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2010 Proxy Season Year in Review September 14, 2010

2010 Proxy Season Year in Review September 14, 2010. Presenter: Thomas A. Germinario Senior Vice President D. F. King & Co., Inc. Important Changes for 2011: Dodd-Frank Wall Street Reform and Consumer Protection Act.

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2010 Proxy Season Year in Review September 14, 2010

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  1. 2010 Proxy Season Year in ReviewSeptember 14, 2010 Presenter: Thomas A. Germinario Senior Vice President D. F. King & Co., Inc.

  2. Important Changes for 2011: Dodd-Frank Wall Street Reform and Consumer Protection Act • Proxy Access: Shareholders permitted to include nominees for director elections within issuer’s proxy solicitation materials. • Deadline to submit nominations: no later than 120 and no more than 150 days prior to anniversary of previous year’s mail date • Ownership Threshold: limited to shareholders or groups with 3% ownership for at least three years • Who will use?: pension funds, labor funds, individual activists • Say on Pay: Companies will be required to seek non-binding shareholder vote on compensation package of named executive officers at first meeting held on or after January 21, 2011. Companies will also be required to seek a vote on a frequency proposal of future “say-on-pay” votes - one, two or three years. • Elimination of the Broker Discretionary Vote on Executive Compensation: Brokers will not be able to vote client shares without instructions on say-on-pay proposals or any compensation proposals. • Golden Parachutes: On a merger agenda, shareholders will be permitted to vote on a separate non-binding proposal on any executive pay related to a change-in-control they have not previously approved in addition to the merger proposal itself.

  3. Proxy Plumbing • Street Name Proxy Distribution: Review NYSE fee schedule and potentially eliminate it in favor of allowing market forces to determine appropriate fees. • Non-Objecting Beneficial Owner (“NOBO”) / Objecting Beneficial Owner (“OBO”): Cost of anonymity may be borne by the shareholder rather than by the issuer. • Stock Loan: Recall shares in time to vote on important matters. • Over Voting / Under Voting / Empty Voting: Disclosure of pre or post reconciliation. • Advance Notice of Meeting Agenda: Issuers should give advance notice of matters to be voted on to institutions.

  4. Proxy Plumbing • Voting Audit: Require vote tabulators, securities intermediaries, and proxy service providers to provide each other with access to vote data so investors and issuers can confirm that votes have been received and tallied according to investors’ voting instructions. • Dual Record Date: One record date for determining who is entitled to receive notice of the meeting and a later one for determining who can vote at the meeting. Holders without an economic stake in the matter should not be able influence the outcome of a vote (issue of reconciliation is used in Europe). • Proxy Advisory Firms: Should proxy advisory firms register with SEC to alleviate potential conflicts of interest and lack of accuracy and transparency? Should they disclose any potential conflicts? • Enhance Fund Voting Disclosure: Provide actual shares voted in N-PX filing.

  5. Proxy Fight Trend Analysis As of August, 2010 Source: FactSet Research Systems Inc. 2010 showed a drop in number of contentious activist situations especially in large cap proxy contests.

  6. # of Directors Receiving Against/Withhold Recommendations from ISS As of August, 2010 * Increased recommendations due to tax gross up policy

  7. # of Directors with Less than 50% For Vote As of August, 2010 * Russell 3000

  8. Management Compensation Proposals As of August, 2010 Source: Institutional Shareholder Services (ISS)

  9. Shareholder Proposal: Say-On-Pay As of August, 2010 Source: Institutional Shareholder Services (ISS)

  10. Management Proposal: Say on Pay As of August, 2010 Source: Institutional Shareholder Services (ISS)

  11. Shareholder Proposal: Majority Voting As of August, 2010 Source: Institutional Shareholder Services (ISS)

  12. Shareholder Proposal: Declassify Board As of August, 2010 Source: Institutional Shareholder Services (ISS)

  13. Shareholder Proposal: Call Special Meeting As of August, 2010 • All proposals in 2010 were at the 10% threshold • Issuers were granted a relief from the SEC on the shareholder proposal if there was a management proposal for 25% Source: Institutional Shareholder Services (ISS)

  14. Shareholder Proposal: Act by Written Consent As of August, 2010 Source: Institutional Shareholder Services (ISS)

  15. Shareholder Proposal: Independent Board Chair As of August, 2010 Source: Institutional Shareholder Services (ISS)

  16. Independent Chairman of the Board (S&P 500) Source: The Corporate Library

  17. Shareholder Proposal: Eliminate Supermajority Provision As of August, 2010 Source: Institutional Shareholder Services (ISS)

  18. Shareholder Profile Example

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