Citizens United Citibank & Social Media Data Security in the Digital Age Bankruptcy & Restructuring New Stock Exchange www.levick.com/insights

1. EDITION 13
Weekly October 19, 2012
Citizens
United
Are Shareholder Revolts in the Offing?

2. 03 Contents
04 Citizens United
Are Shareholder Revolts in the Offing?
08 Citibank & Social Media
Succeeding Where Banks Fear to Tread
10 Data Security in the
Digital Age
11 Adjusting Executive
Compensation Plans
12 Bankruptcy & Restructuring
A Changing Landscape
16 New Stock Exchanges
Leveraging Opportunity
21 Blogs
to follow
Weekly 22 LEVICK
In THe News

3. [United:]
Citizens
here’s now reason to feel At the same time, Mr. Freed’s enthusiasm is
T good―or at least a bit bet-
ter―about Citizens United, the
landmark case in which the
not wholly driven by confidence in the civic
right-mindedness of global corporations. To
the contrary, coverage of the study has duti-
Supreme Court ruled that the First Amend- fully underscored self-interest as a compelling
ment prohibits the government from restrict- motivation, quoting the study’s own emphasis
ing political expenditures by corporations and on shareholder relations.
unions. The decision caused a flurry of spend-
Outside interest groups and politicians usu-
ing by trade associations and non-profit groups
ally have multifarious agendas and, as a result,
that are not required to disclose their corpo-
shareholders may become aware of financial
rate donation sources―and near-apoplexy
contributions that unwittingly disserve their
among some people who were anticipating
own interests. For example, four of the seven
covert corporate control of the political system.
biggest manufacturers of birth control drugs
But lo and behold, a study released last month and devices donated to a trade association
Are Shareholder
by the Center for Political Accountability (CPA), supporting Republicans who were presumably
in partnership with the Zicklin Center for Busi- pro-business, but who had also vowed to limit
ness Ethics Research at the University of Penn- access to birth control-related products. Not all
Revolts in the Offing? sylvania‘s Wharton School, found a significant
increase in the number of large companies
voluntarily disclosing their political contribu-
businesses are created politically equal.
Heretofore, most of the talk about marketplace
impact as a corporate concern in the wake of
Richard S. Levick, Esq. tions. Among 88 such companies, 45 chose to
Citizens United was really about how consum-
Originally Published on Forbes.com disclose, up from 36 the year before. The study
ers might react. Such pressures are not to
awarded particularly high marks to Microsoft,
be taken lightly as Target learned in 2010
Merck, Aflac, and Gilead for their disclosure
when gay rights groups started a boycott
policies and procedures.
because the company donated $150,000 to a
The ideological dynamics are fascinating and by business group supporting Minnesota’s guber-
no means glibly predictable. “We’re encouraged natorial candidate Tom Emmer, who opposes
that even when the stakes are highest, leading same-sex marriage.
companies are refusing to engage in hidden
Yet the real pressure points, or at least the most
spending,” said CPA president Bruce Freed. This
consistent ones, are likelier to be felt among
is the very same CPA castigated earlier this year
shareholders who may be upset over negative
in the Wall Street Journal as a well-armed sol-
consumer opinion triggered by a donation, or
dier in the war against corporate free speech.
who are themselves directly opposed to a par-
It’s always a good sign when public figures
ticular donation. Shareholder activism, about
undermine their own stereotypes.
05

4. Weekly
“
pressures driving companies like Aflac and
Chubb to reveal their contributions seem very
Consider the Center for Political genuine indeed.
Accountability itself as a barometer of the
On the left, observers like Craig Holman of
activist sea change. According to its own Public Citizen argue that shareholders are in-
reports, shareholders working with CPA creasingly less amenable to “squander” money
on the political enthusiasms of their CEOs. Nor
have filed a total of 51 resolutions in 2012.” are all conservatives as disturbed as Smith by
the trend. Jim Bopp Jr., who has sued to over-
turn disclosure requirements, has no problem
which we’ve written so frequently in these is a lot more form than there is substance in
with voluntary action. “If [companies] think
pages, is thus a salient countervailing force the agreements that shareholder groups have Luís Brás / Shutterstock.com
they get a competitive advantage by disclos-
against the oligarchic trends purportedly un- struck with public companies,” says Kelner,
ing their contributions, we are fine with that.
The move toward transparency applauded by
leashed by Citizens United. And corporations chair of the Election and Political Law Practice
That’s the marketplace.”
Bruce Freed and others is in and of itself a
know it, as the mounting number of voluntary Group at Covington & Burling LLP. “The vast
Yet disclosure is only one aspect of the problem sign of progress but, like all progress, it begets
disclosures clearly suggests. majority of what they are disclosing was al-
for corporations. As Smith correctly suggests, new problems. In fact, it opens up a Pandora’s
ready publicly available. For the most part, they
Consider the Center for Political Accountability Box as we’re no longer just talking about a
are just pulling it all together in one place.” they must still decide if they even want to
itself as a barometer of the activist sea change. marketplace for the products and services that
participate in the political process given the
According to its own reports, shareholders But there’s no gainsaying that the CPA/Zicklin corporations exist to sell. We’re also talking
increased scrutiny to which Citizens United has
working with CPA have filed a total of 51 reso- Center report touched a political nerve if only about a marketplace of ideas, where more
inspired the watchdogs. There’s a communica-
lutions in 2012. Of those, 13 led to agreements because the narrative has shifted, from debate than a few corporate angels have historically
tions challenge layered over any decision that
with the company. For example, the New York about Citizens United itself to a discussion of feared to tread.
companies make. After all, once they disclose
State Pension Funds “successfully engaged” how corporate stakeholders will or will not
how much they’ve contributed and to whom,
The lesson is that, if you do tread there, watch
Safeway, Kroger, CSX Corp., Sempra Energy, hold public companies accountable for their
it stands to reason that shareholders and other
your step. Think very hard about the questions
R.R. Donnelley & Sons, and Reynolds Ameri- decisions. On the right, former Federal Elec-
interested parties will also want to know why.
you may be asked and the answers you’ll have
can. Trillium Asset Management “reached tion Commission Chairman Bradley Smith has
At that point, the penalties for miscommuni- to give. You may pay dearly for the “favor” the
agreements” with Halliburton, Chubb Corp, averred that shareholders “regularly defeat”
cating accelerate. How justify a donation to Supreme Court did you with its fateful decision
and State Street Corp. The list goes on, en- proposals to compel donation disclosures. In
a pro-industry candidate who might have a in Citizens United. L
compassing both individual shareholders and the same breath, however, Smith laments that
other institutional investors. “many corporations are feeling pressure from problematic position on abortion or gay rights? Richard S. Levick, Esq., President and CEO of LEVICK,
faux ‘shareholder rights’ groups to adopt such Conversely, how justify not contributing to a represents countries and companies in the highest-stakes
Robert Kelner offers an important general global communications matters—from the Wall Street
policies, or to exit the political arena entirely.” prominent industry supporter because he or
caveat to any such evidence of a ground-break- crisis and the Gulf oil spill to Guantanamo Bay and the
she happens to have a strong position on an
ing rapprochement between shareholders It’s hard to imagine that those shareholder Catholic Church.
unrelated social issue? You risk being per-
and corporate political contributors. “There rights groups are all that “faux” when the
ceived as either knave or fool.
06 07 07

5. When it comes to social media’s impact on America’s
largest financial institutions, one can’t help but think of
the ways that the Occupy movement and other consumer
activists have used platforms such as Twitter and
Facebook to grow their ranks, organize their efforts,
and disseminate scathing critiques of the industry. But
as reported last week in the Wall Street Journal, at least
one major financial services provider is embracing
social media to get closer to its customers.
When Citibank customer Stacy Small tweeted that it is actively gaining ground in an indus-
about being left on hold for 40 minutes during try with a spotty history of customer service
a routine call to the bank’s customer service through traditional channels.
department, a Citibank agent responded within
Key to Citibank’s success (as evidenced by the
minutes with a message that read “Send us your
anecdote above) is an understanding that even
phone number and we’ll call you right now.”
the most critical commentary posted to a Face-
Not moments later, Ms. Small was speaking book page or Twitter account is only the begin-
Citibank’s Social
to one of approximately 30 Citibank customer ning of a conversation that could potentially
service representatives who have received transform a negative customer experience into
special training in social media monitoring and a positive one.
response. The experience was so overwhelm-
Media Effort
Even better, Citibank’s social media efforts
ingly positive that Ms. Small doesn’t even call
provide potential customers with a look at the
Citibank customer service anymore. Instead,
lengths it will traverse to ensure an optimal
she simply tweets the address @askCiti when-
banking experience for all. L
ever a question or problem arises.
Succeeding Where Many Banks Still Fear to Tread While such interactions may be nothing
Michael W. Robinson is an Executive Vice President at
LEVICK and a contributing author to LEVICK Daily.
new to the social media mavens who protect
By Michael W. Robinson
Originally published in the LEVICK Daily
online brands at hotels, airlines, and major
consumer product companies, Citibank is
something of a pioneer for the simple reason
09

6. Weekly
Data SecuritY In The Digital Age NACD Boardroom:
Adjusting Executive Compensation
from PicewaterhouseCoopers’ Shane Sims Plans During a Turnaround
This week’s edition of NACD BoardVision focuses on adjusting executive compensation plans
during a turnaround. Join Steve Kalan, associate publisher of NACD Directorship, and Glenn Bor-
romeo, of Meridian Compensation Partners, in this video interview as they discuss changing pay
I recently sat down with Shane Sims, a Director in PricewaterhouseCoopers’ U.S. Forensic Services strategies for companies pivoting to turnaround mode.
practice, to discuss data security in the Digital Age.
Mr. Sims outlined the specific risks presented to companies and countries by the five primary
threat groups when it comes to data loss and theft: foreign intelligence services; terrorist organiza-
tions; transnational criminal enterprises; global competitors; and insiders. With so many potential
threats, companies must establish a data breach response plan that enables fast action and effec- Financial Communications
tive outreach to all concerned stakeholders.
Litigation
As a former Supervisory Special Agent with the Federal Bureau of Investigation (FBI) who has
more than 24 years experience in forensic investigations, cybercrime, national security, and crisis
Corporate & Reputation
management, Mr. Sims shared these insights and many more with Bulletproof™. Public Affairs
Crisis
Sign Up Today
10

7. Weekly
Tyler Nurnberg
on
Bankruptcy &
Restructuring
Richard S. Levick, Esq.
Over the next several weeks, LEVICK Daily
How has the bankruptcy and
Originally Published on LEVICK Daily
will share selected interviews from our recent
restructuring landscape
NACD Directorship article entitled “What’s
changed in the wake of the
Next? The Top Issues of 2013 and Beyond.”
global financial crisis?
Today, we feature a discussion on bankruptcy Tyler Nurnberg: Europe is still very much in
and restructuring with Tyler Nurnberg, a Part- the midst of a financial crisis and the effects
ner in Kaye Scholer’s Bankruptcy & Restructur- are multifaceted. Notably, we have seen an
ing Group and Managing Partner of the firm’s increase in the number of cross-border insol-
Chicago office. vency cases, which is a trend we fully expect to
continue. In particular, there has been a rise in
Mr. Nurnberg represents troubled companies
cases filed under Chapter 15 of the Bankruptcy
in restructurings throughout the U.S. He
Code, which provides a framework for multi-
also advises lenders, funds, institutional
national companies to have foreign insolvency
investors, and private equity sponsors on
proceedings recognized in the U.S. The laws
restructuring matters.
governing these cases are still being devel-
At the conclusion of the interview, you can oped, and courts are struggling with how much
find LEVICK’s own communications best weight to give foreign insolvency laws when
practices appended. they conflict with U.S. law.
12 13

8. Weekly
We have also witnessed growth in the num- Once a company files bankruptcy, the board bankruptcy. The benefits of getting this done business and, while bankruptcy can be a
ber of foreign companies looking to file under should appreciate that the decision-making before filing can include greater flexibility in powerful tool, it is not a panacea for the
Chapter 11 of the Bankruptcy Code. The rules process becomes much more transparent. In developing an incentive bonus plan for the problems that led the company to file
on eligibility for a foreign company to file general, the company can operate as usual but company and avoiding potential liability for bankruptcy in the first place. L
bankruptcy here are lenient, and our bank- will need prior court approval for “non-ordi- premature layoffs.
Richard S. Levick, Esq., President and CEO of LEVICK,
ruptcy laws are biased towards rehabilitating nary course” transactions such as sales, financ- represents countries and companies in the highest-stakes
Lastly, the board needs to stay focused on the
a troubled company to preserve its “going ings and the like. A question that frequently global communications matters—from the Wall Street
business plan during the bankruptcy. While
concern” value―as opposed to most foreign gets asked is whether a director should resign crisis and the Gulf oil spill to Guantanamo Bay and the Catho-
external factors may have contributed to the lic Church.
insolvency regimes, where the focus is on liqui- once the company files bankruptcy―there
need to file, larger underlying problems with
dating a troubled company’s assets quickly and are exceptions but in most cases, the answer This post is excerpted from Richard Levick’s recent NACD
the business model or the balance sheet likely
distributing the proceeds to creditors. is “no,” the director is better off staying on the Directorship feature “What’s Next? The Top Issues of 2013
drove the decision. Those issues need to be and Beyond.”
board and guiding the company to conclusion
resolved for the company to emerge as a viable
How can directors best serve a of the bankruptcy process.
company during bankruptcy or
restructuring? How can a company best position
itself for post-bankruptcy BEST COMMUNICATIONS PRACTICES:
Tyler Nurnberg: A board will want practical
operations?
outside advice early in the process on how to
fulfill its fiduciary duties, and how those duties Tyler Nurnberg: The company should deter-
Boards must ensure that exit strategies and future growth are the
may change when the company is insolvent or mine its exit strategy before it files bankruptcy 1. hallmarks of communications during bankruptcy, beginning with the
approaches insolvency. The board will want to wherever possible, and view the process as
initial announcement. When companies control the “new day” narrative,
maintain a proper supervisory role and not ex- an opportunity to fix both financial and op-
internally and externally, they keep stakeholders focused on future
ercise undue influence over day-to-day opera- erational problems. Get as much negotiated in success, not past mistakes.
tions. Prior to filing bankruptcy, the board and advance of filing as possible. There has been
Every ruling, decision, and development in the restructuring process is
its advisors should also assess the adequacy an increase in the number of “prepackaged” or
2. an opportunity to communicate the new day message. Adversaries will
of the D&O insurance policies. Also, directors “pre-negotiated” cases in recent years and we
should be alerted to the discrete areas where see that trend continuing. Filing with an exit
use these milestones to disseminate their own messages. Don’t let them
operate in a vacuum.
they could potentially be liable personally for plan already negotiated enables the company
the bankrupt company’s debts. Every case is to shorten the time it spends in bankruptcy, Boards must understand the power of social and digital media to disclose.
different, but these pitfalls can include person- maintain control over the process and reduce
3. Teams need to be ready to respond publically from the very moment a
al liability for “responsible persons” when a restructuring costs. company begins to seriously consider restructuring—in other words, go on
company fails to pay wages or segregate certain the offense so you don’t have to play defense.
Another piece of practical advice is for the
taxes, or for knowingly permitting the company
company to get the right managers and finan-
to incur debts beyond its ability to pay.
cial advisors in place, and develop a plan to
“right-size” the employees, before it files
14 15

9. how new Stock Exchanges
Can Leverage
Global
Economic
Opportunity
Richard S. Levick, Esq.
Originally Published on Fast Company

10. Weekly
In
June of this year, a Bank of Amer- Nurturing Confidence on multiple exchanges in New York, London, significantly driving down the price. That kind
ica poll found that investors are Hong Kong, and other major financial hubs. of volatility can keep investors and compa-
still sitting on their hands as the Investors—especially today’s anxious breed— As such, it is incumbent on new exchanges to nies on the sidelines. As such, new exchanges
global economic recovery inches need to feel that the exchange facilitating their highlight six key selling points: need to identify ways to encourage long-term
forward. According to the study, they are hold- trades is a safe and protected environment. investing.
ing more cash than at any point since 2009. That means fairness and transparency need
to be seen as paramount concerns by all the
Given the high levels of anxiety still present in right stakeholders, including governments, six key selling points
the marketplace, one might conclude that this investment bankers, accountants, ratings
is perhaps not the most opportune time to es- agencies, institutional investors, and financial
tablish a new stock exchange such as those that advisors. For a nascent exchange, this point 1. Liquidity — The deeper and more liquid the market, the more companies
have been created in Egypt, India, and even is especially critical as new and uncharted will want to be there;
Cambodia in recent years. But because inves- frontiers inherently conjure fears of
tors aren’t finding attractive options on the ex- potential problems. New capital — Companies seeking investment have a new venue in which
changes that traditionally dominate the capital 2. to access capital that likely wouldn’t have been invested elsewhere;
markets (such as the NYSE or FTSE), the door As such, a strong regulatory infrastructure
is open for these and other new exchanges to needs to be implemented and articulated to Governance — Attracting market participants means promoting the
brand themselves as true players on the global the point that the dominant perception by 3. experience, capital, and management capabilities of those running the
economic stage. investors and listed companies alike is one
of safety and security. New exchanges often
exchange in order to build the needed trust;
And it isn’t just investors who may be seeking bring unfamiliar trading partners together.
Global regulatory cooperation — If companies don’t see a strong
new opportunities. As the world gets smaller, This is another point that ups the ante for 4. commitment to the rule of law, administered via clear and consistent legal
big companies are looking for ways to access emerging exchanges. When buyers and sellers
pools of capital that exist in regions they have don’t know each other, they need to know guidelines, they will see risk rather than opportunity.
yet to tap into. At the same time, these regions that the institution standing between them
are home to growing companies that need to will ensure the best price, facilitate a complete Technology — State of the art trading systems can help prevent the
raise capital, but can’t get themselves listed on transaction, and prevent any underhanded
5. problems that derailed the high-profile IPOs of Facebook and others. They
the major exchanges. dealings. also support robust market surveillance and stand as a bulwark against
hacking and cybercrimes; and
All of this means that the time is right for new
and nascent exchanges to begin aggressively Articulating the Competitive
Listing fees – The more reasonable, the better.
promoting their value propositions to inves- Advantage 6.
tors and public companies alike. Right now,
they have the chance to breed confidence; Equally as important to new stock markets
articulate their unique competitive advantages; as fairness and transparency are concrete
and attract the committed, long-term invest- demonstrations of the value and advantages That means helping global investors better un-
ment so essential to reducing volatility and that come with being listed on the exchange.
Attracting Committed Investors derstand the intricacies of the market and how
ensuring steady growth. Most new exchanges rely heavily on local and they represent fertile ground for long-term
During the first three days of trading on the
regional companies’ participation, so there growth. To some extent, this means controlling
Cambodian Stock Exchange (CSX), which
Confidence, competitiveness, and commit- exists a need to discuss the ways that the ex- the digital conversation surrounding the re-
opened last year, the share price of a local wa-
ment are the “three Cs” of creating and grow- change benefits local and regional interests. gional economy. For example, a Google search
ter utility shot up 60 percent. It wasn’t long be-
ing an exchange today—and to develop these performed as of this writing for the generic
fore investors looking for a quick buck began
necessary elements of success, new exchanges At the same time, there is also a desire to at- term “Middle East Investment” returns not
selling their stakes and pocketing the profits,
need to rely on the fourth C that brings them tract global companies who are often listed one result owned by a regional exchange. That
all together: communication.
18 19

11. Weekly
BLOGS to follow
Thought leaders Industry blogs
Amber Naslund Holmes Report
brasstackthinking.com holmesreport.com
Amber Naslund is a coauthor of The Now A source of news, knowledge, and career
Revolution. The book discusses the impact of the information for public relations professionals.
social web and how businesses need to “adapt to
the new era of instantaneous business. NACD Blog
blog.nacdonline.org
Brian Halligan The National Association of Corporate Directors
hubspot.com/company/management/brian-halligan (NACD) blog provides insight on corporate
HubSpot CEO and Founder. governanceand leading board practices.
Chris Brogan PR Week
prweekus.com
Chrisbrogan.com
PRWeek is a vital part of the PR and
Chris Brogan is an American author, journalist,
communications industries in the US, providing
marketing consultant, and frequent speaker about
timely news, reviews, profiles, techniques, and
social media marketing. ground-breaking research.
David Meerman Scott PR Daily News
davidmeermanscott.com prdaily.com
David Meerman Scott is an American online PR Daily provides public relations professionals,
marketing strategist, and author of several books social media specialists and marketing
on marketing, most notably The New Rules of communicators with a daily news feed.
Marketing and PR with over 250,000 copies in print
in more than 25 languages.
means other voices are controlling the conver- access to the resources they need to grow,
sation and establishing the dominant percep- create jobs, and perhaps even become econom- Guy Kawasaki BUSINESS Related
tions about opportunities in the region—and ic engines for parts of the world that guykawasaki.com FastCompany
their messages are not always what investors sorely need them. Guy Kawasaki is a Silicon Valley venture capitalist, fastcompany.com
would hope to hear. bestselling author, and Apple Fellow. He was one Fast Company is the world’s leading progressive
of the Apple employees originally responsible for business media brand, with a unique editorial
That’s a rising tide that lifts all boats—and one marketing the Macintosh in 1984. focus on business, design, and technology.
that can help motivate those global investors
Why New Exchanges Need to still sitting on the sidelines. L Jay Baer Forbes
Succeed jaybaer.com Forbes.com
Richard S. Levick, Esq., President and CEO of LEVICK, Jay Baer is coauthor of, “The Now Revolution: 7 Forbes is a leading source for reliable business
Shifts to Make Your Business Faster, Smarter and news and financial information for the Worlds
By aggressively communicating the three Cs, represents countries and companies in the highest-stakes business leaders.
More Social.
new exchanges have the chance to benefit the global communications matters—from the Wall Street
global economy in two distinct ways. First, by crisis and the Gulf oil spill to Guantanamo Bay and the Mashable
Rachel Botsman mashable.com
providing large, established companies with Catholic Church. rachelbotsman.com Social Media news blog covering cool new web-
access to investment capital that might not find Rachel Botsman is a social innovator who writes, sites and social networks.
its way to the NYSE, FTSE, or any of the other consults and speaks on the power of collaboration
traditional exchanges. And second, by provid- and sharing through network technologies.
ing small regional companies that could never
be listed on those traditional exchanges with Seth Godin
sethgodin.typepad.com
Seth Godin is an American entrepreneur, author
and public speaker. Godin popularized the topic of
permission marketing.
20

12. IN THE NEWS
Articles
Los Angeles Times | October 19, 2012
Google releases earnings prematurely, triggering stock sell-off
MSNBC | October 18, 2012
Google delivers 3Q letdown early, stock plummets
ESPN | October 17, 2012
Armstrong out as Livestrong head, loses sponsors
Video
Fox 5 News CNN
Lance Armstrong Steps Down
as Livestrong Chairman,
Loses Sponsors
The Situation Room With Wolf
Blitzer
THE URGENCY
OF NOW.
23