Five Questions With Steven Shapiro

After winning Corporate Secretary‘s award for best governance professional in the small to mid-cap category last year, Steven Shapiro stated that ‘educating and listening are the keys to 
success’. Here he talks to deputy editor Aarti Maharaj about some hot topics in governance.

How is your firm keeping up with the ever-changing regulatory landscape?

It’s certainly a challenge, particularly since we are a bank holding company that accepted funds under the Troubled Asset Relief Program (TARP). The large number of regulatory changes 
exacerbates this. Many government agencies have not even been able to propose all the implemented rules within the very tight time frames that were prescribed for them.

With our limited resources, we have taken a practical approach. We carefully monitor the proposed regulations and work to react to them while implementing changes to conform to our particular 
business needs. Our team believes it is essential to keep our directors, senior management and affected businesspeople informed of all 
proposed and actual developments.

How do you think small companies are dealing with say on pay, say when on pay and, in the future, say on golden parachutes?

It is difficult to generalize. We had to address say on pay as a result of receiving TARP funds. For the same reason, we are prohibited from having golden parachutes. Most small companies will 
follow the lead of the large issuers, though large firms are more visible and more likely to have to justify their actions to investors. If the larger companies analyse the say-on-pay requirements and decide an annual review is preferable, many small firms will follow their lead.

What is your advice on risk management?

It is important for boards to analyse their company’s processes and feel comfortable with them. Boards should regularly revisit these processes and reevaluate them. Even policies and procedures that are only a couple of years old may be outdated. Meeting independently from management is more important now, to ensure that board members can openly share their thoughts and concerns.

In terms of proxy, are your retail investors voting? How are you getting them more engaged?

Engaging true retail investors can be very difficult for several reasons. I’m not sure how involved they want to be or how much time they wish to devote to the issue, particularly if a firm is doing well. I suspect many of them feel that as they are relatively small stockholders, their impact on any company is limited.

Do you see any emerging trends or issues regarding proxy access?

Proxy access might be the single most important change 
public companies will have to address as it would offer investors the most direct input into a firm’s management. If it’s ultimately adopted in its originally proposed form, I see it as having a significant impact on stockholder relations.

As the proposed change has moved closer to being a reality, some of the generic advice that has been disseminated suggests public companies try to engage larger stockholders in an effort to identify their concerns before they result in a request for proxy access. To me, that underlines just how potentially significant many commentators and companies perceive the 
possible impact of the rule to be.

[Article by Aarti Maharaj, Corporate Secretary]