MZ Bulletin 2008

‘08

The Most Comprehensive Global Review for Investor Relations and Corporate Governance

MZ Bulletin ‘08

number 25

MZ Bulletin

IFRS: International Financial

Reporting Standards

International Investing Trends www.mz-ir.com

Ideas on how to evaluate IR TEAMS

TOP30

IR Global Rankings for IR Websites, Corporate Governance and Financial Disclosure Procedures

Case Studies: Nexen, adidas, Philips and BBVA

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Supporting Structure

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Don’t miss the 2009 edition Registration begins October 1st, 2008

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www.mz-ir.com A LEADING GLOBAL IR PLAYER

http://www.irglobalrankings.com/

IR Global Rankings

Summary of the 2008 Edition

T

he IR Global Rankings (“IRGR”) is the most comprehensive ranking system for IR websites, corporate governance practices and financial disclosure procedures. Based on extensive proprietary research of public companies and investors, the scores are compiled by MZ analysts and reviewed by an independent audit and legal committee in order

to obtain reasonable assurance that the results and evaluations are free of material misstatements or omissions. MZ’s methodology is highly detailed, transparent, and completely accessible to all participants (please visit the www.irglobalrankings.com website for full information).

Since the first IRGR edition in 1999, we have analyzed over 800 companies. In 2008 a total of 160 companies from 32 different countries subscribed to participate in the ranking, many of them for the fifth consecutive year.

More than just evaluating and ranking each year’s participants, the goal of the IR Global Rankings is to provide companies with technical feedback through benchmark reports and individual conference calls in order to help IR teams to continue to improve their IR communication efforts.

In order to achieve this, the IRGR professionals analyze over 100 items in three categories (IR Website, Corporate Governance and Financial Disclosure Procedures) which are periodically updated in order to be up‑to‑date with current best practices, of all the companies subscribed for each year’s edition. We believe these initiatives, aligned with the quality of our ranking, is what makes IRGR unparalleled. If you have not yet participated in our ranking, we encourage you to do so!

Global Coordinator:

Supporting Entities:

2009 11th Annual Edition 1

Registration begins

October 1st, 2008 For futher information, visit our website:

http://www.irglobalrankings.com/

Technical Evaluation and Independent Review

M

Z's technical evaluation takes place during November and December every year, and an independent technical committee oversees and reviews MZ's findings and final rankings. Technical committee members perform various tests of the results and evaluations carried out by MZ analysts. The results of the evaluation are released at the award ceremonies in February of the following year.

The independent technical committee consists of three members:

Paulo Arakaki Engagement Manager for Listed Companies ‑ Audit, KPMG in Brazil. Mr. Arakaki has been working in the audit area at KPMG since 1987. As a Senior Manager, he has performed operational financial audits and special engagements, including general planning, internal controls and financial statement examinations. He is currently the engagement manager responsible for the "Listed Companies Department" at KPMG. Mr. Arakaki has participated in the preparation of financial reports in foreign currency and in constant purchasing power (monetary correction), and has prepared internal controls and in accordance with regulatory rules and rules of law, applied to financial and regulatory institutions.

His key areas of experience include large, medium and small banks, brokers and distributors, finance, leasing, investment funds and financial conglomerates, and also insurance companies, private pensions, pension funds and capitalization companies. He graduated in Accounting at Faculdade de Economia, Administração e Contabilidade (FEA ‑ USP).

E‑mail: parakaki@kpmg.com.br

Gregory Harrington Partner, Arnold & Potter LLP. Gregory Harrington is a partner in the firm's corporate and securities practice group.

He has extensive experience in major international financial transactions in Latin America, particularly in the area of capital markets. His practice includes corporate and project finance, including equity and debt securities sold pursuant to SEC registration, Rule 144A or Regulation S; and listings on the New York, London, Luxembourg, and Irish Stock Exchanges; Securities Act, Securities Exchange Act and Investment Company Act compliance; and advising sponsors and lenders in connection with project finance transactions.

Mr. Harrington is a graduate of the University of Chicago Law School and The George Washington University.

E‑mail: gregory.harrington@aporter.com

Leonardo Leite Partner, Demarest e Almeida ‑ Advogados. Leonardo Leite is a partner in the business law department of the firm, concentrating his practice in corporate law and capital markets, as well as in M&A, corporate governance, contracts, intellectual property and technology/internet. He has a strong experience in major transaction involving both domestic and international company and has been working on such areas since mid‑80's. Leonardo worked in NY/USA in the 90's as a foreign lawyers just after his LLM at NYU and his practice included business deals in Brazil, Argentina, Chile, Ecuador, Mexico and Portugal in connection with M&A, securities, privatization and other transactions. Leonardo is a graduate of the Unversity of São Paulo, with specialization programs at Getulio Vargas Foundation (in business administration and business economics as well as in Law & Economics and Legal Administration). He also graduated in Business Law at Escola Paulista da Magistratura. E‑mail: lleite@demarest.com.br

MZ Bulletin’08

5

Editorial

T

his edition of the IR Global Rankings is very special to us as it marks our 10-year anniversary. Over these ten years we have diligently strived to evaluate and recognize the online communication efforts of companies around the world. Our experience and track record in analyzing

and ranking IR websites, financial disclosure procedures and corporate governance with full transparency, as results are independently reviewed by external auditors and legal counsels and individual feedback is discussed with each registrant is what makes IR Global Rankings so unique.

We would like to thank our supporting entities KPMG, Arnold & Porter and Demarest & Almeida for their ongoing past support and would like to welcome new partners such as The Bank of New York Mellon, PR Newswire, Bloomberg and NYSE Euronext who have recently joined this initiative to improve IR practices worldwide.

Most importantly, we would like to thank all the companies for participating in the IR Global Rankings year after year. The quality of the participants we have received each year drives us to continuously take the rankings to the next level. This year, 160 companies from 32 countries were registered and we are honored to have received the trust of these global companies with unparalleled experience in their respective fields of operation.

As part of our continuous efforts to expand, IR Global Rankings inaugurated its first monthly newsletter in July 2008. These newsletters aim at approaching key themes, concerns and best practices directed towards the global Investor Relations community. Feel free to access our newsletters on our website (www.irglobalrankings.com) and

send your comments or suggestions.

We hope you enjoy this 2008 edition of the MZ Bulletin and we look forward to being with you in the next 10 years to come.

Rodolfo Zabisky CEO - MZ

6

MZ Bulletin’08

Rodolfo Zabisky CEO - MZ

Table of Contents IRGR Feedback

8

IR Global Rankings: Top 30

10

Winners by Industry

15

Winners by Region

16

IRGR Global Ceremonies

19

SEC Releases Proposal To Ease Requirements On Foreign Broker窶船ealers

22

International Investing Trends

26

Investor Relations: Evaluating the IR Team

30

IFRS: Converging into a Global Standard Challenges and Opportunities

32

Investor Relations in a Globalized Economy

36

The Rise and Rise of the Activist Investor

40

CONTENT MZ New York LLC 1001 Avenue of the Americas New York, NY 10018 Phone: (212) 813-2975 www.mz-ir.com GRAPHIC PRODUCTION MZ Design

Case Study: Royal Philips Electronics

42

Case Study: adidas

44

Case Study: BBVA

48

Case Study: Nexen

50

IR Global Rankings Participant List

54

INFORMATION FOR READERS For circulation inquiries, address changes and request for copies, please call (212) 813-2975 or e-mail irgr@mz-ir.com For subscription inquiries, send an email to irgr@mz-ir.com

MZ Bulletin is a publication of MZ. The total or partial reproduction of content is prohibited without prior authorization of MZ. The articles included in this publication involve public interest subjects and are not intended to provide legal opinions or suggest any kind of investment.

IRGR

Feedback

I’m glad to see our efforts recognized by the internet community Carmen Hernansanz (BBVA)

Infosys is delighted and honored to figure in the list of winners of IR Global Rankings As a company that is all about sports, competing against the best is what we love. And it makes us extremely proud to be rated number one in the IR Global Rankings Dennis Weber (adidas)

It helps us improve our website and IR efforts every year Judith Nestmann (Bayer)

8

MZ Bulletin’08

Sandeep Mahindroo (Infosys)

Being among the top five websites in the world is an honor for us. For many years the IR Global Rankings serves as a benchmark to continuously improve our IR website. thanks for your efforts!

Andrea Wentscher (BASF)

IR Global Rankings The following pages lists IRGR’s top 30 ranked companies in IR Website, Corporate Governance, Financial Disclosure Procedures and Online Annual Report, as well as classifies the best ranked companies by industry and region.

MZ Bulletin’08

9

TOP30 IR Website Company

Region

Industry

C

DN

I

TD

50.0

15.0

10.0

15.0

Total

10.0 100.0

1

Bayer

Europe

Industrials

44.2

11.5

8.0

15.0

9.0

87.8

2

adidas

Europe

Consumer Goods

42.0

14.0

8.5

13.0

8.0

85.5

3

ALL

Latin America

Industrials

37.5

15.0

8.5

13.5

9.0

83.5

4

BASF

Europe

Basic Materials

43.5

10.5

7.5

13.0

9.0

83.5

5

Banco Bradesco

Latin America

Financials

39.0

14.5

8.0

12.5

8.0

82.0

6

Homex

Latin America

Basic Materials

46.0

9.0

8.0

9.5

9.0

81.5

7

Unibanco

Latin America

Financials

40.5

14.0

8.5

10.5

8.0

81.5

8

Deutsche Post

Europe

Consumer Services

38.0

12.5

7.0

14.0

9.0

80.5

9

GOL

Latin America

Consumer Services

41.0

13.5

7.0

10.5

7.0

79.0

10 TAM

Latin America

Consumer Services

39.0

14.0

7.0

9.0

10.0

79.0

11 Cameco

North America

Basic Materials

39.0

10.5

6.0

13.5

8.0

77.0

12 Talisman Energy

North America

Oil & Gas

42.5

15.0

2.5

9.5

7.0

76.5

13 Petrobras

Latin America

Oil & Gas

40.3

10.5

6.8

12.3

5.5

75.3

14 RWE

Europe

Utilities

36.8

9.5

7.5

13.5

8.0

75.3

15 Telekom Austria

Europe

Telecommunications

38.3

9.5

7.5

12.0

6.0

73.3

16 Danske Bank

Europe

Financials

32.3

9.5

8.5

14.0

7.0

71.8

17 EVN

Europe

Utilities

30.0

15.0

6.5

11.0

9.0

71.5

18 FedEx

North America

Industrials

32.0

13.5

6.5

12.5

7.0

71.5

19 Nexen

North America

Oil & Gas

33.3

9.5

7.0

13.5

8.0

71.3

20 Banco BPI

Europe

Financials

35.3

15.0

6.0

8.5

6.0

70.8

21 CPFL Energia

Latin America

Utilities

36.0

14.0

8.0

5.0

7.0

70.0

22 Infosys

Asia/Pacific/Africa

Technology

31.5

10.5

8.0

12.0

8.0

70.0

23 Brasil Telecom

Latin America

Telecommunications

33.5

13.0

6.5

10.8

6.0

69.8

24 Credit Suisse

Europe

Financials

38.0

8.5

3.0

12.5

7.0

69.0

25 General Electric

North America

Industrials

36.0

10.5

2.0

13.5

7.0

69.0

26 Nedbank Group

Asia/Pacific/Africa

Financials

30.5

14.0

4.5

13.0

6.0

68.0

27 Royal Ahold

Europe

Consumer Goods

37.5

11.5

4.0

14.0

1.0

68.0

28 Erste Bank

Europe

Financials

29.2

13.5

6.5

12.0

5.0

66.3

29 Banco Itaú Holding

Latin America

Financials

31.0

11.0

7.0

12.0

5.0

66.0

30 Tecnisa

Latin America

Consumer Goods

30.5

11.0

5.0

11.5

8.0

66.0

C Content DN Design & Navigability I Interactivity

10

R

MZ Bulletin’08

TD Technology & Data Handling R Responsiveness

TOP30 Corporate Governance M

BD

MR

15.0 25.0

20.0

S

OP

22.5 12.5

T

Total

Company

Region

Industry

5.0 100.0

1

Nexen

North America

Oil & Gas

15.0

22.7

20.0

19.0

12.2

4.0

93.0

2

Royal Philips Electronics

Europe

Industrials

15.0

23.0

16.0

17.5

12.2

5.0

88.7

3

Telekom Austria

Europe

Telecommunications

13.5

20.5

20.0

18.5

9.7

5.0

87.2

4

Bayer

Europe

Industrials

14.2

22.0

19.0

19.2

7.0

5.0

86.5

5

Infosys

Asia/Pacific/Africa

Technology

13.5

19.2

21.0

16.5

10.0

5.0

85.2

6

Procter & Gamble

North America

Consumer Goods

15.0

21.0

20.0

14.0

10.0

5.0

85.0

7

Deutsche Post

Europe

Consumer Services

14.0

19.5

21.5

17.5

7.0

5.0

84.5

8

Satyam

Asia/Pacific/Africa

Technology

12.5

18.2

21.5

18.5

8.5

5.0

84.2

9

TOTAL

Europe

Oil & Gas

7.2

20.7

22.5

17.0

12.2

4.5

84.2

10 General Electric

North America

Industrials

15.0

20.0

19.0

13.0

11.2

5.0

83.2

11 TOTVS

Latin America

Technology

14.0

15.5

20.0

18.5

11.0

3.5

82.5

12 Norsk Hydro

Europe

Basic Materials

15.0

20.5

19.0

13.5

9.0

5.0

82.0

13 ICICI Bank

Asia/Pacific/Africa

Financials

11.7

19.0

21.5

18.5

8.5

2.5

81.7

14 Banco BPI

Europe

Financials

12.5

16.5

19.0

17.5

10.5

5.0

81.0

15 Wachovia

North America

Financials

13.2

19.5

19.0

13.0

11.2

5.0

81.0

16 Bursa Malaysia Berhad

Asia/Pacific/Africa

Financials

14.0

19.5

19.0

15.5

9.2

3.5

80.7

17 Global Payments

North America

Financials

15.0

19.0

17.5

15.5

9.5

4.0

80.5

18 Kotak Mahindra Bank

Asia/Pacific/Africa

Financials

13.5

17.0

22.5

14.0

9.0

3.5

79.5

19 JDSU

North America

Industrials

13.0

21.0

17.5

14.0

8.7

5.0

79.2

20 Perdigão

Latin America

Consumer Goods

12.2

11.5

22.5

19.0

11.0

3.0

79.2

21 Deutsche Telekom

Europe

Telecommunications

12.0

18.5

20.0

14.5

9.0

5.0

79.0

22 Life Time Fitness

North America

Consumer Goods

13.5

18.5

17.5

16.0

8.5

5.0

79.0

23 Grasim Industries

Asia/Pacific/Africa

Industrials

13.5

16.5

19.0

18.5

7.7

3.5

78.7

24 BASF

Europe

Basic Materials

10.0

21.5

19.0

18.0

4.7

5.0

78.2

25 Indra

Europe

Technology

12.5

15.0

21.5

14.5

8.0

5.0

76.5

26 Pengrowth

North America

Oil & Gas

12.5

19.5

18.5

14.5

8.0

3.5

76.5

27 Masisa

Latin America

Industrials

12.7

17.2

19.0

10.7

10.5

5.0

75.2

28 IC RUSS‑INVEST

Europe

Financials

12.7

15.0

22.5

11.2

9.0

4.5

75.0

29 Hysan

Asia/Pacific/Africa

Financials

13.7

15.2

20.0

13.2

7.5

5.0

74.7

30 ICA

Latin America

Industrials

10.7

16.7

19.0

14.5

10.2

3.5

74.7

M Management BD Board of Directors MR Minority Rights

S Controlling Shareholders and Shareholders´ Meeting Procedures OP Other Policies T Transparency

MZ Bulletin’08

11

TOP30 Financial Disclosure Procedures (Corporate) OI

IS

BS

CF

15.0 35.0 10.0 10.0 10.0

CC

ED

Total

Company

Region

Industry

1

Nexen

North America

Oil & Gas

15.0

31.0

8.0

10.0

8.0

4.0

15.0

91.0

2

Norsk Hydro

Europe

Basic Materials

14.0

32.0

6.0

8.0

6.0

5.0

15.0

86.0

3

GOL

Latin America

Consumer Services

13.0

29.0

4.0

10.0

9.0

5.0

15.0

85.0

4

Novartis

Europe

Health Care

12.0

25.0

10.0

10.0

8.0

5.0

15.0

85.0

5

Statoil Hydro

Europe

Oil & Gas

15.0

29.0

10.0

10.0

1.0

5.0

15.0

85.0

6

Galp Energia

Europe

Oil & Gas

14.0

30.0

10.0

8.0

2.0

5.0

15.0

84.0

7

BASF

Europe

Basic Materials

13.5

31.0

8.0

8.0

3.0

5.0

15.0

83.5

8

Braskem

Latin America

Basic Materials

13.0

30.0

10.0

10.0

4.0

4.5

12.0

83.5

5.0 15.0 100.0

9

CSN

Latin America

Basic Materials

14.0

30.0

10.0

9.0

2.0

5.0

12.0

82.0

10 General Electric

North America

Industrials

13.0

24.0

7.0

10.0

8.0

5.0

15.0

82.0

11 Colgate‑Palmolive

North America

Consumer Goods

11.0

29.0

5.0

10.0

6.0

5.0

15.0

81.0

12 Deutsche Post

Europe

Consumer Services

12.0

21.0

10.0

10.0

8.0

5.0

15.0

81.0

13 ALL

Latin America

Industrials

15.0

28.0

8.0

8.0

1.0

5.0

15.0

80.0

14 Southwestern

North America

Oil & Gas

11.0

30.0

10.0

9.0

‑

5.0

15.0

80.0

15 Terna Participações Latin America

Utilities

13.0

33.0

8.0

7.0

2.0

5.0

12.0

80.0

16 Aracruz Celulose

Latin America

Basic Materials

11.0

29.0

6.0

10.0

3.5

5.0

15.0

79.5

17 Petrobras

Latin America

Oil & Gas

15.0

25.0

8.0

9.0

2.0

5.0

15.0

79.0

18 Sappi

Asia/Pacific/Africa

Basic Materials

13.0

19.0

10.0

10.0

7.0

5.0

15.0

79.0

19 Telkom

Asia/Pacific/Africa

Telecommunications

13.0

27.0

10.0

8.0

2.0

4.0

15.0

79.0

20 Bayer

Europe

Industrials

5.5

27.0

8.0

10.0

8.0

5.0

15.0

78.5

21 VCP

Latin America

Industrials

15.0

25.0

6.0

9.0

3.5

5.0

15.0

78.5

22 Deutsche Telekom North America

Telecommunications

11.0

23.0

8.0

8.0

8.0

5.0

15.0

78.0

23 NET Serviços

Latin America

Telecommunications

15.0

28.0

8.0

7.0

1.0

4.0

15.0

78.0

24 Satyam

Asia/Pacific/Africa

Technology

7.0

29.0

9.0

7.0

7.0

4.0

15.0

78.0

25 TAM

Latin America

Consumer Services

15.0

25.0

6.0

8.0

4.0

5.0

15.0

78.0

26 Telekom Austria

Europe

Telecommunications

11.0

27.0

10.0

10.0

‑

5.0

15.0

78.0

27 Pemex

Latin America

Oil & Gas

11.0

24.0

10.0

10.0

2.0

5.0

15.0

77.0

28 Ultrapar

Latin America

Oil & Gas

13.0

27.0

8.0

9.0

3.0

5.0

12.0

77.0

29 Esprinet

Europe

Technology

2.0

29.0

10.0

8.0

8.0

4.0

15.0

76.0

30 adidas

Europe

Consumer Goods

11.0

21.0

8.0

10.0

9.0

1.0

15.0

75.0

IS Income Statement BS Balance Sheet CF Cash Flow

12

G

MZ Bulletin’08

G Guidance CC Conference Call ED Exemplary Disclosure

TOP30 Financial Disclosure Procedures (Financial Institutions)

1

OI

IS

BS

G

CC

Company

Region

Industry

15.0

35.0

20.0

10.0

5.0

Banco Bradesco

Latin America

Financials

14.5

33.0

19.0

2.0

5.0

ED

Total

15.0 100.0 12.0

85.5

2

Banco Itaú Holding

Latin America

Financials

13.0

30.0

17.0

2.0

5.0

12.0

79.0

3

Banco do Brasil

Latin America

Financials

11.0

33.0

16.0

1.0

4.5

12.0

77.5

4

BBVA

Europe

Financials

7.5

25.0

11.0

0.0

5.0

15.0

63.5

5

Nedbank Group

Asia/Pacific/Africa

Financials

12.5

15.0

9.5

8.0

5.0

10.5

60.5

6

Credit Suisse

Europe

Financials

3.0

18.0

13.0

1.0

5.0

15.0

55.0

7

ANZ

Asia/Pacific/Africa

Financials

4.0

26.0

13.0

3.0

5.0

3.0

54.0

8

Banco BPI

Europe

Financials

8.0

18.0

6.0

1.0

5.0

15.0

53.0

9

BRE Bank

Europe

Financials

4.0

21.0

7.0

1.0

5.0

15.0

53.0

10 Danske Bank

Europe

Financials

3.5

15.0

6.0

8.0

5.0

15.0

52.5

11 Bank of Montreal

North America

Financials

2.0

15.0

6.0

8.0

5.0

15.0

51.0

12 Banco Espírito Santo

Europe

Financials

8.5

14.0

6.0

1.0

5.0

15.0

49.5

13 Unibanco

Latin America

Financials

5.5

20.0

7.0

0.0

5.0

12.0

49.5

14 Wachovia

North America

Financials

2.5

20.0

5.0

5.5

4.0

12.0

49.0

15 Shinsei Bank

Asia/Pacific/Africa

Financials

3.0

17.0

5.0

2.0

5.0

15.0

47.0

16 Banco ABC

Latin America

Financials

3.0

16.0

9.0

0.0

5.0

12.0

45.0

17 BNP Paribas

Europe

Financials

1.5

12.0

6.0

1.0

5.0

15.0

40.5

OI IS BS CF G CC ED

Operating Information Income Statement Balance Sheet Cash Flow Guidance Conference Call Exemplary Disclosure

MZ Bulletin’08

13

TOP30 Online Annual Report Company

Region

Industry

DN

I

TD

Total

35.0

35.0

10.0

20.0

100.0

1

adidas

Europe

Consumer Goods

29.5

29.0

7.0

20.0

85.5

2

Royal Philips Electronics

Europe

Industrials

23.0

28.0

10.0

20.0

81.0

3

Banco Bradesco

Latin America

Financials

31.0

29.0

1.0

19.0

80.0

4

Bayer

Europe

Industrials

33.0

23.5

7.0

16.0

79.5

5

Banco Itaú Holding

Latin America

Financials

29.5

31.0

3.0

13.0

76.5

6

EVN

Europe

Utilities

27.5

23.0

8.0

15.0

73.5

7

RWE

Europe

Utilities

27.5

31.0

8.0

7.0

73.5

8

Fresenius Medical Care

Europe

Health Care

24.0

28.0

7.0

13.0

72.0

9

Grupo Pão de Açúcar

Latin America

Consumer Services

27.5

27.0

-

17.0

71.5

10 Erste Bank

Europe

Financials

33.0

23.0

7.0

8.0

71.0

11 Deutsche Post

Europe

Consumer Services

31.5

19.0

9.0

10.0

69.5

12 Telkom

Africa

Telecommunications

29.5

29.0

-

11.0

69.5

13 Cameco

North America

Basic Materials

23.0

28.0

5.0

12.0

68.0

14 Bank of Montreal

North America

Financials

28.0

22.0

1.0

16.0

67.0

15 TPI Triunfo

Latin America

Consumer Services

25.0

27.0

-

13.0

65.0

16 Natura

Latin America

Consumer Goods

19.5

31.0

-

14.0

64.5

17 NET Serviços

Latin America

Telecommunications

24.0

26.0

-

14.0

64.0

18 GOL

Latin America

Consumer Services

22.5

27.0

-

14.0

63.5

19 Zurich Financial Services

Europe

Financials

23.0

22.0

7.0

11.0

63.0

20 Homex

Latin America

Basic Materials

23.0

27.5

-

12.0

62.5

21 Petrobras

Latin America

Oil & Gas

22.5

29.0

-

11.0

62.5

22 Royal Ahold

Europe

Basic Materials

22.5

27.0

-

13.0

62.5

23 ANZ

Asia/Pacific

Financials

30.0

23.0

-

9.0

62.0

24 Norsk Hydro

Europe

Basic Materials

28.0

23.0

5.0

6.0

62.0

25 ALL

Latin America

Industrials

18.0

22.5

3.0

18.0

61.5

26 Coloplast

Europe

Health Care

25.0

28.5

-

8.0

61.5

27 Braskem

Latin America

Basic Materials

26.5

26.0

-

8.0

60.5

28 General Electric

North America

Industrials

23.0

20.0

-

17.0

60.0

29 Nedbank Group

Africa

Financials

24.5

22.5

-

11.0

58.0

30 TIM Participações

Latin America

Telecommunications

25.0

23.0

-

10.0

58.0

OI IS BS CF

14

C

MZ Bulletin’08

Operating Information Income Statement Balance Sheet Cash Flow

G Guidance CC Conference Call ED Exemplary Disclosure

Winners by

Industry

Industrials & Healthcare Best IR Website Bayer

Best Disclosure Procedure Novartis

Best Corporate Governance Royal Philips Electronics

Best OAR Royal Philips Electronics

Best Corporate Governance Infosys

Best OAR Cisco Systems

Best Corporate Governance Procter & Gamble

Best OAR adidas

Best Disclosure Procedure Telkom

Best Corporate Governance Telekom Austria

Best OAR Telkom

Best Disclosure Procedure Nexen

Best Corporate Governance Nexen

Best OAR Petrobras

Best Disclosure Procedure Norsk Hydro

Best Corporate Governance Norsk Hydro

Best OAR Cameco

Best Disclosure Procedure Banco Bradesco

Best Corporate Governance ICICI Bank

Best OAR Banco Bradesco

Best Disclosure Procedure GOL

Best Corporate Governance Deutsche Post

Best OAR Grupo Pão de Açúcar

Best Disclosure Procedure Terna Participações

Best Corporate Governance Enersis

Best OAR EVN

Technology Best IR Website Infosys

Best Disclosure Procedure Satyam

Consumer Goods Best IR Website adidas

Best Disclosure Procedure Colgate-Palmolive

Telecommunications Best IR Website Telekom Austria

Oil & Gas Best IR Website Talisman Energy

Basic Materials Best IR Website BASF

Financials Best IR Website Banco Bradesco

Services Best IR Website Deutsche Post

Utilities Best IR Website RWE

MZ Bulletin’08

15

Winners by

Region

North

Latin

Top 5 IR Websites

Top 5 IR Websites

America

America

Cameco

77.0

ALL

83.5

Talisman Energy

76.5

Banco Bradesco

82.0

FedEx

71.5

Homex

81.5

Nexen

71.3

Unibanco

81.5

General Electric

69.0

GOL

79.0

Best IR Website - Small Cap.

Best IR Website - Small Cap.

E*Trade Financial

TOTVS

Top 5 Financial Disclosure Procedures 91.0

GOL

85.0

General Electric

82.0

Braskem

83.5

Colgate-Palmolive

81.0

CSN

82.0

Southwestern

80.0

ALL

80.0

Deutsche Telekom

78.0

Terna Participações

80.0

Top 5 Corporate Governance

Top 5 Corporate Governance

Nexen

93.0

TOTVS

82.5

Procter & Gamble

85.0

Perdigão

79.2

General Electric

83.2

Masisa

75.2

Wachovia

81.0

ICA

74.7

Global Payments

80.5

Best Online Annual Report (OAR) Cameco

POP+

16

MZ Bulletin’08

Top 5 Financial Disclosure Procedures

Nexen

Best Online Annual Report (OAR)

68.0

Categories

Banco Bradesco

POP+

80.0

Categories

E*Trade Financial

3

Petrobras

5

Ultra Petroleum

5

PDG Realty

1

Winners by

Europe

Region

Asia, Pacific & Africa

Top 5 IR Websites

Top 5 IR Websites

Bayer

87.8

Infosys

70.0

adidas

85.5

Nedbank Group

68.0

BASF

83.5

Telkom

65.0

Deutsche Post

80.5

Sappi

63.0

RWE

75.3

Exxaro Resources

55.3

Best IR Website - Small Cap.

Best IR Website - Small Cap.

Arcadis

Global Sources

Top 5 Financial Disclosure Procedures

Top 5 Financial Disclosure Procedures

Norsk Hydro

86.0

Sappi

79.0

Novartis

85.0

Telkom

79.0

Statoil Hydro

85.0

Satyam

78.0

Galp Energia

84.0

Partner Communications

70.0

BASF

83.5

MTR Corporation

69.0

Top 5 Corporate Governance

Top 5 Corporate Governance

Royal Philips Electronics

88.7

Infosys

85.2

Telekom Austria

87.2

Satyam

84.2

Bayer

86.5

ICICI Bank

81.7

Deutsche Post

84.5

Bursa Malaysia Berhad

80.7

TOTAL

84.2

Kotak Mahindra Bank

79.5

Best Online Annual Report (OAR)

Best Online Annual Report (OAR)

adidas

85.5

Telkom

69.5

POP+

Categories

POP+

Categories

BBVA

5

Kotak Mahindra Bank

5

MZ Bulletin’08

17

IRGR Global Ceremonies

March, 2008

Skyline: lorem ipsum sit dolor amet

Márcio Veríssimo (MZ); Judith Nestmann (Bayer); Jeremy Derenne (PR Newswire); Alain Martel (NYSE Euronext)

New York Ceremony

Skyline: lorem ipsum sit dolor amet

Mirelys Reyes (Hugin Group); Oscar Díaz-Canel (BBVA); Carmen Hernansanz (BBVA)

18

MZ Bulletin’08

Paris Ceremony

Rodolfo Zabisky (MZ); José Rogério Luiz and Laércio Cosentino (Totvs)

Alain Martel (NYSE Euronext)

Márcio Veríssimo, Tereza Kaneta and Amanda Munhoz (MZ)

Carmen Hernansanz (BBVA)

Sandra Wolker (Deutsche Telekom)

São Paulo Ceremony

MZ Bulletin’08

19

IRGR Global Ceremonies

March, 2008

São Paulo Ceremony

Tereza Kaneta (MZ)

20

MZ Bulletin’08

Márcio Verissímo (MZ); Carmen Hernansanz (BBVA); Alain Martel (NYSE Euronext); Oscar Díaz-Canel (BBVA); Jeremy Derenne (PR Newswire)

PEMEX IR Team

Márcio Verissímo (MZ); Andrea Wentscher (BASF); Alain Martel (NYSE Euronext); Jeremy Derenne (PR Newswire)

Rodrigo Camargo (Frignani e Andrade); Roberta Ehlers (ALL)

Judith Nestmann (Bayer)

Latin America winners

Rodolfo Zabisky (MZ)

MZ Bulletin’08

21

by Arnold & Porter LLP

SEC Releases Proposal To Ease Requirements On Foreign Broker‑Dealers

T

he United States Securities and Exchange Commission (SEC) has had a busy year.

In just the first half of 2008, the SEC has issued proposing releases that, if adopted, would affect every person involved in the US capital markets, including US domestic companies, non‑US companies, rating agencies, accountants, and broker‑dealers. Included are releases concerning: »» Adoption of Extensible Business Reporting Language (XBRL) by reporting issuers, which would require most reporting companies to file financial information using the XBRL format; »» Revisions to the cross‑border tender offer, exchange offer, and business combination rules; »» Rules affecting nationally recognized statistical rating organizations and the use of ratings; »» Foreign issuer reporting, which, among other changes, would shorten the filing deadline for Form 20‑F; »» Exemption from registration under Section 12(g) of the Securities Exchange Act of 1934 for foreign private issuers, which would particularly benefit companies with Level I American Depositary Receipt (ADR) programs; and »» Modernization of reporting requirements for oil and gas companies.

However, for brokers and dealers the most important changes are the set of rules the SEC published on June 26, 2008 as Securities Exchange Act Release No. 34‑58047. These rules would allow non‑US securities brokers and dealers greater latitude to operate in the US without registering with the SEC. These proposals would allow foreign broker‑dealers to interact with more US investors, and in a

22

MZ Bulletin’08

significantly greater fashion, than they are currently permitted. The proposed rule changes are intended to modernize the SEC’s approach in an environment of increasing demand by US investors for investment opportunities outside of the United States, and to substantially reduce cumbersome compliance burdens.

The proposal is subject to a 60‑day comment period that will run from the date of publication in the Federal Register. The SEC expects to effect publication in the Federal Register shortly.

SEC Rule 15a‑6 In general, a foreign securities broker‑dealer that induces or attempts to induce securities transactions by persons in the United States is required to register with the SEC. However, SEC Rule 15a‑6 provides certain conditional exemptions from registration for such foreign broker‑dealers. The primary exemptions permit the foreign entity to deal with institutional investors who are presumed to have the sophistication and financial wherewithal to understand and withstand the risks of dealing with a non‑US‑registered broker‑dealer.

Even as supplemented by an array of No‑Action Letters and interpretations found in the releases proposing and adopting the rule, Rule 15a‑6 has frequently been criticized as overly restrictive. For example, under the current rule, foreign, non‑US registered broker‑dealers may only solicit or deal in a very restrictive fashion with certain financial institutions, such as investment advisers, banks, insurance companies, and certain employee benefit plans, and in an only slightly less restrictive fashion with any entities that own or manage in excess of US$100 million in total assets.

Even then, contacts and transactions between the foreign broker‑dealer and US institutional investor must be “chaperoned” by a US‑registered

broker‑dealer, in all cases by having the US broker‑dealer effect and be responsible for all aspects of the transaction other than the sales communication and in many cases by participating in the sales communication.

The Proposed Changes The proposal, however, would work several significant changes to the rule. Most significantly, the suggested revisions would permit foreign broker‑dealers to solicit and deal with “Qualified Investors,” as defined in the Securities Exchange Act of 1934. This is a far greater universe of potential customers, including entities and natural persons who own and invest on a discretionary basis just US$25 million in investments.

Exemptions for Solicited Trades With respect to their dealings with Qualified Investors, the revised rule would feature two exemptions from registration for foreign broker‑dealers. In the so‑called “(A)(1) exemption,” a foreign broker‑dealer would be permitted to effect all aspects of a securities transaction, including maintaining custody of funds and assets, provided that at least 85% of the aggregate value of the securities purchased or sold under the direct institutional access provisions of Rule 15a‑6 is in “foreign securities,” computed on a rolling two‑year basis.

The foreign broker‑dealer would be required to use its best efforts to provide information, documents and testimony to the SEC upon request (to the extent it is not prohibited from doing so by applicable foreign law), maintain background materials concerning its associated persons, and determine that its associated persons are not subject to US statutory disqualifications. In addition, the foreign broker‑dealer would be required to disclose that it is not regulated by the SEC or subject to US bankruptcy and segregation requirements, and that the protections afforded by the Securities Investor Protection Act would not apply.

While in‑person chaperoning would no longer be required, the proposal would still require the involvement of a US broker‑dealer. In particular, a US broker‑dealer would be required to maintain copies of all books and records, including confirmations and statements issued by the foreign broker‑dealer relating to any transactions relying on the exemption as prescribed by the foreign securities regulatory authority. Nonetheless, the US broker‑dealer could maintain such records with the foreign broker‑dealer if

MZ Bulletin’08

23

by Arnold & Porter LLP

the US broker‑dealer reasonably determines that such records can be promptly furnished to the SEC upon request. The US broker‑dealer also would have to obtain consents to service of process from the foreign broker‑dealer and its associated persons with regard to actions brought by the SEC or US self‑regulatory organizations and obtain confirmation from the foreign broker‑dealer that it has determined that its associated persons are not subject to any statutory disqualification and that the firm has the required background information in its records.

The proposed changes aim to modernize SEC’s investing approach and to substantially reduce cumbersome compliance burdens

1 Due to a typographical error in footnote 92, the Release appears to indicate that an issuer might not be deemed “foreign” on the sole ground that over 50% of its voting securities are held by US residents.

24

MZ Bulletin’08

A further exemption, the so‑called “(A)(2) exemption,” would be available for any foreign broker‑dealer, and required for any foreign broker‑dealer that does not meet the 85% foreign securities test referred to above. This exemption does not permit the foreign broker‑dealer to have custody of its US customers’ funds and securities and, in addition to the obligations described above, requires that a US broker‑dealer receive, deliver, and safeguard funds and securities of US customers in compliance with SEC Rule 15c3‑3.

The proposed provisions would define “foreign securities” by reference to Rule 405 under the Securities Act of 1933. Accordingly, the definition would include securities issued by any non‑US entity, unless 50% or more of the entity’s voting securities are held of record (directly or indirectly) by US residents and either a) the majority of its executive officers or directors are US citizens or residents; b) more than 50% of its assets are located in the United States; or c) its business is administered principally in the United States.1 The definition would also include derivative instruments on such foreign securities.

The amount of time a foreign broker‑dealer’s representatives can visit the United States to meet with customers while maintaining its status as a foreign broker‑dealer is proposed to be expanded from the present position of 30 days, on a firm‑wide basis, to 180 days.

In addition, so that they might provide comprehensive services to their institutional customers, the revised rule would permit foreign

broker‑dealers to effect all aspects of transactions in limited amounts of US securities, depending on whether the (A)(1) or (A)(2) exemptions are utilized, which would facilitate arbitrage and basket trading strategies that include both US and non‑US securities.

Research Reports Foreign broker‑dealers would also be permitted to directly provide research reports to Qualified Investors. Rule 15a‑6 currently explicitly requires that such research reports may only be provided to institutional investors who own or manage at least US$100 million in total assets, but is subject to an interpretative statement in the original Rule 15a‑6 adopting release that allows a US broker‑dealer to distribute non‑US research to any US person, provided that the US broker‑dealer assumes responsibility for its contents and effects any resulting transactions without follow‑up by the foreign broker‑dealer. The only proposed change in the rule relating to the provision of research is the change in the class of permitted recipients to Qualified Investors.

Fiduciaries of Offshore Clients The rule would also be amended to codify prior SEC No‑Action relief that permits foreign broker‑dealers to interact with any US fiduciaries (such as investment advisers) acting for non‑US resident clients in respect of non‑US securities. This position is frequently relied upon to enable US‑based managers of offshore funds to trade foreign securities through foreign broker‑dealers.

This codification omits the former requirement that transactions be limited to foreign securities, but resulting transactions are included in the calculation of the 85% test discussed above.

“Familiarization” With Options Traded on Foreign Exchanges Finally, the proposal would codify a series of No‑Action letters that allow members of non‑US options exchanges to “familiarize” US institutional investors with options traded on non‑US exchanges without triggering registration requirements. The Release also proposes the issuance of interpretative statements that would provide that foreign options exchanges and clearinghouses would not be subject to SEC registration if the conditions in the rule for non‑registration of foreign broker‑dealers are satisfied.

Implications of the SEC’s Proposal The proposed rule changes are intended to modernize the SEC’s approach in an environment of increasing demand for investment opportunities outside of the United States, and to substantially reduce cumbersome compliance burdens. Moreover, as SEC staff indicated at the Open Meeting, the revisions are meant to codify and supersede prior No‑Action letters in this area, and those letters would be withdrawn.

Our preliminary analysis suggests several areas of concern and the need for comment. For example: »»The proposed definition of “foreign securities” includes subjective elements and there is no definitive list of such securities that can be relied upon for compliance purposes. Commentators should press for a simpler, objective standard such as jurisdiction of organization. »»Will the SEC’s present position allowing US broker‑dealers to transmit foreign research to any US person, as described above, be maintained or will distribution by the foreign broker‑dealer to Qualified Investors be the sole avenue?

Commentators should press for the broader interpretative statement to be codified. »»Foreign broker‑dealers should be permitted to follow up on research reports that have been sent to Qualified Investors in order to further discuss potential transactions. »»Should it be necessary for a residue of chaperoning to be preserved by requiring a US broker‑dealer to maintain books and records related to transactions for Qualified Investors? Perhaps an agreement with the foreign broker‑dealer and its primary foreign self‑regulatory organization or regulator would be sufficient. Alternatively, perhaps maintaining copies of the records with a US records depository that is not a US broker‑dealer would be sufficient for jurisdictional and access purposes. »»Will the revisions affect the ability of foreign broker‑dealers to finance US customer transactions?

The revisions would delete the requirement that US chaperoning broker dealer extend or arrange for

margin. However, since custody is an implicit aspect of financing and the (A)(1) exemption would be limited to firms that do not conduct a US business based upon the 85% test, some foreign broker‑dealers may be unnecessarily precluded from financing US customer transactions involving foreign securities. »»Will foreign broker‑dealers that effect transactions on a delivery‑versus‑payment (DVP), received‑versus‑payment (RVP) basis be considered to have custody of US customers’ property in the event of a fail to deliver or fail to receive on the basis of an amount of cash or securities then owed to such customers? We suggest that the consequences of fails be excluded from the definition of custody. »»Following up on our DVP/RVP point above, the SEC should confirm that short sales conducted on a DVP/ RVP basis such that securities are borrowed and delivered by the US customer at settlement will not be regarded as involving custody. We also suggest that the foreign broker‑dealer should be permitted to lend securities to a US customer’s prime broker or custodian, acting as principal or agent, to settle such short sales without being deemed to have custody of the US customer’s assets. »»The 180‑day firm‑wide test for in‑person visits to the United States by representatives of foreign broker‑dealers remains restrictive. Perhaps a federal tax definition of a presence sufficient to establish a permanent residence may be a reasonable alternative. »»Finally, the Commission’s discussion of the proposal to revise Rule 15a‑6 and the proposing Release did not refer to the implications that it may have with respect to State laws. Non‑US firms should be aware that State laws and regulations establish registration requirements for broker‑dealers, independent of any federal standards. Many such State laws and regulations include exemptions for broker‑dealers that do not have a place of business in a State and that only conduct business with specific types of institutions. Irrespective of any changes by the SEC to its own rules, foreign broker‑dealers are advised to consider the potential application of such State registration requirements to their operations.

MZ Bulletin’08

25

by The Bank of New York Mellon

International Investing Trends U.S. Investment in Foreign Equities U.S investors remained the most significant purchasers of DRs. The total value of U.S. investment in non‑U.S. equities (both DRs and non‑U.S. shares) increased more than $1 trillion to $4.9 trillion as of September 30, 2007, an increase of 29% from the same time last year and a record high, according to the latest U.S. Federal Reserve statistics. Overall, non‑U.S. equities accounted for a record 21.8% of all equity investment in the U.S., up from 18.3% at the same time last year.

The $1 trillion overall increase in investment consisted of a $807 billion increase in asset values and record net positive capital inflows of $193 billion, according to the Federal Reserve.

U.S. investors continue to favor developed markets when investing internationally. Eight of the 10 largest countries for U.S. foreign investment, as ranked by market value, were developed markets at the end of 2006, according to the latest statistics available from the U.S. Department of the Treasury. However, many emerging markets posted remarkable percentage annual increases. Overall U.S. investment in equities from China and Russia each increased more than 100% year‑on‑year. Both countries also ranked among the 20 largest for the first time.

Of the $4.9 trillion total value of U.S. investment in non‑U.S. equities, The Bank of New York Mellon estimates1 that 25%, or $1.2 trillion, is held in the form of DRs. This represents an increase of 20% year‑on‑year.

U.S. Holdings of Foreign Equities

Value ($tn) % of Portfolio

5

25

4

20

3

15

2

10

1

5

0

'98

'99

'00

'01

'02

'03

'04

'05

'06

3Q07

U.S. Holdings of Foreign Equities Net Purchases ($bn)

200 150 100 50 0

26

'98

'99

MZ Bulletin’08

'00

'01

'02

'03

'04

'05

'06

3Q07

0

U.S. Holdings of Foreign Equities

By Type, Sept. 30, 2007 ($bn)

1,250

1,400

Ordinary Shares DRs Canada/Carib.

2,300

1 See page 27 for research methodology.

U.S. Holdings of Foreign Equities Country

‘06 Amount ’05 Amount Change % (bb) (bb) (bb) Change United Kingdom $674 $538 $136 25 Japan 544 493 51 10 France 307 205 102 50 Switzerland 263 192 71 37 Germany 220 158 62 39 Netherlands 161 133 28 21 South Korea 114 110 4 4 Australia 101 71 30 42 Brazil 92 67 25 37 Italy 92 64 28 44 Hong Kong 86 44 42 95 Spain 86 64 22 34 Mexico 84 58 26 45 74 27 47 174 China, Mainland2 Taiwan 74 57 17 30 Sweden 59 41 18 44 Finland 56 44 12 27 India 48 33 15 45 Ireland 48 33 15 45 Russia 40 19 21 111 2 Excludes Hong Kong and Macau, which are reported separately.

Sources: U.S. Federal Reserve, U.S. Department of the Treasury, Treasury International Capital System. The table U.S. Holdings of Foreign Equities excludes Canada and offshore financial centers including Bermuda, Cayman Islands and other locations where DRs are not necessary.

The 3Q07 figure for U.S. net investment in foreign equities is annualized by the Federal Reserve.

Value of Outstanding DRs

Investment in DRs

By Market, 2007 ($bn)

DR issuers continued to benefit from increased cross‑border investing trends. The Bank of New York Mellon estimates1 that the total value of outstanding DRs increased 15% year‑on‑year to reach an all‑time high of $1.5 trillion ($1.2 trillion held by U.S. investors and $300 billion held by non‑U.S. investors) at the end of 2007.

Outstanding values in U.S.‑listed DRs totaled more than $1 trillion at year‑end, a jump of 14% from year‑end 2006. Overall outstanding value in European‑listed DRs was estimated to be $260 billion, and outstanding value in over‑the‑counter‑traded and other DRs was estimated to be $200 billion.

Among individual DR issuers, oil and gas sector companies comprised five of the eight largest programs. The U.K.’s BP remained the issuer with the largest DR program, valued at $64.6 billion, although it decreased slightly in size during the past year.

The largest amount of DR value outstanding remained in Western Europe. The region had $615 billion of DRs outstanding, 41% of the global total.

The largest percentage increases belonged to issuers from the Asia‑Pacific and Latin America regions which grew 38% and 28%, respectively, year‑on‑year.

260

200 U.S.-Listed European-Listed OTC-Traded / Other

1,040

Value of Outstanding DRs

By Region, 2007 ($bn)

270 615

EEMA Western Europe

300

Latin America.

Asia Pacific.

315

Largest DR Programs Company BP Vale (Common + Preference) America Movil (A + L) Petrobras (Common + Preference) Lukoil Royal Dutch Shell (A + B) Nokia Gazprom Teva Pharmaceutical Vodafone GlaxoSmithKline Norilsk Nickel Novartis Cemex TOTAL Telefonos de Mexico (A + L) Vimplecom POSCO Orascom Telecom TSMC

Country U.K Brazil Mexico Brazil Russia U.K. Finland Russia Israel U.K. U.K. Russia Switzerland Mexico France Mexico Russia Korea Egypt Taiwan

DR Exchange NYSE NYSE NYSE NYSE London NYSE NYSE London NASDAQ NYSE NYSE London NYSE NYSE NYSE NYSE NYSE NYSE London NYSE

Sector Oil & Gas Mining Mobile Telecom Oil & Gas Oil & Gas Oil & Gas Tech. Hardware Oil & Gas Pharma. & Biotech Mobile Telecom Pharma. & Biotech Mining Pharma. & Biotech Const. & Materials Oil & Gas Fixed Line Telecom Mobile Telecom Industrial Metals Mobile Telecom Tech. Hardware

DR Value Outstanding (bb)* $64.6 51.0 48.6 48.2 46.7 42.2 42.1 41.2 26.9 24.2 22.7 20.7 18.8 15.1 15.0 13.7 12.4 12.2 12.1 11.4

Mkt. Cap. (bb)** $220.6 156.4 112.1 155.6 70.5 149.6 149.2 260.4 35.7 192.4 150.2 51.7 135.9 23.4 183.0 32.2 27.7 62.3 14.0 53.5

Mkt. Cap. in DRs % 29.3 32.6 43.3 31.0 66.2 28.2 28.2 15.8 75.3 12.6 15.1 40.0 13.9 64.7 8.2 42.6 44.8 19.6 86.7 21.4

*DRs value outstanding in billions of U.S. dollars is defined as DRs outstanding multiplied by DR price. Data is as of September 30, 2007. ** Free float market capitalization in billions of U.S. dollars as defined by Dow Jones as of September 30, 2007.

1 Research Approach: The total value of DR investment was derived by multiplying DRs outstanding by DR price. All DR price figures are publicly available from the applicable stock exchanges or trading markets. The number of DRs outstanding for issues sponsored by The Bank of New York Mellon was derived from internal reporting sources. The number of DRs outstanding from non‑BNYM sponsored U.S.‑listed issues was derived from publicly available figures provided by the NYSE and NASDAQ. DRs outstanding for European‑listed and OTCtraded issues that are not BNYM‑sponsored were estimated using publicly available information including, but not limited to, company reports and SEC 13‑F shareholder data.

MZ Bulletin’08

27

by The Bank of New York Mellon Institutional Investor Type

Depositary Receipt Demand

Type Investment Advisors Mutual Fund Managers Bank Managements Hedge Funds Brokers / /Investment Banks Insurance Company Management Pension Funds Arbitrage Funds Foundations / Endowments Private Banking Portfolios

D

uring 2007, mutual funds, separately managed accounts, hedge funds and exchange‑traded funds continued to be net purchasers of international equities and were significant purchasers of DRs. These investor classes continued to diversify their portfolios internationally and helped drive the expansion of the DR market.

Institutional Investors – According to data from the World Federation of Exchanges, the market capitalization of equities listed on global stock exchanges continued to grow and continued to diversify away from the U.S. In 1970, the world’s equity market capitalization totaled $929 billion, and two‑thirds of this amount was accounted for by U.S. companies. At the end of November 2007, this value had increased to $60.7 trillion, of which $19.8 trillion, or one‑third, was comprised of U.S. domestic equities.

U.S. institutional investors continued to diversify their portfolios globally and they increased their holdings of DRs in 2007. An analysis of information provided by FactSet, on December 31, 2007, shows the year’s ten largest DR investors held DRs valued at $277 billion, a 30.7% increase from 2006 figures.

Fidelity Management & Research remained the largest identified institutional investor in DRs and increased the value of its DR portfolio by 31.7% during the past year to more than $59 billion.

Tradewinds Global Investors, which formerly filed as NWQ Investment Management, remained the institution with the highest DR value as a percentage of total equity assets among the ten largest identified investors at 62%.

Nine of the ten largest identified institutional holders of DRs increased the value of their DR portfolio ‑ many by a significant margin. Among the most significant were AllianceBernstein, Dodge & Cox and Capital Research & Management, each of which posted DR value increases in excess of 40%.

DR Value (bn) $495.1 226.8 97.8 55.9 54.6 18.6 10.6 1.1 1.0 0.2

Source: FactSet, December 2007 study of institutional investors

Institutional Investor Location Type United States United Kingdom Canada Hong Kong Germany France Sweden Switzerland Netherlands Denmark

DR Issuers 3,043 518 219 73 168 171 80 198 55 41

DR Value (bn) $756.4 97.4 22.8 13.3 10.3 8.1 7.5 5.3 5.1 3.9

Source: FactSet, December 2007 study of institutional investors

Institutional Investor Style DR Holdings, 2007 ($bn)

44 17 112

Growth/Agg. Growth GARP Value, Core/Deep

268

521

Index Yield

Largest Depositary Receipt Investors Investor Fidelity Management & Research Capital Research & Management Dodge & Cox Wellington Management Brandes Investment Partners AllianceBernstein Tradewinds Global Investors Blackrock Investment Management (UK) Fisher Investments Lazard Asset Management Source: FactSet, December 2007 study of institutional investors

28

MZ Bulletin’08

2007 DR Value (mm) $59,042 45,073 34,671 32,454 24,741 23,062 17,884 14,300 13,069 13,031

2006 DR Value (mm) $44,826 31,653 23,871 23,455 23,353 14,079 20,044 10,511 9,988 11,411

DR Value % Change 31.7 42.4 45.2 38.4 5.9 63.8 ‑10.7 36.0 30.8 14.2

Total Equity DR Value as a % of Assets (mm) Total Equity $741,001 7.9 981,218 4.5 161,083 21.5 344,952 9.4 82,736 29.9 407,447 5.6 28,878 61.9 134,687 10.6 36,426 35.8 53,071 24.5

NOW THE HARD WORK STARTS Our sincere congratulations to all IR Global Rankings winners and finalists. As winners of 85 editorial awards this year—including the Society of Business Editors and Writers General Excellence Award—we know all too well how quickly the feeling of pride and achievement in winning any award is replaced by the realization that it takes even more hard work, creativity and flair to retain an award than to win it. Then again, that’s the fun part, isn’t it?

©2008 Bloomberg Finance L.P. All rights reserved. 29869106 0608

MZ Bulletin’08

29

by MZ

Investor Relations

Evaluating the IR Team

I

t is no easy task to measure objectively the quality of work produced by a company’s investor relations team, making it difficult to establish evaluation and improvement targets. So it would make sense to begin by looking at some of the most commonly used criteria for this purpose.

One of the most absurd is to base one’s assessment on the number of buy recommendations from independent analysts. Firstly, it is extremely easy to achieve a high number of such recommendations – all you have to do is issue future performance figures that are much lower than those you actually expect, pulling down the share price, and then announce your real expectations just before the analysts’ evaluation.

Clearly, this would be against the law, since what you are effectively doing is manipulating the price for your own benefit, but the mere fact of it being illegal does not mean it’s never going to happen. In fact, this is one more reason why to avoid this criterion because it would certainly not be a good idea to provoke a blatant conflict of interest. Even more importantly, it is a clear indication that the company’s IR team's aim is to sell the share in any scenario. However, shares do not always merit a buy recommendation and this is not necessarily a bad thing.

For example, based on the following extracts from hypothetical reports, which firm is better positioned? A company whose report states that “…company X continues to have excellent growth prospects, but we believe the market has already incorporated these expectations and the price is an

30

MZ Bulletin’08

accurate reflection of this…” or “…company Y had yet another mediocre quarter, but we believe that the 50% drop in the price of its share makes it a good investment pick”. The answer is obvious, even though the firm in better shape almost certainly did not receive a buy recommendation.

Another IR evaluation criterion is the number of awards received, and this is partially justified. It is hardly credible that a company receiving successive awards can be doing a bad job. On the other hand, the biggest firms tend to win most of the prizes either because they have much deeper pockets or because they are more widely known (in the case of awards by popular vote). Thus smaller businesses tend to be ruled out and the majors tend to battle it out among themselves. Personally, I believe awards are an excellent indicator of tendencies, but cannot be used to state that the first‑placed firm is definitely better than the second‑placed one because every award, in order to be objective, must have a list of evaluation criteria which cannot, by definition, cover the specific attributes of each company.

Some firms try to establish a correlation between the share price or its multiples and the evaluation of IR quality. Although some studies have shown that such a correlation exists, it is extremely difficult to measure it with any degree of objectivity in order to come up with a useful result. Another much‑used method is IR perception studies carried out by independent companies. This is undoubtedly the best of the criteria mentioned because it consults the

team’s final “client”, although the responses tend to be more on the subjective side. They also tend to be influenced by the firm’s financial results, given that there is less criticism when the numbers are healthy and vice‑versa, independently of the IR team’s performance per se.

So what is the most appropriate means of evaluating IR performance? In fact, there are several criteria, depending on which aspect of the work is under the spotlight. For example, one can define certain purely technical indicators to appraise procedures and the effectiveness of certain activities. These include a maximum number of simple disclosure errors, such as typos, erroneous figures and outright mistakes; strict compliance with predetermined deadlines for certain tasks, such as publication of the annual report or the holding of a given event; or compliance with certain quantitative targets, such as participating in a certain number of meetings with investors and conferences or publishing a certain number of releases.

What is the most appropriate means of evaluating IR performance?

There are several criteria, depending on which aspect of the work is under the spotlight Clearly, these criteria have to be negotiated and they also need to be realistic. It is no use determining disclosure deadlines that are so tight the accounts department can’t possibly come up with the numbers in time. Similarly, it’s of little use demanding a certain number of meetings without a travel budget or a certain number of releases and then saying you can’t disclose this or you can’t disclose that. Although the indicators we have mentioned so far are both useful and easy to measure, they certainly don’t tell the whole story. For example, none of them assess the quality of information provided and for this we need more interesting and complex criteria.

The chief responsibility of the IR team is to supply the necessary support so analysts can estimate the company’s future results, eliminating uncertainty‑related risks and, consequently, reducing its

discount rate and increasing firm value. Is there a simple way of measuring the success of such efforts? Indeed there is. For example, leading brokerage house analysts always publish their models and expected results. The IR team can compare these expectations with the company’s guidance to see if they are in‑line.

You can also increase the scope of this test by monitoring the share’s behavior immediately after the company’s results are disclosed. Even better‑than‑expected results are bad news for the IR team as they show investors are undervaluing the company’s results. In addition, large price swings increase share volatility, which, as anyone who has ever estimated a discount rate for a discounted cash flow model knows, has a negative impact on the company’s value, even if the variation is positive as it underlines the investment’s degree of uncertainty.

Finally, there is a third type of criterion, which is perhaps the most important of all and measures the IR team’s ability to achieve its objectives. It is impossible to state a priori precisely what these criteria should be, since they basically depend on the proposed objectives, but I can give an example to illustrate the point. Imagine the company is suffering from excessive share price volatility.

Unless there are operational factors involved, this problem can be caused by excessive liquidity, possibly because investors with rapid portfolio turnover (such as hedge funds) have a major stake in the company. In this case, the IR team can reduce this effect by proactively identifying a list of potential investors with a longer‑term profile (such as pension funds), arrange meetings and try to attract them to invest in the company.

This type of work is particularly easy to evaluate as the evaluation method consists of checking if the meetings actually occurred and analyze the shareholder base to see what the achieved hit ratio (verify how many of the target investors actually acquired a stake in the company). Countless other objectives can also be measured and evaluated, however, in the vast majority of cases, this is not done due to a more serious problem, namely that the IR team are focused on daily activities only and many of them have no defined objective, but that is the subject for another article.

MZ Bulletin’08

31

by KPMG

IFRS

Converging into a Global Standard Challenges and Opportunities

Agents of Change. After adopting the Euro, the European Community adopts a Single Accounting Principal

I

n 2005, most listed companies in the European Community and several other countries started to release their consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS). Before that, each company published its financial statements using the accounting principals accepted in their respective countries.

Prior to the IFRS adoption, for analysts, investors and other financial statement users, the interpretation and comparison of financial statements were not easy

tasks, not even for companies in the same business sector, to the extent that different accounting practices caused material misstatement in any direct comparison.

The first wave of the IFRS adoption, known in Europe as the 2005 movement, enabled the direct comparison of companies’ financial statements for the first time, facilitating their interpretation and understanding by the market and paving the way for reductions on the cost of capital and a more efficient allocation of funds.

The outcome of the 2005 movement

T

here is a consensus that the 2005 movement was a success: over 7 thousand companies in over 92 countries migrated to a single accounting standard with minimal turbulence in financial markets and no significant delays in the disclosure of financial statements. However, the success did not come without cost and the process of change proved to be extremely challenging.

The significant increase in the volume of financial

32

MZ Bulletin’08

disclosures, the need to implement new systems and internal controls, material changes in previously reported results plus the new metrics for business performance evaluation greatly tested the ability of executives and other professionals directly involved in the process. The key lesson learned from European companies and their conversion to IFRS was that it is much more than a simple accounting matter.

The Movement gains Strength The success of the European convergence process in 2005 provided momentum to the global convergence movement and several countries subsequently announced deadlines for IFRS adoption.

Perhaps the most notable movement in this sense took place in the USA, as the world’s most important capital market, when, at the end of 2007, the Securities and Exchange Commission (SEC) announced the end of the requirement for foreign registrants to reconcile IFRS prepared financial statements with US GAAP.

Simple Questions, Complex Answers Examples of questions that companies may have:

1 2 3 4

To what extent are IFRS results more volatile and how could this impact performance measurement?

Do we have professionals who are capable of leading a conversion process and have the necessary technical knowledge in both accounting matters and project management?

What is required to ensure that IFRS is inserted into our daily routine and which departments will be affected by the new standards?

What additional information and data requirement are necessary to make the change? Are our systems capable of capturing this information? Do we need to establish a new internal control policy to help ensure the reliability of the information?

5 6 7 8 9 10

What will the impacts on financial instruments be and how will our hedge policies be affected by the new standards?

What will the impacts on our pension plans and share‑based remuneration policies be?

Will the new standards produce impacts on acquisition of companies and business combinations? Will we have to apply the rules retroactively for past acquisitions?

Can the exemptions offered for first‑time IFRS adoption represent opportunities for the company?

And if my company already prepares an IFRS reconciliation, can we consider this as full IFRS adoption?

What will the IFRS impacts on my specific business sector be?

MZ Bulletin’08

33

by KPMG IFRS or day‑by‑day

How KPMG can help Fase 1

KPMG has international knowledge and experience and has developed its own methodology (Global Conversion Services), which provides tools and templates to assist our clients with the IFRS conversion process.

The key phases of a conversion project on to international standards can be summarized as shown in the following chart:

Scoping and planning the conversion Assessment • Mobilize the core team • Assessment of financial statement and business impact • Assessment of impact on processes and systems • Identify training requirements • Develop the conversion plan and budget

Fase 2 Training and developing the tools Design • Mobilize the fiance and IT departments • Develop training materials • Preparations of tools and templates (accounting policies, mock financial statements, reporting package) • Design system customization and process changes • Initial tests of systems and processes • Transfer of skills and knowledge

Fase 3 Implementation and parallel testing Implementation • Manage the implementation process • Paralel tests • Opening balance sheets • Comparative financials statements • IFRS financial statements • Manage business in accordance with IFRS • Transfer of skills and knowledge

IFRS business as usual Our methodology is modular, focused on knowledge transfer and the creation of a sustainable IFRS conversion process, which is fully aligned with our commitment to disseminate IFRS globally.

The KPMG Global Conversion Services Group is comprised of a team of IFRS specialists capable of advising your company on all matters relating to IFRS conversion, among which we mention the following: »» Application and interpretation of new accounting standards »» Tax and fiscal impacts »» Acquisition of businesses and fair value valuations »» IT systems »» Project management »» Financial instruments »» Application of IFRS in specific industry sectors such as agribusiness, construction and development, energy »» Training »» Pension plans and share‑based remuneration »» Investor relations

Material adapted from the KPMG publication "Converging into a Global Standard - Challenges and Opportunities" which is available at www.kpmg.com.br/ifrs.

If you are interested in finding out more about how KPMG can advise your company on IFRS conversion, please visit the website www.kpmgifrg.com.

34

MZ Bulletin’08

© 2008 KPMG Auditores Independentes, uma sociedade brasileira e firma-membro da rede KPMG de firmas-membro independentes, afiliadas à KPMG International, uma cooperativa suíça. Todos os direitos reservados.

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MZ Bulletin’08

35

by Bloomberg

Investor Relations in a globalized economy As investors’ demands increase for more transparency and quality information, IR departments globally are getting more sophisticated and keeping close track of their company

IRGR<GO> IR Global Rankings

M

arkets are constantly changing and as the world gets more interconnected, the global corporate scenario evolves to keep up with a more demanding and diversified international investor community. For example, when you look at the 100 biggest companies by market cap around the world today, compared to 10 years ago, you will start noticing more and more globalization's impact on the decrease of American companies' concentration.

Today, American companies account for only 30% of the world's market cap as investors have discovered the benefits of investing in from Brazil, China, Russia and other high return potential countries.

As money crosses borders easier because investors look for better returns beyond their home country, the search for established companies go to before unimaginable places. Investor Relations departments have become a strategic area for any global company looking to raise new capital—both in equity and debt markets—and to keep their current stakeholders happy with transparent, accurate and rapid information.

Investor Relations in several global companies throughout the world use the Bloomberg Profesional® service daily. They monitor their companies, communicate with stakeholders and analysts,

36

MZ Bulletin’08

and stay abreast of their competition, industries and global market trends. With a myriad of functionality accessible on their desktops and portable devices such as BlackBerry®, IR Managers are able to monitor prices, analysts' estimates and recommendations, news, corporate actions, economic releases, commodity and foreign exchanges and a lot more information on their own companies and their competitors. This information allows managers to always have answers to directors and investors and analysts.

A typical day for a global Investor Relations manager starts with an overview of the news – what is out about your company, who is publishing reports, articles, etc. Then, moving into announcements, economic indicators that may impact the stock price, looking at competition, industry news, comparative analytics, and holder's information.

With a customized Bloomberg LaunchPad, all the information you need in your desktop is just a single click away. The Bloomberg Professional service provides access to real‑time and historical prices for your stock, your competition and any world index; peer group comparison, alerts for changes on ratings or price movement; financial analysis, sales calls, earnings announcements, corporate events; analyst recommendations; news and research; TV interviews with world executives and much more.

Bloomberg's unique messaging/chat system facilitates constant communication with analysts and stakeholders enabling you to respond to their needs or voluntarily divulge new information.

The Bloomberg Professional service may be used as an efficient platform to divulge results, promote your company or run road shows. All of this supported by a 24/7 Global Customer Support, unlimited free training to continuously assist you on exploring the depth and breadth of Bloomberg's data covering over 9 million securities and 26,000 analytical tools.

Global IR manager’s toolkit

The most important tool IR neeeds: BLP<GO> to open your LaunchPad and customize your desktop with news, charts and analytics.

Where to start the day with news?

TOP<GO> for global news that are moving markets READ<GO> for the most read news, by companies, topics and people (ticker) <Equity> CN<GO> for news and research about your company, where you can chose a variety of sources from internet sites, blogs or wires

How to monitor global markets?

WEI<GO> and WEIF<GO> real‑time monitors of global equity indices’ prices, valuation and futures MMAP<GO> and IMAP<GO> browse thru maps of sectors and regions to find out what is hot, using over 60 analytical metrics EVTS<GO> check which companies are coming to the market with announcements, earnings, listen to calls, review transcripts, and plan schedule future events with alerts

How to start narrowing the world?

EQS<GO> set your own parameters to narrow the universe of equities to monitor a sector, industry or list of companies EA<GO> for a general view of earnings for a particular country/industry or list of companies

Now that you have a macro view, analyze your company and peers (ticker) <Equity> BQ<GO> full description of a company with details on management, performance and much more (ticker) <Equity> RSKC<GO> snapshot of a company with details on risk, credit and corporate governance (ticker) <Equity> ANR<GO> find out what analyst are saying and expecting (ticker) <Equity> EE<GO> both will help you get depth on earning and estimates (ticker) <Equity> SURP<GO> wondering if you have done a good job managing investor’s expectations? See if they are surprised by your company’s results (ticker) <Equity> SI<GO> what are short sellers thinking? See the total number of shares that have been sold short and the ratio of short interest to average trading volume (ticker) <Equity> PV<GO> and RV<GO> Stack up your company against its peer group locally or globally, using over 20,000 analytical fields and export all the data you need to MS Excel.

Who holds your stock?

If your CEO or CFO is making a trip to London, you might like to see which mutual funds are based nearby and schedule visits.

Additionally, you can also see which investors are bought shares/ bonds of your competitors and target them as well …

PSRT<GO> (ticker) <Equity> PHDC<GO> & HDS <GO> search thru a list of public portfolios, for holders of a particular stock and recent buy/sell activity.

MZ Bulletin’08

37

by PR Newswire

The Rise and Rise of the Activist Investor

P

ick up the financial press on any average day, and you will find them. Activist investors have targeted another company, whose stock they feel to be undervalued by the market, as a result of some corporate failing. By changing that failing, the argument goes, shareholder value can be increased.

So how did we get here, who are these activist investors, how do they operate, and what can a company do when targeted?

For many, a trend was started when the Deutsche Boerse made its ill‑starred bid for the London Stock Exchange. We all recall the bid – at £6 per share, made on the back of the Deustche Boerse’s strong performance. Enter TCI (The Children’s Investment Fund). They argued that this price did not represent

38

MZ Bulletin’08

value for money, and brought many other DB investors with them. The bid failed. Ironically, as we write, the LSE share price is £13.62.

So are activists “freedom fighters” battling unseen weaknesses in a company’s performance, or profiteers after a quick return? The answer as always depends on your perspective. What we do know is that they exercise an influence out of all proportion to their economic might. A typical holding in a company in Europe is around 1%. We also know that the number of activist attacks is growing both in Europe and the US. And no single sector is safe; Activist involvement has been seen in more than 20 sectors, led by financial services. And companies in 8 European countries have seen involvement of activists.

rejection, the media will have a key role to play. The letter may be provided to the press, and (increasingly) backed by an advertising campaign. The current (still ongoing) battle at HSBC, started publicly with a series of advertisements in the national media placed by Knight Vinke. The share price responded.

The level of press interest is driven by involvement of noted activists. At the lowest level, silent engagement by long funds and trackers excites little if any interest. However when names like Hermes, Fidelity, Calpers and others are pressed into action, the media sits up and takes notice. And when it emerges that an Icahn, TCI, Knight Vinke or a Wyser Pratt is involved, interest levels are high. This can lead to a trial by media.

No single sector is safe; Activist involvement has been seen in more than 20 sectors, led by financial services

How does activism work in practice? Writing in the Financial Times earlier this year, Peter Montagnon of ABI, and ex‑FT journalist, noted “Long term investors have a programme of engagement with the companies they own, which is important but qualitatively different from activism. However, there is sometimes a synergy between activists, and long‑term institutions.

When the 2 combine, they become a powerful force for change. When activists lack the support of long‑term institutions, they rarely get far”.

So we see a dynamic at work where a hedge fund will identify a target and a demand. It will quietly take a stake, perhaps of 1‑2%. They will approach the company seeking management access, and outline their position in a letter (to the Board only). On Board

The campaign itself will be driven by what the activists want. Recent campaigns have been aimed at blocking or supporting a corporate action, governance and management change, or a strategy change. Occasionally they will seek an improved shareholder cash return.

As always the best defence is constructed before the attack. Identifying potential vulnerabilities in governance, strategy or performance is crucial as is then building a clear value creation strategy. Taking that strategy on the road to key investors and securities analysts, and indeed through the media, will cultivate the relationships needed.

Knowing that a stake is being built by a known activist investor will allow proactive action before the media campaign is underway.

Among the steps target companies often take are background briefings from senior management, including rebuttal of the key points of the activists’ demands. These should include sources of information outside the company. Any supporting research or opinion generated by analysts will help greatly.

How do you know when you have won? Often these campaigns can be drawn out. However delivering sustained performance makes the task immeasurably harder for the activist. The current attack on Generali, the Italian insurance giant, is facing the “problem” that Generali continues to produce sound financial performance.

MZ Bulletin’08

39

“…to launch an activist hedge fund to target underperforming European companies….” “…activist investors openly attack insurer but are still a long way from forcing any change…”

“A group of activist investors has launched a bid to shake up the board…”

(Some headlines from a recent Financial Times on activist investors)

With the expansion of derivatives trading it has become increasingly difficult to determine who is in control of a company’s shares. Mark Hynes of PR Newswire explains how some investors can use this lack of transparency to their advantage.

N

ot an atypical day, but how can activist investors seek to ensure their opinions are heard and actioned?

Added to their armoury of techniques is an emerging practice known as ‘empty voting’. Two US university professors – Henry T.C. Hu & Bernard Black ‑ coined the term to describe how investors use a simple way to profit from the workings of public companies: Borrow their shares, and then swing the outcomes of their votes.

For companies with a one‑share, one vote structure, in which voting power is proportional to economic ownership and gives shareholders economic incentives to exercise their voting power well. Mechanisms based in the shareholder vote, including proxy battles and takeover bids, encourage companies and their directors not to stray too far from shareholder value as their key driver.

However the derivatives revolution and capital market developments such as the massive growth in stock lending, threaten this pattern.

Both outside investors and insiders can now easily separate economic ownership of shares from voting rights to those shares.

Through stock lending agreements, shares held by institutional fund managers can be lent, often for very

40

MZ Bulletin’08

short periods of time. With companies reporting that 40% and more of their free float is lent at any one time, the question of who is in control of the voting rights of their shares is a growing concern for issuers.

In some cases, the strategy has allowed speculators to gamble that a company's stock will drop, and then vote for decisions that will ensure that it does – without their ever having to own any stock themselves.

Some outside interests have used the strategy to hide their voting power within a company until the last moment, while others of course deny that this practice exists – or at least that it is commonplace.

Stock lending began as an informal practice among brokers who had insufficient share certificates to settle their sold bargains, often because the owner had mislaid their certificates.

Today, however, securities lending is an important business, whereby securities are temporarily transferred by the lender to the borrower, who is then obliged to return the securities on demand or at the end of the term.

However it highlights three issues of concern for issuers.

First, if the lending investor is not aware that their stock is being lent, then they may have problems voting

their intentions, and IR’s seeking to build relationships, especially with a significant vote approaching, can be misled; Second, stock being lent in volume is sometimes an indicator that a company’s equity is being shorted, perhaps by a hedge fund. Registrars can often help in identifying patterns which may be stock lending and shorting; and Thirdly is whether there may be some element of double counting of votes. For voting effected through CREST (the multi‑currency electronic settlement system), this should not be a problem, as CREST ensures accurate counting. However where the vote is exercised through a proxy form, companies need to ensure that votes are being exercised properly.

What is the regulatory position?

The Financial Services Authority consultation on disclosures of ‘non material’ positions is closed, and we await (as I write) the outcome. In the meantime, the challenges in identifying borrowers and in managing voting intentions by investors who have lent their shares, continue.

If you really want to get in the game, you need a depositary bank who knows all the players.

Depositary receipt services at their best.

You know your depositary receipts are an outstanding investment opportunity. You need global investors to know it too. Keeping your program top-of-mind requires a depositary linked to the worldâ&#x20AC;&#x2122;s brokers and investors. Our exceptional market outreach initiatives and specialized expertise can connect you with who and what you need to know. Together, we can strive to reach your highest goals.

To learn more, please call: New York: Anthony Moro +1 212 815 5838 London: Michael Cole-Fontayn +44 20 7964 6318 Asia: Chris Kearns +852 2840 9875

bnymellon.com/dr Š2008 The Bank of New York Mellon Corporation. This information is provided for general purposes only and is not investing advice. Depositary Receipts: NOT FDIC, STATE, OR FEDERAL AGENCY INSURED. MAY LOSE VALUE. NO BANK, STATE, OR FEDERAL AGENCY GUARANTEE. Products and services are provided by various subsidiaries of The Bank of New York Mellon Corporation.

IR Global Rankings Case Study

Corporate Governance Region: Europe Sector: Industrials

Royal Philips Electronics

P

hilips was an outstanding corporate governance contender in 10th edition of the IR Global Rankings,

taking first place among the European participants with an excellent performance in all evaluation criteria, underlining its commitment to transparency and best practices. In line with several other participants, it recognizes the value that such procedures can add to the companyâ&#x20AC;&#x2122;s shares price and their increasing relevance in investment decisions. Even more importantly, Philips demonstrated a proâ&#x20AC;&#x2018;active

approach, going well beyond legal market requirements.

One of its strengths is its Board of Directors. In our opinion, a good Board must meet certain criteria, beginning with the stipulation that members (especially the chairman) should not be part of management. Even more importantly, directors should have no conflicts of interest, particularly in regard to the controlling shareholders who may be tempted to put their own interests above those of the company. It is therefore advisable that at least a majority of the directors, if not all, be independent. In addition to its supervisory duties, the Board is also responsible for determining the

Philips IR Team

companyâ&#x20AC;&#x2122;s longâ&#x20AC;&#x2018;term strategy, so it is vital that that at least some of its members have a strong background in

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the companyâ&#x20AC;&#x2122;s industry.

By establishing these standards, Philips is assuring its shareholders that the Board is concenteating on its prime role of supervising management. The adoption

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of practices such as these, added to its preoccupation with transparency, management accountability and protecting the rights of minority shareholders have made Philips a benchmark for corporate governance.

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Methodology for Corporate Governance Corporate governance has rapidly become one of the key issues in the investment decision process and studies confirm that investors are willing to pay more for companies that follow proper governance practices.

Corporate governance deals with agency problems arising in modern corporations due to the separation of ownership and control. There are a series of disciplining devices to protect shareholder interests and thus reduce agency costs.

MZ evaluates corporate governance in line with its ability to create, maintain and manage value, while balancing the interests of its various stakeholders.

Management Accountability [15 points]

One of the main aspects of corporate governance is to promote the alignment of interests between shareholders and management. To achieve this goal, the regulations of the Board of Directors and of Executive Management must be carefully established. In the case of Executive Management, hot topics include remuneration, particularly that related to stock options, and performance evaluation. Information on both, as well as how the company avoids conflicts of interest regarding short and long‑term performance, is all‑important. Executives’ business backgrounds are also evaluated, as are their appointment procedures and terms of office.

Board of Directors [25 points] The Board of Directors has two fundamental duties: supervising Executive Management and determining the company’s long‑term goals. Assessment criteria include the independence of Board members, the financial skills of its audit committee, procedures for the election of its members and their terms of office and the charters of its committees, among others. The business background of the Board members and the time they can devote to the business is also

examined in order to evaluate their capacity to perform their duties.

Minority Shareholders Protection [22.5 points] Controlling shareholders, particularly in some markets, may achieve a degree of power that is prejudicial to minority shareholders and steps should be taken to avoid such a situation. For example, companies should have a single class of shares, in line with the one‑share‑one‑vote principle, and provide tag‑along rights to minority shareholders so that they may benefit fully from a potential takeover.

Controlling Shareholders and Shareholders’ Meetings Procedures [20 points] Capital concentration/fragmentation and the total float should be analyzed in order to ensure sufficient liquidity and avoid the concentration of voting and share‑pricing powers. Companies should also establish rules for their shareholders’ meetings in order to facilitate the exercise of shareholders’ rights, such as summoning extraordinary meetings, proxy voting and determining minimumt quorum and approval ratios.

Other Policies [12.5 points] General policies are needed to

regulate certain aspects of a company’s daily operations. For example, minority shareholders should have a say in transactions with related parties and be able to restrict them if they deem them to be detrimental to the company’s business. Other policies such as whether to pay dividends, effect a buyback or reinvest in the company are also important in investment decisions. Despite the absence of a single “correct” approach to the use of cash flow, companies should have a clearly established policy and explain why it was adopted.

Financial Statements and Disclosure [5 points] Investors need reliable information to make their investment decisions, so the quality of the financial information and its fair disclosure to all market participants are extremely important. Regarding transparency, it is advisable for companies to adopt a well‑established GAAP, be it US GAAP or IFRS. Those willing to go the extra mile, presenting additional information not required by law, such as the expensing of stock options and comprehensive information on accounting estimates (e.g. the estimation of future revenues and expenses related to pension benefits) should outperform their peers.

MZ Bulletin’08

43

IR Global Rankings Case Study

IR Website and Online Annual Report Region: Europe Sector: Consumer Goods

adidas T

report, which was the benchmark for the OAR rankings.

because of its tradition, but also due to its importance in

The annual report is an exceptionally useful tool for

the overall evaluation. Winning this award means being

increasing investor access to institutiutional information

a trendâ&#x20AC;&#x2018;setters in one of the most important investor

on the company and an online version is even more

communications channels.

attractive than a PDF one. adidasâ&#x20AC;&#x2122;s OAR possesses

his category is undoubtedly one of the most fiercely contested in the IR Global Rankings, not only

adidas has always been among the TOP 5 in Europe and this edition was no exception. The companyâ&#x20AC;&#x2122;s IR content,

Another adidas highlight was its online annual

excellent navigability and interactivity.

Maintaining these IR tools on the website

the most important evaluation criterion, was excellent,

appears to be an easy matter. Not so â&#x20AC;&#x201C; in order to

particularly the guidance section, which is divided into two

do so, companies must always be aware that good

pages. The first, called Outlook and located in the strategy

content is enough in itself to ensure that their

section, gives an exceptionally comprehensive picture of the

site fulfills its basic role of establishing market

market, growth drivers, regional trends and new products;

communications and attracting investor interest.

the other, entitled Targets and Investment Case, contains

Being aware of the best market practices, such

highly specific financial guidance for both 2008 and 2009.

as those cited above, and of the latest internet

Though this company has a very complete guidance section,

resources and tools can ease the task considerably.

it is, nevertheless, a good example of how a firm can

2QOLQH $QQXDO 5HSRUW

present investors with certain directional trends, particularly regarding operating performance, without necessarily providing precise financial forecasts (a practice which is vetoed by some companies).

In addition to excellent content, and once again following the example of adidas, a good IR site must be contantly

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updated and focused on the needs of its users. Tools that facilitate navigabiility and augment interactivity with

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analysts and investors increase the utility and efficiency of the site. adidas is fully aware that investors want to find what they are looking for in as few clicks as possible and makes a point of presenting clear information in an easily accessible manner, with links to subjects that are related to the topic on view at any given moment.

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Methodology for IR Website The best global IR websites use the strength of the Internet to provide investors with all the information they need on the company‘s business, financial performance, prospects, competition, culture and history They facilitate coverage of the company by providing webcasts of important events, FAQs and e‑mail and help investors find information and news through search mechanisms, e‑mail alerts and a future events calendar.

Good IR websites are also anything but static – they permit interactive communications, allowing investors to vote by proxy, buy the company‘s stock, listen to quarterly conference calls, manipulate information online through analytical and financial modeling tools, and customize the website.

In other words, a good IR website is the main vehicle through which companies communicate with the capital markets thanks to such attributes as equal access for all, real‑time publishing and potential for interactivity.

Content [50 points] Accounting for just under half the total points, content is the most important criterion. After all, information is what users are looking for and, when it comes to websites, there seems to be no such a thing as too much information.

The criteria range from standard items, such as regulatory filings, presentations, earnings releases and analysts’ information, to more complex features such as investment messages, debt information, a comprehensive corporate governance section and guidance.

Certain specific characteristics of each of these items are also evaluated. In the case of management presentations, for example, it is common to find slides, but considerably less so to find the accompanying transcripts, which would be more useful in most cases.

Similarly, while posting PDF versions of annual reports on the website is fine, more points are granted to firms with a sound online annual report. In addition, while a number of companies provide guidance, few take the time to post their guidance on a specific section of their website and just a handful go the extra mile by presenting their initial guidance plus any changes along the year, as well as a comparison of the previous year’s guidance with actual results.

Design and Navigability [15 points]

Ample content is of little use, however, if users can’t find the information they are looking for, so proper design and user‑friendly navigability are key features of a successful website.

A dedicated IR menu, in which all the content is not only visible, but also just a few clicks away, is the most important feature, although by no means the only one. For instance, the IR section should be easy to find from the homepage and direct document downloads are imperative, as it is often difficult to open bulky files in a browser. Finally, a portal‑style homepage and some internal links are important to pique users’ curiosity and induce them to explore the site further.

Interactivity [10 points] Although it should be pretty easy to score high interactivity, some companies overlook the potential of these tools. For example, nothing could be easier than posting spreadsheets of the company’s financial and operating results, which are exceptionally useful for analysts.

In addition, while institutional investors almost certainly have their Bloomberg terminals, individual investors almost equally certainly do

not, so interactive quotes and/or graphs may well enhance their experience. Both will also benefit from a constantly updated FAQ section, which is also a great time‑saver for the IR team. Unfortunately, FAQs invariably retain the same content for inordinate lengths of time.

Finally, companies should try to make it easier for investors to track any new corporate developments. E‑mail alerts and an updated events calendar are therefore crucial; all too often, however, events calendars contain no useful information at all.

Technology & Data Manipulationt [10 points] Few things are as important when making investment decisions as confidence in management, because it is the quality of their management that distinguishes great companies from the rest. In this sense, webcasts are a key feature in increasing the audience for management presentations. As well as being an exceptionally useful tool for individual investors who otherwise would not have the opportunity of attending the presentations, they have also become the medium of choice for an increasing number of institutional investors.

MZ Bulletin’08

45

Webcasts are therefore a major item in the technology criterion, and the features evaluated include slides, videos, events, quarterly calls and other management presentations.

Certain other features are also important in improving the overall experience, such as a functional search mechanism and the intensive use of HTML instead of PDF. In addition, while online

Timeliness [10 points] It is often said that anyone can build a great website but the real challenge is keeping it up to date. It is also vital that IR teams respond to investor demands as soon as possible. It is precisely these two features that are evaluated under this criterion Firstly, we ascertain when the website was last updated to verify the presence (or not) of new information or if it is updated once every quarter. We then check if contact information is available and certain documents materials are requested to assess the response time.

46

MZ Bulletin’08

Technical Criteria for Online Annual Reports Online annual reports are part of the overall IR website evaluation process; however, due to their considerable importance as a communication tool, MZ also carefully reviews them in order to verify their ability to transmit the investor message. Not only should they clearly convey the firm’s corporate identity, but they should also provide a greater feel for the management team, something which is critical for many investors when they are considering acquiring a company’s stock. Examples include the use of audio and video to deliver the CEO’s message in a much more dynamic and forceful manner than the nmere printed page can offer, making it really come alive. In other words, by making appropriate use of the best technological resources available on the internet, online annual reports are much more effective in “selling” the company than printed ones. Such resources include: bold design, animation and sound, abundant hyperlinks, visitor interactivity and multimedia applications for important statements.

To be considered for this category, companies must have a truly online report in HTML, not simply a PDF version of the printed one. MZ does not evaluate annual reports in PDF format. Technical evaluations are based on the English version only and adopt the same criteria used to assess websites, outlined above.

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Profit Read Like Predict Suit Manage Adjust Notice Network Deliver Accept Quote Scale Account Correct Achiev Service Maneuver Retain Support Access Reach Distinguish Remark Target Relate Bank Action Trust Function Connect Measur Click Engage Share Unite Interact Control Inform Craft Spark View Link Want

IR Global Rankings Case Study

IR Performance: Most Popular POP+ Region: Europe Sector: Financials

BBVA I

market visibility at all times. In the case of the Investorsâ&#x20AC;&#x2122;

were expanded beyond the IR website, BBVA caused a

Choice rankings, this strategy includes mailing the

major surprise by winning the POP+ award in all categories,

investor base to encourage them to vote and the

being the most voted in Europe. What makes a company a

placement of a banner on the IR website with a link to

favorite with investors? In BBVAâ&#x20AC;&#x2122;s case: a solid IR program,

the awards page and/or instructions on how to vote.

n the first year in which the IRGR the voting channels

an efficient team and a brilliant online campaign.

Clearly, such recognition is the fruit of continuous

BBVAâ&#x20AC;&#x2122;s excellent campaign and its thoroughly deserved recognition from the highly competitive

efforts by the IR area to ensure the use of the best

Eurpoean capital maket were the result of a

corporate governance and earnings disclosure practices,

combination of initiatives taken by the company

the maintenance and constant updating of the IR site and

before and during the voting period. Thanks to

a proactive and responsive approach by the IR team.

this recognition, the company has yet another

In a good IR program, a company already has what it

opportunity to leverage its IR program by showcasing

takes to become an investor favorite. All that remains is to

its achievements, further raising the bar for future

institute an effective communications strategy to ensure

editions of the rankings.

BBVA IR Team

Methodology for IR Performance POP+ The POP+ (most popular) ranking is an initiative to identify best practices based on direct votes from investors, analysts and capital market players in the following categories: IR Website, Corporate Governance, Financial Disclosure, IR Professional, and IR Program.

POP+Rules Voting eligibility is as follows: »» Individual or institutional investors, analysts, brokers, listed company employees, financial journalists and finance professionals are eligible to vote. »» The number of votes per company is limited to five. »» To improve feedback, only votes directly from a Bloomberg terminal or through MZ’s website accopmpanied by a valid Bloomberg login are accepted. »» Only one vote per email address is allowed.

Voting periods may vary from one

MZ is responsible for receiving

edition to another. The official voting

and validating the votes and KPMG

period will be announced during the

Independent Auditors is responsible for

refer to the privacy policy and terms and conditions of the survey.

By registering a company in the

registration period for each edition.

examining the procedures to ensure

2008 IR Global Rankings™ or by

Each participating company may, if it

the reliability of the results.

utilizing the POP+ logo on its website,

so wishes, advertise its participation

Registration implies that

each participant declares their

in the POP+ rankings on its website

participating companies have

knowledge of and agreement with

via banners and pop‑ups, including

authorized MZ to use an image of the

these rules.

but not limited to those provided by

company’s IR website, the company

MZ after registration. Additionally,

name and logo, and the URL of the

adjust the rules at any time without

participating companies may request

IR website to advertise the POP+

prior notice to the participants. Any

votes from their investors / analysts

ranking. All claims for any type of

such adjustments will be made in good

by e‑mail, banners on brokers’ sites or

payment for reproduction and/or

faith, based upon MZ‘s sole judgment,

other means.

publication rights are waived. Please

to ensure the fairness of the rankings.

If it deems necessary, MZ may

MZ Bulletin’08

49

IR Global Rankings Case Study

Financial Disclosure Procedures Region: North America Sector: Oil & Gas

Nexen

N

exen has been a prime performer

statements, providing a detailed breakdown of

in various categories thanks to the

accounts items and making maximum use of

excellence of its IR practices, always figuring

the release to provide additional information to

among the leaders in its industry and region.

ensure a better understanding of the numbers.

This year, its financial disclosure procedures were particularly outstanding.

This was best exemplified by its cash

Nexenâ&#x20AC;&#x2122;s standards in financial disclosure procedures are a good example of what companies should strive to achieve in this topic

flow evaluation. In addition to providing a

and is definately a benchmark example in the IR

detailed cash flow breakdown, the company

Global Rankings universe.

also commented on the topic in its release and quarterly disclosure, helping give investors and analysts a better understanding of the figures.

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It also gives a detailed picture of other key cash key figures such as capital expenditures, not only historically, but also in reference to future trends.

However, Nexenâ&#x20AC;&#x2122;s meticulous approach to its financial disclosure procedures is not limited to cash flow. It also goes well beyond the legal requirements in relation to its financial

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Methodology for Financial Disclosure Procedures Effective as of October 23, 2000, the SEC adopted new rules (Selective Disclosure and Insider Trading Rules, or Regulation Fair Disclosure ‑ Reg. FD) to address three issues: the selective disclosure by issuers of material nonpublic information; when insider trading liability arises in connection with a trader‘s “use” or “knowing possession” of material nonpublic information; and when the breach of a family or other non‑business relationship may give rise to liability under the misappropriation theory of insider trading. The rules are designed to promote the full and fair disclosure of information by issuers, and to clarify and enhance existing prohibitions against insider trading.

On August 27, 2002, the SEC adopted final rules for the implementation of Section 302 of the 2002 Sarbanes‑Oxley Act, which requires that CEOs and CFOs of SEC reporting companies (including foreign private issuers) to deliver personal certifications in each annual or quarterly report filed pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934 on or after August 29, 2002. In addition, the new rules expressly require that these companies establish and maintain a system of disclosure controls and procedures to address the quality and timeliness of the company’s public disclosure. These rules became effective on August 29, 2002.

The term “disclosure controls and procedures” refers to a company’s system of controls and other procedures designed to ensure that information required to be disclosed in SEC filings is recorded, processed, summarized and reported on a timely basis. These disclosure controls are intended to have a broader coverage than the “internal controls” that the SEC requires, which relate solely to financial reporting and control of assets.

MZ’s evaluation is intended to capture and rate a small portion of the “disclosure controls and procedures”, focusing on earnings releases and their associated disclosure procedures. MZ’s analysis is primarily based on the quality of the information provided in these releases and in the quarterly financials.

Operating Information

[Banks & Companies: 15 points] Although specific for each industry, operating data are the key to making sound investment decisions and are therefore essential, even if their disclosure is not specifically required by law. Figures such as market share, sales volumes, and other industry‑specific data should, therefore, be provided.

Operating Information

[Banks & Companies: 35 points] A comprehensive analysis of the income statement should be provided on a line‑by‑line basis. The focus

here is on evaluating the quality of the comments, which can be divided into three categories: a) those that merely repeat the information provided in the tables, without adding any color to the raw figures; b) those that merely describe the effects of the period; and c) those that both describe and explain these effects and outline the likely future trends for the accounts in question.

A further plus would be to provide information that is not required by law, such as a breakdown of revenues or COGS. A breakdown of results per business segment, in addition to

the consolidated results, would also be welcome as it makes it easier to understand the precise trends for each business.

Balance Sheet [Banks: 20

points/Companies: 10 points]

Companies should also comment on their main balance sheet numbers and explain any major changes and trends. Key figures normally include net debt and working capital, although individual firms may have their own accounts of special interest. This section is particularly important for banks and accounts

MZ Bulletin’08

51

for more points than for other companies, given that items such as credit quality and liquidity are vital to operations and results. This was offset by disregarding cash flow in the case of banks.

Cash Flow [Banks: 0 points/

Companies: 35 points]

Public companies should not only provide a cash flow statement, but should also explain the main differences between their operating cash flow and their income statement, such as non‑cash charges or deferred revenues/expenses. Other key cash figures should also be examined, including current and expected

52

MZ Bulletin’08

capital expenditures, future debt amortizations and dividend payout policies, among others.

Guidance [Banks & Companies:

10 points]

Most companies do provide financial guidance one way or the other, so it is preferable if this is formalized and updated in the financials/earnings releases. This applies not only to specific EPS trends, but also to revenue and cost guidelines and the underlying drivers. Assessment also includes explanations on the company’s long‑term strategy and management vision and how it is pursuing and achieving these goals.

Conference Call

[Banks & Companies: 5 points] The only requirements regarding the conference call are that it is held up to two business days after the earnings announcement and is accompanied by a slide presentation.

Distribution/Dissemination [Banks & Companies: 15 points]

Public companies should also respect the principle of “Exemplary Disclosure”.

Evaluation criteria therefore include the timing of the disclosure (i.e. when this information crossed the wires, if at all), time gaps between local language and English announcements and between the earnings release and full financial filing, among other metrics.

When the deal is complex, the choice is simple

Acquisition (through its TSI Group, Inc. portfolio company) of Thompson Industries Ltd. 11/28/07

Acquired by PNC National Bank, N.A. 7/1/07 CORPORATE/REGULATORY/ ANTITRUST

CORPORATE

Acquisition of Chandler/May, Inc.

CNL Income Properties, Inc. SECURITIES AND TAX COUNSEL

12/5/06

Acquired by Detica Group PLC for $39,500,000

Acquired by Ventas, Inc. for CDN$2,260,000,000

4/02/07

US TRANSACTIONAL COUNSEL

CORPORATE/ GOVERNMENT CONTRACTS

Acquisition of Guidant for $27,000,000,000 4/21/06

CORPORATE

Acquisition of Armor Holdings, Inc. for $4,100,000,000

4/26/07

REGULATORY

7/31/07 GOVERNMENT CONTRACTS/ CORPORATE DILIGENCE

In its ongoing business alliance with Honda Aircraft Company, Inc. concerning the PiperJet and Honda Jet TECHNOLOGY TRANSACTION

Acquisition of Adams Respiratory Therapeutics for $2,300,000,000 1/24/08 CORPORATE/REGULATORY

Acquisition (through Perseus Partners VII, L.P.) of a controlling interest in Distributed Energy Systems Corp.

8/24/07 CORPORATE

Acquisition of assets (through its portfolio company, Perseus Books, L.L.C.) of Publishers Group West Incorporated and Avalon Publishing Group Incorporated 2/28/07

Acquisition of GameDaily assets from Gigex, Inc. 2006 CORPORATE/ INTELLECTUAL PROPERTY/ TECHNOLOGY TRANSACTION

Stock Purchase of Totekasche Holdings, Inc. d/b/a Userplane 2006 CORPORATE/ INTELLECTUAL PROPERTY/ TECHNOLOGY TRANSACTION

CORPORATE

Acquisition (through its Thermal Solutions, LLC portfolio company) of Woven Electronics, Inc. 3/21/06 CORPORATE

Acquisition of Scientific-Atlanta, Inc. for $7,000,000,000

Acquisition of Alphason Designs, Limited for £40,000,000

Acquisition of Aircast Incorporated $290,000,000

2/24/06

2/23/06

4/7/06

REGULATORY

CORPORATE

REGULATORY

Acquisition of certain assets of Placer Dome, Inc. from the Barrick Gold Corporation for $1,485,000,000

Acquisition of Windrose Medical Properties Trust for $877,000,000

Acquisition by Merger of Lighteningcast, Inc.

12/20/06

5/12/06

SPECIAL REIT TAX COUNSEL

CORPORATE/ INTELLECTUAL PROPERTY/ TECHNOLOGY TRANSACTION

REGULATORY

2006

®

(An AOL Subsidiary)

Issued over $1,587,000,000 in Common Stock 3/29/05 - 3/29/06 CAPITAL MARKETS

Acquisition of Smurfit-Stone Container Corp.’s consumer packaging segment for $1,040,000,000 5/12/06

Acquisition of BellSouth for $86,000,000,000

Acquisition of LDMI Telecommunications, Inc.

12/29/06

1/4/06

REGULATORY

CORPORATE

Acquisition of Coastal Financial Corp. for $350,900,000

Acquisition of The Taylor Companies

Acquisition of Third Screen Media, Inc.

9/09/06

5/1/07

CORPORATE

CORPORATE/ INTELLECTUAL PROPERTY/ TECHNOLOGY TRANSACTION

REGULATORY

5/14/07

REGULATORY-ENVIRONMENTAL

Acquisition of Evans Analytical Group, Evans Texas, Evans East, Evans Taiwan, and Cascade Scientific, Inc. for $28,100,000

Corporate Reorganization and Recapitalization $27,000,000

Acquisition of Network Telephone Corporation for $20,000,000

Acquisition of First Citizens Bankcorp for $142,600,000

3/31/06

Acquisition of AT&T Corporation for $16,000,000,000 11/18/05

REGULATORY

REGULATORY

1/3/06

REGULATORY

8/1/06

2/25/05 CORPORATE

REGULATORY

9/2/05

Acquisition of Rinker Materials Polypipe, Inc. and Pipe Liners, Inc. for $66,000,000

Joint Venture with Mitsui & Co., Ltd. to form Advertising. com Japan Kabushiki-Kaisha 2006 CORPORATE/ INTELLECTUAL PROPERTY/ TECHNOLOGY TRANSACTION

REGULATORY

®

Sale of MBT Holdings, Inc. and its subsidiaries to Kaman Music Corporation for $30,000,000

In its Chapter 11 reorganization and simultaneous merger with America West

8/5/05

9/27/05

CORPORATE

CORPORATE

A merger with AMC Entertainment Inc./Marquee

Acquisition of Instinet Group, Inc. for $1,880,000,000

Acquisition of Macromedia for $3,400,000,000

1/26/06

12/8/05

12/3/05

REGULATORY

REGULATORY

REGULATORY

In the sale of its non-chocolate confections business to The Wm. Wrigley Co. for $1,480,000,000 5/5/05

Acquisition of Seattle Bike Supply, Inc. 2/28/06 SOLE OUTSIDE US COUNSEL

REGULATORY

arnoldporter.com Washington, DC  New York  London  Brussels Los Angeles  San Francisco  Northern Virginia  Denver

53

Attorney advertising: Prior results do not guarantee a similar outcome.

MZ Bulletin’08

Participant List The following companies have participated in one or more of our evaluations since 2003, and have benefited from the feedback and exclusive insights provided by IRGR.

7-Eleven AB SKF AB Volvo ABB Asea Brown Boveri Abitibi ABN AMRO Acambis Actavis Activision ADC adidas Advanced Semiconductor Engineering AES Gener Agnico-Eagle Mines Agora Air France-KLM Air Products Alcoa ALL Allergan Allianz Allied Defense Group Allied Electronics Corporation Limited (Altron) ALLTEL Corporation ALTADIS ALTANA Amadeus Global Travel Distribution Amazônia Celular AmBev Amcor AMD Amerada Hess American Electric Power American Financial Realty Trust American Greetings American Power Conversion AmSouth AMVESCAP Anadolu Efes Anglo American plc Anritsu Corporation Anthem Apple Aracruz Celulose ARC Energy Trust ARC Wireless ARCADIS Arcelor Ashland ASML Assore Assurant ASUR AT&S Austria Technologie und Systemtechnik Atlas Copco Australia and New Zealand Banking Group Autodesk Autoroutes du Sud de la France Avaya Aventis Avery Dennison Avgold Aviva Avmin Axcan Pharma Banca Fideuram Banco ABC Banco BPI Banco Bradesco Banco do Brasil Banco Espírito Santo Banco Itaú Holding Financeira Banco Nossa Caxia Banco Santander Bank Austria Creditanstalt Bank of Montreal Bank One Barloworld Barrick Gold BASF Bayer BBVA BCE Beckman Coulter Bell Equipment Benetton Group Best Buy BG Group BHP Billiton Biogen Biovail Corporation Blockbuster BlueScope Steel BMW Group BNP Paribas Bombardier BOUYGUES Bradespar Brascan Brasil Ecodiesel

54

MZ Bulletin’08

Brasil Telecom Braskem Brazil Realty BRE Bank Brisa Auto Estradas de Portugal British American Tobacco Brookfield Properties Bruker Biosciences Bumiputra-Commerce Holdings Berhad Buongiorno Burlington Resources Bursa Malaysia Berhad Cadence CAE Camargo Corrêa Des. Imobiliário (CCDI) Cameco Cangene Capital Title Carbo Ceramics Cardo Career Education Casa Saba Casas GEO CCC Information Systems CCR CEMEX Cemig CenterTelecom Centrica CGI Group Chaparral Resources Chartered Semiconductor Manufacturing Chi Mei Optoelectronics China Life Insurance Company China Petroleum & Chemical China Telecom Chr. Hansen Holding Chromos Molecular Systems Chunghwa Telecom Co. CIE Cisco Systems CKE Restaurants Clariant International CLP Holdings CNOOC Limited Coca-Cola Amatil Coca-Cola Femsa Coca-Cola Company Cognos Coles Myer Colgate-Palmolive Coloplast Comcast Comdirect Bank Companhia Brasileira de Distribuição Companhia Força e Luz Cataguazes-Leopoldina Companhia Paranaense de Energia - Copel Compañia Anónima Nacional Teléfonos de Venezuela (CANTV) Compañia Cervecerías Unidas Compañia de Minas Buenaventura Company Computer Associates Computer Systems Advisers Concha y Toro Consorcio ARA Controladora Comercial Mexicana Converium Conzzeta Holding Corporacion GEO Corporacion Mapfre Corporativo Fragua COSCO Cosipa COSMOTE Mobile Telecommunications CPFL Energia Craftmade Credicorp Credit Suisse Group Cree CSN - Companhia Siderúrgica Nacional CST CTC CVS Pharmacy CyberLink Corp Cyrela Brazil Realty DAB Bank Daimler Daiwa Securities Group Danisco Danske Bank Datang Power Datasul Dell Desc Descartes Systems

Deutsche Bank Deutsche Beteiligungs Deutsche EuroShop Deutsche Lufthansa Deutsche Post World Net Deutsche Telekom Devon Energy Diageo Dick‘s Sporting Goods Diebold DIS Deutscher Industrie Service D-Link Corporation DnB NOR DRS Technologies DSM DSP Group Ducati Duke Energy DuPont Duratex Durban Roodepoort Deep Dynegy E*Trade E.ON EADS ECI Telecom Econorte Edison International EDP - Energias de Portugal.

Eisai Eksportfinans Electrolux Elisa Embraer Embratel Participações EMC2 Corporation Enagas Endesa Endesa Chile Enel Energias do Brasil Enerplus Resources Fund Enersis ENI ENSCO International Entel EPCOS ERG Ericsson Erste Bank Esprinet Esprit Holdings Estácio Participações Ethan Allen Euro Disney EVN Evotec OAI Exxaro Resources Federal Realty FedEx FEMSA Flamel Fleetwood Flowserve Fording Canadian Coal Trust Forest Oil Fortum France Telecom Freddie Mac Fresenius Medical Care FuelCell Energy Gafisa Galp Energia, SGPS Gateway Geberit Genentech General Electric Company Genzyme Georg Fischer Gerdau GfK Glenayre Technologies.

Global Payments Global Sources GOL Linhas Aéreas Inteligentes Gold Fields GPC Biotech Grainger Grasim Industries Gruma Grupo Aeroportuario del Sureste Grupo Bimbo Grupo Cementos de Chihuahua Grupo Elektra Grupo Embotelladoras Unidas Grupo Ferrovial Grupo Financiero Galicia Grupo IMSA Grupo Iusacell Grupo Mexicano de Desarrollo Grupo Pão de Açúcar Grupo Radio Centro Gruppo Campari

Gruppo San Paolo Guidant H. Lundbeck Hannover Re Hansabank Hanson Harley-Davidson Harmony Gold HAVAS Health Axis Hecla Mining Company Heidelberger Druckmaschinen Herman Miller Hitachi Hochtief Holcim Home Depot Homex Hong Kong Exchanges and Clearing HQ Sustainable Maritime Industries Hysan Development Company IBERIA IBM IC RUSS-INVEST ICA ICICI Bank Idial Networks IDT iGATE Global Solutions IJM Corporation Berhad Ikon Office Solutions Imapla Platinum Holdings Limited Imperial Tobacco Group PLC IMS Health Inditex Indra Industrias Bachoco Industrias Peñoles Infinity Bio-Energy Infosys Technologies Insight Internet Initiative Interoil Intrawest Investec INVESTools Irish Continental Group IRSA ISS Itaúsa - Investimentos Itaú Itaútec-Philco J. Sainsbury Jabil James Hardie Industries Japan Airlines JazzTel JDSU Jerónimo Martins JHSF Participações Johnson & Johnson Julius Baer Holding K+S Aktiengesellschaft KarenSoft Technology Berhad KB Home Keane Kellogg Keppel Land Kesko Kimberly-Clark Kingfisher Kirby Corp Klabin Kookmin Bank Kos Pharmaceuticals Kotak Mahindra Bank KT Corporation Kuoni Travel Holding Kyphon Lam Research LAN Airlines Landsbanki Lavipharm Lear Leggett & Platt Leica Geosystems Level 3 Communications Liberty Group Life Time Fitness Lilly Limited Brands Localiza Lojas Americanas Lucent Technologies Lukoil Lundbeck Lupatech Luxottica Group M. Dias Branco Maconomy MacroPore Biosurgery Madeco Makhteshim-Agan Industries

Manulife Financial Maple Leaf Foods Marfrig Marine Products Masisa Massmart Matsushita Electric McDonald‘s Mechel OAO Medco Health Solutions Mediaset Medicure Merrill Lynch Metro International Metso Mexichem Migenix Mitchells & Butlers MMX Motive M-Systems MTC Technologies MTR MVV Energy Naspers Natura Natural Beauty Bio-Technology Navteq Nedbank Nedcor Neoforma Ness Technologies Nestlé Net Serviços Netflix NetIQ NetManage Nevada Gold and Casinos NewAlliance Bancshares Newmont Mining Nexen NICE Systems Nidec Corporation NIKE Ninetowns Internet Technology Group Company Nobel Biocare Holding Norsk Hydro Northam Platinum Novabase Novartis Novo Nordisk Novozymes O2 Océ Office Depot OHL Brasil OJSC Rostelecom Omron OMV Optical Communication Orascom Construction Industries Orgachim ORIX OTE PacifiCare Partner Communications PCCW PDG Realty Peabody Energy Pearl Asian Mining Industries Pengrowth Pengrowth Energy Trust Perdigão Pericom Semiconductor Petro-Canada Petroflex Petrobras Petróleos Mexicanos - Pemex PetSmart Pfeiffer Vacuum Technology Pharmacy chain Philippine Long Distance Telephone Positivo Informática Photronics Pinnacle West Capital Pioneer PKN Orlen Plains All American Plantronics Plascar Pliva Plug Power Polaris Software Laboratories Portugal Telecom Posco Positivo Informática Potash Corp.

Powerchip Semiconductor Procter & Gamble Profarma Prudential PSI

PT Antam PT Telekomunikasi Indonesia Publicis Groupe QIAGEN QuickLogic Quiñenco Rabobank Randon RBC RBS Redwood Trust Regis Remgro Remote Knowledge Renault Reunert Reuters Rexam PLC Rieter Management Ripasa Celulose e Papel RLI Corp Roche Rogers Communications Rossi Residencial Royal Ahold Royal Bank of Scotland Group Royal Dutch Shell Royal Philips Electronics Royal Vopak RPC Rubicon Minerals RWE Ryder System Sabre Holdings Sacyr Vallehermoso Sadia Saes Getters Salzgitter Sampo Sandvik Sanpaolo IMI SAP Sappi Sare Holding Sasol Satellite Newspapers Satipel Industrial Satyam Computer Services Saurer SCA - Svenska Cellulosa Schwarz Pharma SCM Microsystems Scottish Re SCP Pool SeaChange International SEB Secunet Security Networks Semiconductor Manufacturing International Serena Software Set Point Technology Shinsei Bank SI International Siemens Singapore Airport Terminal Services Singapore Food Industries Sinopec Sirenza Microdevices SLC Agrícola Slough Estates SMIC Smithfield Foods Software Sonoco Sony Southern Telecommunications Company Southwestern Energy Company SportsLine Sprint SQM Standard Chartered Bank Statkraft Statoil Hydro STmicroelectronics Stora Enso Sulzer Sun Hung Kai Properties SureWest Communications Suzano Papel e Celulose Suzano Petroquímica Swedish Match Swift Energy Swiss Reinsurance SwissLife Sylvan Symantec Syngenta Synthes TAKKT Talisman Energy TAM

Tata Motors Tav Airports Holding TDC Team Industrial Technip Teck Cominco Tecnisa Tele Norte Celular Telecom Argentina Telecom Italia Telecomunicações de São Paulo Telefonaktiebolaget LM Ericsson Telefonica Telefónica Argentina Telefonica CTC Chile Telefónica Móviles Telekom Austria Telekomunikacja Polska Telemig Celular Participações Televisa Telkom TELUS Telvent Tenaris Terna The East Asiatic Company Thomson Thiel Logistik ThyssenKrupp TIB Bank TietoEnator TIM Time Warner Tingyi (CaymanIslands) Holding Tiscali TNT TOM Group TOTAL TOTVS TPI Triunfo Tractebel Energia Transportes Azkar Turk Economy Bank Turkcell Iletisim Hizmetleri TV Azteca Tyler Technologies Tyson Foods UBS Ultra Petroleum Ultrapar Unibanco Unicredito Italiano Unified Energy System of Russia Unilever Unipar Unipol Assicurazioni Unisys Unocal UPM-Kymmene Uralsvyazinform URS Usiminas Valora Holding Vasogen VCP - Votorantim Celulose e Papel Venfin Veolia Environnement Verizon Vimpel Visma Vitro Vivendi Universal Vivo Participações Volkswagen W.W. Grainger Wachovia Wal-Mart de Mexico Wärtsilä Corporation WCI Communities Wendy´s Westmoreland White Electronic Designs Wienerberger Williams Wilson Greatbatch Technologies Wind River Systems Wipro Xansa Xerox Xinao Gas Xinhua Finance Yahoo!

Yara International Yau Lee Holdings Yuanta Core Pacific Securities Yum! Brands ZEVEX International Zimmer Holdings Zurich Financial Services

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