University on corporate governance issues.


PATRICK MCGURN EXECUTIVE VICE-PRESIDENT &

SPECIAL COUNSEL INSTITUTIONAL SHAREHOLDER

SERVICES

Patrick S. McGurn is Executive Vice President & Special Counsel at Institutional Shareholder Services, a RiskMetrics Group company. ISS is the world's leading provider of proxy voting services and corporate governance research. ISS serves more than 1,700 institutional investor clients. Founded in 1985, ISS recommends votes on ballot issues for more than 35,000 shareholder meetings across 115 markets around the globe. ISS's Corporate Governance Quotient is the global, industry-standard benchmark for ranking governance practices at more than 7,500 public companies.

Prior to joining ISS in April 1996, Pat was director of the Corporate Governance Service at the Investor Responsibility Research Center (IRRC), a not-for-profit firm that provided governance research to investors. He also served as a private attorney, a congressional staff member and a department head at the Republican National Committee. He is a graduate of Duke University and the Georgetown University Law Center. He is a member of the bar in California, the District of Columbia, Maryland and the U.S. Virgin Islands. Pat serves on the Advisory Board of the National Association of Corporate Directors and was a member of the NACD's 2001 Blue Ribbon Commission on Board Evaluations.

Pat is frequently cited by business publications such as The Wall Street Journal and Fortune. He has appeared on ABC World News Tonight, Bloomberg Radio and TV, BBC Radio, CBS Evening News, CNBC, CNN, Marketplace, NBC Nightly News, Nightly Business Report, National Public Radio, Tech TV and ABC's This Week. He is a frequent presenter at conferences.


PATRICK G. QUICK PARTNER FOLEY & LARDNER LLP

Patrick G. Quick is a partner with Foley & Lardner and a member of the firm’s Transactional & Securities Practice and Sports Industry Team. Mr. Quick practices corporate law, with an emphasis in securities law compliance, acquisitions, and takeover defense. He regularly counsels public companies concerning compliance and governance matters and has participated in initial and other public offerings for Wisconsin corporations. Mr. Quick also has participated in many acquisition transactions representing buying and selling parties in a variety of industries. He has been involved in the representation of clients doing advance takeover preparedness planning and has counseled clients who have received unsolicited takeover proposals or similar overtures.

Mr. Quick was among 114 attorneys nationwide who made The BTI Consulting Group’s Client Services All Star Team for 2005. This honor is bestowed upon attorneys who deliver outstanding client service according to corporate counsel interviewed at Fortune 1000 companies. This is the second consecutive year he has received this honor. In addition, Mr. Quick is listed in Chambers USA: America's Leading Lawyers for Business (2005-06), and he has been selected by his peers for inclusion in The Best Lawyers in America 2007 ®.

Mr. Quick has served for many years on the board of directors of the Child Abuse Prevention (CAP) Fund and also has been involved in the United Way, the Children's Miracle Network Telethon for Children's Hospital of Wisconsin, and the Marquette University Business Administration Alumni Association.

Mr. Quick graduated, magna cum laude, from the University of Michigan Law School in 1984, where he served as an editor of the Michigan Law Review and was elected to the Order of the Coif. He received his B.S., magna cum laude, from Marquette University.

THE SIXTH ANNUAL NATIONAL DIRECTORS INSTITUTE


2006 Proxy Season Overview &

2007 Preview

D.F. King & Co., Inc. March 2007

Majority Voting in Director Elections

Prominent Shareholder Proposals and Trends

Proxy Access

NYSE Rule 452

E-Delivery

Topics and Industry Issues

Majority Voting to Elect Directors

Source: IRRC and D.F. King* Voting results data based on 91 proposals as of December 2006

Noteworthy Vote Results

Plurality Voting - No Action• Marathon Oil – 67.7%• SprintNextel – 67.0%• Kohl’s – 61.6%

Director Resignation Policy• Johnson & Johnson – 39.0%• General Dynamics – 37.9%• MeadWestvaco – 34.3%

49 Proposals Withdrawn,Omitted, or not includedin Proxy• Director Resignation Policy• Majority Vote Implemented

Majority Voting To Elect Directors

0 0 0

12

62

94*

0%

20%

40%

60%

80%

100%

2001 2002 2003 2004 2005 2006

Number of Proposals Average Support

11.8%43.9% 47.7%


0%

10%

20%

30%

40%

50%

60%

4249

55.7%

Number of ProposalsAverage Support

Majority Voting To Elect Directors

42.4%

Plurality Voting–No Action Director Resignation Policy



Prominent Shareholder Proposals in 2006Lucian Bebchuk binding by-law proposals

Disclosure of compensation at Home Depot – 44% supportPoison Pill proposal at CA – 41% support

Advisory Vote on Compensation Committee ReportsSupport levels – avg 39.9%

– Countrywide Financial (43%)– Home Depot (40%)– US Bancorp (40%), – Merrill Lynch (35%)

Shareholder approval of extraordinary retirement benefits –averaging in excess of 41% support

Link pay to performance – 32% support

Award performance-based stock options - in excess of 40% support

Carpenter’s proposal – “pay for superior performance” – 35% average support

Key Shareholder Proposal Trends

Adopt Cumulative Voting

24*24 19 19 20 22 18

39.8%

28.3% 30.3% 33.1% 34.1% 35.7% 36.5%

0%

20%

40%

60%

80%

2000 2001 2002 2003 2004 2005 2006Number of Proposals Average Support


YTD

Separate Chairman & CEO

28

36

302

55*

30.1%31.9%28.2%

26.1%

40.4%

0%

20%

40%

60%

80%

100%

2002 2003 2004 2005 2006

Number of Proposals Average SupportSource: IRRC and D.F. King* Voting results data based on 54 proposals as of December 2006

YTD


Restrict Golden Parachutes

18*19 18 26 19

34.9%

56.9% 51.7% 53.0% 51.2%

0%

20%

40%

60%

80%

100%

2002 2003 2004 2005 2006Number of Proposals Average Support


Redeem or Vote on the Poison Pill

23

52

84

50

19*

53.0%59.8%61.5%

60.0%60.2%

0%

20%

40%

60%

80%

100%

2002 2003 2004 2005 2006Number of Proposals Average Support YTD

YTD

Key Shareholder Proposal Trends (Cont’d)



24*

7712 10 9

13

60.6%

54.6% 57.8% 61.5% 60.5%73.3%

65.6%

0%

20%

40%

60%

80%

100%



YTD

Shareholder Proposals to Eliminate Supermajority Voting


16*

63 5 26

15

78.5%74.2% 80.6%

67.7% 73.7% 73.7%82.0%

0%

20%

40%

60%

80%

100%


Management Proposals to Eliminate Supermajority Voting

YTD



Shareholder Proposals to De-Stagger Board

48384842

63*

66.8%63.8%70.6%

63.3%61.5%

0%

20%

40%

60%

80%

100%

2002 2003 2004 2005 2006Number of Proposals Average Support


YTD

Management Proposals to De-Stagger Board

29*5 2246 45

61.8%

85.5% 80.6% 85.2% 85.9%

0%

20%

40%

60%

80%

100%

2002 2003 2004 2005 2006

Number of Proposals Average SupportSource: IRRC and D.F. King* Voting results data based on 29 proposals as of December 2006

YTD

Restrict Executive Compensation

68

28

81411

82

36*15.3%11.7%

13.0%18.9%9.8%7.8% 22.8%

0%

20%

40%

60%

80%

100%



YTD

2006 Executive Compensation Proposals

Restrict/Reform Executive Comp.

Link Pay to Performance

Abolish Stock Options

Recoup Performance Aw ards if restatement

Recoup Unearned Mgt. Bonuses




Proxy Access

AFSCME proposal on AIG

Court of Appeals for the Second Circuit Ruling

Back on the SEC AgendaOctober 2003 proposed rule changesTwo-step process over two yearsSEC Rule 14a-8(i)(8) – Exclusion of proposal that “relates to directors”It appears that any rule changes may be too late 2007 proxy season

NYSE – Proposed Change to Rule 452

NYSE Proposal released in June 2006Proxy Working Group recommends NYSE amend rule 452 to make election of directors a “non-routine” matterRecommends further education of investors about the proxy voting systemSupports efforts to improve the ability of issuers to communicate with beneficial ownersRecommends SEC study the role of groups making voting decisions over shares not ownedEffect of rule change on ability to achieve a quorum

NYSE Postpones Ruling Aims to implement reform by 2008 proxy seasonNeeds to study related issuesEstablishes three subcommittees to address related issues

Investor educationCompanies’ inability to communicate directly with beneficial holdersCosts associated with the distribution of proxy materials

0%10%20%30%40%50%60%70%80%90%

Large Cap Mid Cap Small Cap

Impact of Routine Vote On Director Elections

% Cast with Broker Vote % Cast Without Broker Vote

Elimination of Routine Vote in Director Elections

88%75%

86%74%

89%

54%



E-Delivery

A Company may, but is not required to, furnish proxy materials to shareholders through a “notice and access”.

A company choosing to follow the model must post its proxy materials on an Internet Web site and send a Notice of Internet Availability of Proxy Materials to shareholders at least 40 days before the meeting date.

The new alternative model for furnishing proxy materials seeks to substantially decrease the expense incurred by issuers to comply with the proxy rules and provide persons other than the company with a more cost-effective means to undertake their own proxy solicitations.

When a company or soliciting party chooses to rely on the notice and access model, brokers, banks and similar intermediaries must prepare and send their own Notices designed for beneficial shareholders. A beneficial shareholder desiring a paper or e-mail copy of the proxy materials must request one from the intermediary.

The compliance date for the amendments is July 1, 2007. No person may comply with the notice and access model before that date.

AJORITY VOTING UPDATE SHAREHOLDER DEMOCRACY AM …...©2007 Foley & Lardner LLP MAJORITY VOTING...

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