Keir D. Gumbs Covington & Burling LLP John Siemann Phoenix Advisory Partners September 14, 2010

1. Panel Discussion: The Dodd/Frank Bill-The Expected and Unexpected Consequences for Corporate Issuers PRESENTATION TOThe Shareholder Services Association Keir D. Gumbs Covington & Burling LLP John Siemann Phoenix Advisory Partners September 14, 2010

2. Program Overview • Overview of Dodd-Frank • What Does Mandatory Say-on-Pay Really Mean? • What Will Be the Impact of the Loss of Discretionary Voting on Say-on-Pay? • What Will Be the Impact of Say-on-Pay on Corporate Governance? • What Will Be the Impact of Expanded Voting Disclosure? • How to Best Prepare for Dodd-Frank • Shareholder Access – What is It? • Impact of Proxy Access - What Does It Really Mean? • How to Best Prepare for Shareholder Access • What Else to Prepare for, other than Dodd-Frank and Shareholder Access

3. Overview of Dodd-Frank On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. Dodd-Frank includes a number of provisions aimed at greater shareholder and regulatory oversight of executive compensation. Among other things, the Act gives shareholders of public companies a “say-on-pay” vote on the compensation of their companies’ executives and enhances the power of regulators to restrict executive compensation at a variety of financial firms. Dodd-Frank also includes provisions that will affect corporate governance practices at many public companies.

4. Overview of Dodd-Frank Requires a “say-on-pay” vote annually and a “golden parachute” vote in connection with mergers, acquisitions or similar transactions Confirms the SEC’s authority to adopt shareholder access rules Strengthens independence standards for compensation committees and advisers to such committees Requires policies regarding the clawback of incentive-based compensation that was based on erroneous financial results Mandates the disclosure of the median annual total compensation of all of a company’s employees and how such compensationcompares to the CEO’s annual total compensation Expands the authority of federal regulators to regulate incentive-based compensation at a wide variety of financial firms Enhances whistleblower protections under Sarbanes-Oxley and creates a new whistleblower procedure

5. Overview of Dodd-Frank • Disclosure about “golden parachutes” (6 months) • Rules directing SROs to adopt standards regarding independence of compensation committees and retention of consultants, legal counsel and other advisers (360 days) • Rules directing SROs to adopt standards regarding clawbacks (No deadline) • Disclosure of median annual total compensation of all employees and CEO’s annual total compensation (No deadline) • Disclosure showing relationship between compensation paid and a company’s financial performance (No deadline) • Disclosure regarding compensation committee consultants and conflicts of interest (1 year) Imposes Aggressive Rulemaking Agenda on the SEC • Disclosures about Board chairman and CEO structures (6 months) • Disclosures about a company’s policies on hedging by employees and directors (No deadline) • Rulemaking designating matters as to which brokers may not exercise a discretionary vote (No deadline) • Rules prohibiting incentive-based compensation that encourages inappropriate risks by brokers, dealers and investment advisers (9 months) • Rules regarding “compensation schemes” at brokers, dealers and investment advisers (No deadline)

6. Corporate Governance Developments Say on Pay Stockholders are pushing for rules that would require that public companies submit their executive compensation programs to stockholder approval. • Mandatory for TARP Firms • Soon to be mandatory for all companies in 2011 • Many companies voluntarily have adopted say on pay policies: • Aflac • Alaska Air • American Express • Apple • Goldman Sachs • Hewlett-Packard • Intel • JPMorgan Chase • Littlefield • MBIA • Microsoft • Motorola • Occidental Petroleum • Pfizer • PG&E • Prudential • RiskMetrics • Sysco • Tech Data • Valero Energy • Verizon • Yum Brands • Zale 5

7. Beginning in 2011, public companies will be required to provide shareholders with a non-binding vote on the compensation of their executives Vote must be held at least once every three years The vote will be based on the compensation paid to the company’s “named executive officers” as disclosed under Item 402 of Regulation S-K: compensation committee report compensation discussion and analysis compensation tables and related disclosures Required at the first shareholder meeting occurring after the six-month anniversary of the Act’s enactment, which means the new requirement will be in place for the 2011 spring proxy season. Beginning with annual meetings to be held in the 2011 spring proxy season, at least once every six years, companies must ask shareholders whether to hold shareholder advisory votes on executive compensation every one, two or three years. What Does Mandatory Say-on-Pay Really Mean?

8. Companies will have to include two say-on-pay proposals in their 2011 proxy statements – one for the annual say-on-pay vote, and another regarding how frequently companies should hold such votes Companies should explain the correlation between pay and performance and make the case for why their compensation practices are appropriate SEC expected to provide guidance regarding how the say-on-pay “frequency” vote may be conducted (i.e., the current proxy rules do not allow companies to give investors the option to choose between an annual, bi-annual, or triennial say-on-pay vote) Unless the SEC amends the proxy rules, all companies subject to the say-on-pay vote will have to file their proxy materials in preliminary form What Does Mandatory Say-on-pay Really Mean? Immediate Impact on Disclosure

9. What Will Be the Impact of the Loss of Discretionary Voting on Say-on-Pay? • Companies may have to do more to get sufficient shareholder participation in the voting process • Companies should consider targeted solicitations to ensure that shareholders approve their compensation practices • Companies may wish to reach out to significant shareholders in advance of their annual meetings

10. What Will Be the Impact of Say-on-Pay on Corporate Governance? • Say-on-pay votes are non-binding and will not overrule any decision of a company or its board of directors or otherwise affect the board’s fiduciary duties • Say-on-pay proposals failed to win majority support at Motorola, Occidental Petroleum and KeyCorp in 2010 - this may increase in 2011 • Significant votes against a company’s executive compensation program may create an issue even if a majority of shareholders vote in favor of the management proposal • There will be increased pressure to engage with investors to identify and address concerns • A failure to respond to low support for majority vote proposals will likely result in withhold or negative votes against a board in the next election • The threat of a director not being re-elected is real, particularly in light of the expected loss of broker discretionary votes

11. What Will Be the Impact of Expanded Voting Disclosure? • Dodd-Frank requires that institutional investment managers who file reports on Schedule 13F must annually disclose how they voted on say-on-pay and golden parachute matters. • Institutional investment managers that exercise investment discretion over $100 million or more in securities must file Schedules 13F with the SEC. • Banks, insurance companies, and broker/dealers, as well as corporations and pension funds that manage their own investment portfolios, are required to file reports on Schedule 13F. • As a result of this provision, say-on-pay votes will garner additional attention and activist investors will likely use these disclosures to put pressure on Schedule 13F filers with respect to their votes on say-on-pay proposals

12. How to Best Prepare for Dodd-Frank General • Public companies potentially affected by Dodd-Frank may want to consider taking a number of steps, including: • Keep abreast of key developments in the rulemaking phase in the ensuing months • Evaluate what efforts, if any, are being made by other firms/industry groups to participate in, and possibly shape, the rulemaking process • Develop realistic strategies to respond to the proposed rules — and ensure that such strategies are effectively implemented • Consider how most effectively to communicate firm and industry views on proposed rules to SEC commissioners, the federal banking regulators and their respective staffs • Separately, develop compliance action plans for expected new rules, including internal training and education, and, where appropriate, briefing of senior officers and relevant board members • Map out possible amendments to the charters of the Board’s compensation and/or nominating committees to address new requirements under the Act and impending SEC rules

13. How to Best Prepare for Dodd-Frank Getting Ready for Say on Pay • Based on a recent study by Towers Watson of the “readiness” of companies for say on pay, only 12% of respondents said they are very well prepared for the say-on-pay legislation, while 46% said they were somewhat prepared • When asked what actions they are taking or planning in preparation for the say-on-pay legislation: • nearly seven out of 10 (69%) said they were identifying potential executive pay issues and concerns in advance • six in 10 (60%) said they were improving their Compensation Discussion & Analysis to better explain the executive pay program’s rationale and appropriateness for the company • 44% said they are engaging with proxy advisors to discuss areas of concern • 29% said they are meeting with key institutional shareholders • 23% said they are preparing a formal communication plan See “Few U.S. Companies Well Prepared for Executive Say-on-Pay Legislation, Towers Watson Survey Finds” available at http://www.towerswatson.com/press/2373

14. Shareholder Access - What is it? Companies Subject to the Rule • All public companies and registered investment companies that are subject to the proxy rules; smaller reporting companies are excused from the rule for three years Minimum Ownership Requirements • A shareholder (or a group of shareholders) must have owned at least 3% of the total voting power of a company’s securities for three years as of the date that the shareholder notifies the company of its proposed nomination. • Voting power is determined based on the aggregate number of votes derived from all classes of securities of the company that are entitled to vote on the election of directors. Example: A company has two classes of common stock that vote together for the purposes of the election of directors. One of the classes of stock has superior voting rights to the other – it is entitled to three votes per share, while the other class only is entitled to one vote per share. Total voting power for this company would be based on the percentage of the total number of votes that shareholders can cast in the election of directors, including both classes of stock.

15. Shareholder Access - What is it? Minimum Ownership Requirements (cont’d) • For shares to be counted as being owned by a nominating shareholder, the shareholder must have both voting power and investment power over such shares. • Shareholders may aggregate their shares with other shareholders to make nominations under the rule. A shareholder that seeks to form such a group must file a report on new Schedule 14N on the same date that the shareholder communicates with other shareholders regarding a potential nomination. Nomination Requirements • A nomination must not violate applicable law, and the nominee must satisfy the objective independence standards of the national securities exchange on which the company’s securities are listed. • Neither the nominating shareholder nor the nominee may have any direct or indirect agreement with the company regarding the shareholder’s nomination. • A shareholder must not hold any of the company’s securities with the purpose (or effect) of gaining control or a number of seats on the board that exceeds the maximum number of nominees permitted by the rule.

16. Shareholder Access - What is it? Deadline for Nominations • A nominating shareholder must notify a company of its intent to make a nomination no earlier than 150 calendar days and no later than 120 calendar days before the anniversary of the date that the company mailed its proxy materials for the prior year’s annual meeting. • If the rules become effective on November 15, 2010, Rule 14a-11 generally would be available to shareholders of companies that mailed their proxy statement for their 2010 annual meetings on or after March 15, 2010. Number of Candidates Who Can Be Nominated • A shareholder can nominate the greater of one nominee or 25% of the number of total board seats (e.g. three candidates on a 12-member board). The largest shareholder to make a nomination has priority over other shareholders. • Prior Rule 14a-11 nominees who continue to serve on the board are counted against the maximum number of potential nominees. • If a company agrees to include a shareholder nominee in its proxy after the shareholder has filed a Schedule 14N, that nominee is counted against the maximum number of potential nominees.

17. Shareholder Access - What is it? Disclosure Requirements Applicable to a Nominating Shareholder • A nominating shareholder must provide a company, and file with the SEC, a new Schedule 14N, disclosing a variety of matters, including: • the amount and percentage of securities owned by the nominating shareholder, • the length of time of the nominating shareholder’s ownership, • information about the nominating shareholder and nominees that is the same as would be required in a proxy contest, • the nominating shareholder’s intent to continue to hold the securities through the date of the meeting, and • whether the nominee satisfies the director qualification requirements, if any, as set forth in the company’s governing documents. Disclosure Requirements Applicable to Companies Subject to Rule 14a-11 • A company must include disclosures in its proxy materials regarding the nominating shareholder and the shareholder nominee or nominees. Much of this information would be based on the Schedule 14N filed by the nominating shareholder.

18. Shareholder Access - What is it? Coordination with Access Rights Under State or Foreign Law • Rule 14a-11 only applies if applicable state law allows a shareholder to make nominations to the board. • The rights created by Rule 14a-11 are meant to be in addition to, but not in lieu of, any shareholder access right given bya company’s governing documents or applicable state or foreign law • A company generally may not use its corporate policies or governing instruments to restrict the rights given by Rule 14a-11 • The rule does not allow a company or shareholder to “opt-out” from the rule, unless they eliminate the right to make nominations entirely Example: A company that adopts a bylaw that includes a 10% minimum ownership threshold for nominations to the board to be included in the proxy would have to include in its proxy statement nominations by shareholders who satisfy Rule 14a-11’s lower ownership threshold.

19. Shareholder Access - What is it? Dispute Resolution The SEC has adopted a new dispute resolution process that a company must follow to exclude a Rule 14a-11 nominee. Under that process, a company may exclude a shareholder nominee if it follows the procedures described in the accompanying table and: • Rule 14a-11 is not applicable to the company; • the nominating shareholder or group or nominee failed to satisfy the eligibility requirements in Rule 14a-11(b); or • including the nominee or nominees would result in the company exceeding the maximum number of nominees it is required to include in its proxy statement and form of proxy

20. Shareholder Access - What is it? Amendments to Rule 14a-8 • Rule 14a-8 now permits the submission of proposals by shareholders to establish a shareholder access regime under a company’s governing documents, as long as such proposals do not conflict with or limit new Rule 14a-11 or other SEC rules. • Rule 14a-8 now treats shareholder access bylaws like other election-related procedural shareholder proposals, which generally may not be excluded as relating to an election of directors. • In light of the minimum ownership requirements of Rule 14a-11 – we expect that much of the activity around shareholder access will take place under Rule 14a-8

21. Impact of Proxy Access - What Does It Really Mean? • Despite the level of attention that has been focused on Rule 14a-11, companies should keep the following facts in mind in responding to the adoption of the rule: • Limited Application. The SEC estimates that roughly only one third of public companies, regardless of size, have one shareholder who satisfies the minimum ownership standards of Rule 14a-11. (Of course, this says nothing about whether group of shareholders will not form to use the rule.) • “… the twenty largest public pension funds on the share register of Goldman Sachs hold in combination just 2.88 percent of the common stock of the company. … CalPERS conducted research based on its domestic index portfolio, a portfolio that held some 2,322 securities at the June 2010 month end. Of these securities, 2,035 were held one year earlier and 1,570 were held three years earlier. These numbers demonstrate that even for a large, stable index portfolio there can be significant changes in the securities membership roster by extending the holding period requirement from one to three years.” See Aug. 12, 2010 Letter to Chairman Schapiro from CalPERS and other institutional investors • Potential Legal Challenges to Rule 14a-11. Rule 14a-11 is expected to be challenged in court. If that does happen, it is possible that implementation of Rule 14a-11 may be delayed until any such challenges are resolved.

22. How to Best Prepare for Shareholder Access • Review Advance Notice Provisions in Bylaws. Companies should ensure that their advance notice bylaw provisions differentiate between nominations from the floor, nominations under Rule 14a-11, Rule 14a-8 proposals, and other business to be brought from the floor of the meeting. • Determine Whether any Shareholders Can Make Nominations. Companies should consider whether they have large long-term shareholders who might be able, individually or with other shareholders, to meet the 3% voting power minimum ownership requirement. • Review Corporate Governance Policies. Companies should review and consider updating their corporate governance policies and governance/nominating committee charters to address how they will process Rule 14a-11 nominations, including the circumstances in which they will challenge a Rule 14a-11 nomination. • Consider the Impact of Rule 14a-11 on Majority Voting Policies. Companies should confirm that their majority voting policies treat the inclusion of a Rule 14a-11 nominee in their proxy materials as a proxy contest and default back to a plurality election standard.

23. What Else to Prepare for, other than Dodd-Frankand Shareholder Access • Proxy Plumbing Concept Release • Comments Due October 20th • Far-ranging impact on the proxy system: • Client Directed Voting • OBO/NOBO • Proxy Advisory Firms • Issuer Choice Model of Proxy Solicitations • Opportunities to Increase Retail Participation in the Voting Process • XBRL Implementation • Most large companies began data-tagging their financial statements this year • Larger companies began detailed tagging of the notes to their financial statements this year • Shareholder Proposals in 2011 • Key Topics – Say on Pay, Special Meetings, Proxy Access? • Recommended strategies • Interpretive guidance expected