Update on Proxy Statement Disclosures and Strategies for 2011 Annual Stockholder Meetings

1. Update on Proxy Statement Disclosures and Strategies for2011 Annual Stockholder Meetings March 17, 2011 Presented by: Christine Daly, Partner at Holme Roberts & Owen LLP Jennifer D’Alessandro, Senior Counsel at Holme Roberts & Owen LLP Edgar J. Lewandowski, Senior Associate at Holme Roberts & Owen LLP #1521776 v1 den

2. Director Qualifications • Since February 2010, Item 401(e) of Regulation S-K has required disclosure of the qualifications of each director and nominee, including the particular experience, qualifications, attributes or skills that: • qualify that person • to serve on your company’s board • at the time of that particular filing • in light of the company’s then-current business and structure #1521776 v1 den

3. Director Qualifications • Frequent SEC comments regarding this disclosure, often related to the following areas: • aggregated disclosure regarding the board as a whole or groups of directors • generic references to “business experience, skills, or knowledge” • directors in board classes not currently up for election • directors nominated or elected by specific stockholders or classes of stock • not simply why the person was chosen as a director in the first place, but why he or she should be one now #1521776 v1 den

4. Compensation Committee Independence • Dodd-Frank requires SEC to adopt rules regarding independence of compensation committee members and compensation consultants / other advisors • Committee member independence rules are expected to relate to additional affiliations of directors (similar to enhanced standards for audit committee members) • Consultant independence is not required, but process for evaluating and disclosing independence of consultants is required #1521776 v1 den

5. Compensation Committee Independence • Committee must consider matters to be specified by SEC including disclosure of: • Other services provided by the advisor • Fees paid to the advisor as a percentage of the advisor’s revenue • Policies and procedures used by committee designed to prevent conflicts of interest • Business and personal relationships between the advisor and committee members • Advisor’s ownership of company stock • Rules will apply equally to compensation consultants, attorneys and other advisors #1521776 v1 den

6. Compensation Committee Independence • Current SEC timetable: • Proposed rules: March 2011 • Final rules: April – July 2011 • Action Items: • Begin considering importance of consultants and their independence • Review current compensation committee member independence in light of strict audit-committee-style requirements • Review and revise compensation committee charter to comply with final rules (when available) • Controlled companies are exempt #1521776 v1 den

7. Board Diversity • Since February 2010, public companies must disclose whether the nominating committee considers diversity in identifying board nominees • Not required to consider diversity, just whether it is considered, and if so, how – which leads to an odd disclosure if not considered • If there is a policy, how it is implemented, as well as how the nominating committee (or the board) assesses its effectiveness • “Diversity” not defined by rules - each company must disclose how it defines diversity • Experience • Expertise • Background • Gender / Ethnic Origin #1521776 v1 den

8. Board Diversity • In a September 2010 speech, SEC Commissioner Aguilar indicated his disappointment with most disclosures to date in response to this rule and suggested improvements: • Disclose actual diversity on board (number of women, minorities, etc.) • Describe concrete steps taken by the board to increase its diversity • adopt policy of interviewing women/minority candidates for each board vacancy • disclose number of interviews conducted with diverse candidates • instruct search firms to seek out diverse candidates #1521776 v1 den

9. Proxy Disclosure of Risk Oversight www.CartoonStock.com #1521776 v1 den

10. New Disclosures Rules in Practice • New proxy disclosures have been in places since February 28, 2010: • Disclosure of compensation policies and practices as they relate to the company’s risk management practices (Item 402(s) of Regulation S-K) • Disclosure of the board’s role in risk oversight of the company, such as how the board administers its oversight function, and the effect this has on the board’s leadership structure (Item 407(h) of Regulation S-K) #1521776 v1 den

11. New Disclosures Rules in Practice • Deloitte Study of 398 of the S&P 500 (Jan. ‘11): • 58% of disclosures note that the audit committee is primarily responsible for risk • 53% of disclosures note that compensation committee is responsible for overseeing compensation-related risks • 34% discussed how risk oversight/management aligns with strategy • 19% noted a management-level risk management committee, but only 4% have board-level risk committee #1521776 v1 den

12. Best Practice Recommendations www.CartoonStock.com #1521776 v1 den

13. Best Practice Recommendations • Evaluate Role of Board Committees • Consider Forming a Risk Committee • Dodd-Frank §165(h) requires some financial service companies to form them • Approximately 4-6% of companies have them (ArcelorMittal, Genzyme, La-Z-Boy, Duke Energy and others) • A new best practice? • Evaluate Lines of Communication and Information Flow • Are “risk dashboards” enough? #1521776 v1 den

14. Best Practice Recommendations • Examine Board Composition and Director Education Programs • Dodd-Frank will require some financial companies to have a risk management expert on the board • Site visits? Review analyst reports? • Consult Recognized Sources of Guidance for Risk Governance • NACD and COSO reports #1521776 v1 den

15. Executive Compensation • Say-on-Pay and Say-on-Golden Parachutes • Final Rule – January 25, 2011 • Smaller reporting companies – delayed effective date until January 21, 2013 • Includes SEC “model” resolution for SOP • CD&A mandatory disclosure re consideration of SOP results • Form 8-K disclosure of frequency of SOP decision #1521776 v1 den

16. Executive Compensation • Dodd-Frank planned guidance • Comp Committee Independence – Mar 2011 • Clawback policy – Aug-Dec 2011 • Pay for performance – Aug-Dec 2011 • Internal pay equity – Aug-Dec 2011 • Hedging policy – Aug-Dec 2011 • Chair and CEO positions – None planned #1521776 v1 den

17. Executive Compensation • Compliance Disclosure Interpretations (CDIs) • How and when to report modifications to awards • How to report awards payable in cash or stock • How to report awards declined or not accepted • Performance award disclosures • SOP, frequency and golden parachutes #1521776 v1 den

18. Executive Compensation • SEC Comments • Performance goals • Peer groups and benchmarking • How amounts were determined • Compensation risk assessment process • The “Why” of compensation #1521776 v1 den

19. Executive Compensation • Disclosure “best practices:” • Compensation Discussion and Analysis (CD&A) • Pay for performance • Selection of peer groups and benchmarking • Compensation risk assessment • Plain English – simple and clear disclosures • Check it one more time – do the math #1521776 v1 den

20. Conclusion – Q&A www.CartoonStock.com 20 #1521776 v1 den