Hurricane Sandy: A Shrill Lesson from the L’Aquila Earthquake Amgen’s Widespread Repercussions with Paul Ferrillo Initial Public Offerings with Alex Lynch Monster Needs to Wake Up & Smell the Coffee Communicating Difficult Decisions NACD Boardvision Blogs Worth Following LEVICK In the News http://levick.com/insights

1. EDITION 15
Weekly
November 2, 2012
Hurricane
Sandy:
A Shrill Lesson from the L’Aquila Earthquake

2. 03 Contents
04 Hurricane Sandy:
A Shrill Lesson from the L’Aquila Earthquake
09 Amgen’s Widespread
Repercussions with Paul Ferrillo
10 Initial Public Offerings
with Alex Lynch
14 Monster Needs to Wake Up
& Smell the Coffee
18 Communicating Difficult
Decisions NACD Boardvision
19 Blogs
Worth Following
20 LEVICK
In the News
COVER Image: In late October 2012 Hurricane Sandy affected at least 24 states in the United States, from Florida to New
England, with tropical storm force winds stretching far inland and mountain snows in West Virginia. The cyclone brought a
destructive storm surge to New York City on the evening of October 29, flooding numerous streets, tunnels and subway lines
in Lower Manhattan and other areas of the city and cutting off electricity in many parts of the city and its suburbs. Extensive
damage occurred in New Jersey, especially in the communities along the Jersey Shore.

3. Weekly
Hurricane J
ust before Hurricane Sandy struck This language went dramatically beyond clear
New York and New Jersey with full simple communications. It was more than an
force on October 29, there was a bit impassioned plea. Consider the use of the word
Sandy:
of mild disagreement among a few “remains” to instill a frightening visual impres-
communications and media observers sion, conjuring up disturbing physical images
as to the appropriateness of the public safety of what will happen if you don’t comply.
warnings, New Jersey’s in particular.
The advisory continued on with powerfully
In retrospect, that “mild disagreement” raises supportive messages in equally pointed upper-
issues of thunderous importance (pun in- case language. The storm was expected to
tended) as it now seems that hundreds of lives, “slam” into the coast. Sandy is “potentially
at least, hung in the balance. It also leads to historic,” injuries are “probably unavoidable,”
A Shrill Lesson from the L’Aquila Earthquake an odd but, we’d argue, fairly credible conclu- and so forth. The NWS concluded with advice
sion: that the approach to the looming disaster to “err on the side of caution.”
by public officials, at least in New Jersey, was
Richard S. Levick, Esq. When we first read the warning, it seemed the
directly conditioned by extraordinary events
Originally Published on Forbes.com NWS was doing just that itself: erring on the
in Italy where, just a few days before Sandy,
side of caution. As it turned out, there was no
six scientists and one government official were
erring about it at all, as the storm turned out to
sent to jail for not adequately preparing the
be at least as bad, probably worse, than ex-
population ahead of the L’Aquila earthquake
pected. As of this writing, there have been over
that killed over 300 people.
50 deaths and the protracted power outage is
On the Sunday afternoon preceding Sandy, back-breaking. (Rumors in New Jersey put full
the National Weather Service (NWS) in Mount recovery at up to two weeks.)
Holly, N.J. provided an advisory designed to
Commentators who, just before the storm,
spook and shock resistant evacuees. Shouting
were wondering if “the tone of the service’s
in caps, the warning included language that
Sunday evening message was completely
particularly caught the attention of communi-
appropriate” might reflect on what it really
cations professionals:
If you are reluctant, think about your loved ones, think about the
emergency responders who will be unable to reach you when you
make the panicked phone call to be rescued, think about the
rescue/recovery teams who will rescue you if you are injured or
recover your remains if you do not survive.
4 05
Anton Oparin / Shutterstock.com

4. Weekly
lev radin / Shutterstock.com
means to err on the side of caution in all because there was no power for either fridge
professional communications. Sometimes or TV. Bloomberg’s lighter tone certainly did
it means being very guarded in tone; some- no harm, as his comments in no way left any-
times it means being extremely bold. In other one less prepared for the torrent to come. But
words, caution is not necessarily synonymous you do have to hand it to New Jersey Gov. Chris
with restraint. Christie. The same guy who predicted that the
Denver Presidential debate would change the
We were particularly struck by one article
dynamics of the race seems to have had the
praising Mayor Michael Bloomberg for being
best gut sense for the kind of communications
rather more congenial about the whole thing
that would work most effectively here as well.
than his counterparts in New Jersey. Bloom-
Christie is now winning plaudits for his “trade-
berg did discharge his duties strongly and
mark bluntness and aplomb” in handling the
responsibly, likewise warning citizens that fail-
storm emergency.
ure to evacuate threatens the lives of the first
responders. At the same time, the article quotes It may be a “trademark” approach, but his
him as suggesting that people “sit back, have a strategy could only have been encouraged by
sandwich from the fridge, watch television.” the six-year sentences handed down in Italy
because of “falsely reassuring” statements
Well, you couldn’t actually have a sandwich
before the 2009 L’Aquila earthquake. Close in
or watch a ballgame in many areas of the city
06 Anton Oparin / Shutterstock.com

5. Weekly
tone to Bloomberg’s attempted insouciance,
Bernardo De Bernardinis, then deputy chief
kind of dire warnings that Sandy prompted in
New Jersey but something more was obviously Amgen’s Widespread
of Italy’s Civil Protection Department, had
advised residents to go home and have some
wine. “Absolutely a Montepulciano,” he added.
needed in Italy, if only a reminder that it’s not
really worth risking your life just because the
probability of disaster is very low.
Repercussions with Paul Ferrillo
It was, in hindsight, a gratuitous comment that
enraged many Italians and helped convict De
Bernardinis. Were the court sentences fair? I
hardly think so. Did Christie face similar penal-
ties had he been anything less than blunt and
even scarifying? Of course not, but the gover-
nor reads the news. Just a day or two before
Sandy, the Italian debacle had to be, at the very
least, a reminder not to pull a single punch;
again, to err on the side of caution by being as Disaster planning is all about risk management
blustery as possible. and risk management is often about com-
munications. To be sure, there are significant
From a communications standpoint, the events
lessons for business here, underscored by our
in Italy are all the more pertinent because
current public preoccupation with transpar-
those convicted were not convicted for failing
ency and accountability. When you prepare for
to predict the earthquake. Earthquake predic-
problems, you must calibrate the communica-
tion is a difficult science to ever get right, as an
tions. Sometimes you need to shout like Chris
international commission on forecasting set up
Christie. Sometimes a prominent disclaimer
after L’Aquila reminded us. An earthquake is a In this LEVICK Daily video interview, we discuss the class certification issues raised by the Amgen
will suffice.
potential “hazard…all the time,” said one com- litigation with Paul Ferrillo, Senior Securities Litigator with Weil Gotshal & Manges, LLP. With
mission member. The one thing businesses can be sure of is cases such as Amgen and Walmart bringing more clarity to class certification issues, companies
that, when there’s any possibility of a disaster —and especially those in the public sphere—need to carefully consider how they share news
On the other hand, there were tremors before
(e.g., product recall, insider trading arrest, you affecting the company and what to say when events don’t transpire as planned.
the L’Aquila quake. In similar past instances,
name it), more than a bottle of Montepulciano
residents would typically sleep in their cars,
will be needed. L
just to be sure. Here, according to the allega-
tion, the assurances by the scientists directly Richard S. Levick, Esq., President and CEO of LEVICK, repre-
sents countries and companies in the highest-stakes global
led to people deciding it was all right to stay
communications matters—from the Wall Street crisis and the
indoors. The defendants are thus going to jail
Gulf oil spill to Guantanamo Bay and the Catholic Church.
for failing to communicate. It’s not reasonable
to have expected those tremors to incite the
08 9

6. What is to be learned from the less
than stellar IPOs issued by Groupon and
Initial Public Facebook in recent months? What are
the lessons for companies outside the
Offerings technology sector?
Alexander Lynch: The primary lessons from
with Alex Lynch
the Groupon and Facebook IPOs are not only
applicable to technology companies but are
applicable to all companies looking to com-
Richard S. Levick, Esq.
Originally Published on LEVICK Daily plete an IPO.
First, listen to your advisors. IPO companies
should retain advisors who are experienced in
Over the next several weeks, LEVICK Daily the IPO process and can help it avoid the many
will share selected interviews from our pitfalls. One of the most common pitfalls is
recent NACD Directorship article entitled gun-jumping or marketing the IPO outside of
“What’s Next? The Top Issues of 2013 and the typical registration process. Gun-jumping
Beyond.” Today, we feature a discussion can delay your offering, result in liability, and
on initial public offerings (IPOs) with Alex produce bad press during the roadshow. Many
Lynch, a partner in Weil Gotshal’s Capital of the gun-jumping issues in the Groupon IPO
Markets Practice. could have been avoided if the standard advice
regarding publicity had been followed.
Mr. Lynch focuses on the representation of
companies, particularly technology, health- Second, when setting the valuation of the IPO,
care, financial services, and other growth en- leave some room for the stock to appreciate
terprises, as well as leading investment banks and be mindful of who is being allocated stock.
and private equity firms. He has extensive Facebook priced its IPO at a rich valuation
experience in equity capital markets transac- and increased the number of shares sold in
tions, with a particular focus on initial public the offering. IPO companies need to balance
offerings. He also advises boards on securities between trying to maximize the price and the
and corporate governance matters. size of the offering and selecting the right type
of IPO investors and letting those new inves-
At the conclusion of the interview, you can
tors enjoy some success. A rich valuation and
find LEVICK’s own communications best
large deal size can reduce the demand for the
practices appended.
stock in the market after an IPO. In addition,
lev radin / Shutterstock.com
11

7. Weekly
How can boards of directors best pre- lenges faced by the IPO company and ensure
pare themselves for the transition from that they are manageable. Make any necessary
private to public ownership? changes to the business, management or advi-
sors before the IPO process to avoid having
Alexander Lynch: Remember, IPOs are the to make these changes during the IPO when
beginning; not the end. An IPO will not be the
public scrutiny is most intense.
last time the IPO company accesses the mar-
ket. Preparation for life as a public company In connection with considering an IPO, I
is critical for success. Also, a well-executed advise boards and management teams to
IPO provides a substantial amount of goodwill act like they run a public company before
and positive publicity, while a poorly executed being public. L
IPO can damage an IPO company’s reputation Richard S. Levick, Esq., President and CEO of LEVICK, repre-
for a long time. Accordingly, preparation by sents countries and companies in the highest-stakes global
the board is critical. communications matters—from the Wall Street crisis and the
Gulf oil spill to Guantanamo Bay and the Catholic Church.
Be honest in your assessment of the IPO
allocating IPO shares to hedge funds and indi- and alert the IPO company’s advisors of any This post is excerpted from Richard Levick’s recent NACD
company’s readiness to be a public company.
Directorship feature “What’s Next? The Top Issues of 2013 and
vidual investors rather than long-only mutual disclosure issues.
Make sure you have the right management Beyond.” To read the full article and learn more about the most
funds can result in increased selling pressure
Second, focus on accounting issues. Is the IPO team in place. Confirm that you have the right significant issues impacting boardrooms today, click here.
if things don’t go well. Remember, an IPO is not
company ready to report on a quarterly basis? accountants and attorneys. Assess the chal-
the last time to the market.
Can it produce financial statements on a timely
What are the responsibilities of boards of basis? Are there any accounting policies that
BEST COMMUNICATIONS PRACTICES:
directors in the IPO process? need to be reconsidered? Do you have any ma-
terial weaknesses or significant deficiencies?
Alexander Lynch: Directors have a number of
If so, how are they being remediated and will The price at which you set your IPO communicates a lot about your value proposition.
unique responsibilities in the IPO process. First
they be remediated in advance of the IPO?
1. What happens to that price after the offering communicates even more. Boards need
and foremost, directors have personal liabil- to maintain investor confidence by allowing room for the share price to grow.
ity for material misstatements and omissions And third, make sure the IPO company is
The IPO is the beginning, not the end. It is not only a financial event, but a
in the registration statement and prospectus. ready to be public by asking the tough ques- 2. corporate branding opportunity. Boards need to ensure that newly-public
Directors also personally sign the registration tions. Do you have the right management team
companies communicate their value just as aggressively post-IPO as they do
statement. As a result, it is critical for directors in place? Why is the IPO company going pub-
in the critical months leading up to it.
to give themselves the time necessary to read lic? Is the business model mature enough to
Boards need to be ready for circumstances in which high IPO trading volume
and review the registration statement carefully withstand investor scrutiny? If you don’t have
3. creates glitches in the system that cost investors’ money and has a negative
in advance of the initial filing and throughout the right answers to these questions, the IPO
impact on trust in the system. Companies need to be ready with statements
the process. They should then compare the dis- company is likely not ready to be public.
that can forestall chaos and confusion under all anticipated contingencies.
closure to what they know about the business
12 13

8. Monster
needs to
Wake Up & Smell
the Coffee
Gene Grabowski
Originally Published on LEVICK Daily

9. Weekly
T
“
he U.S. Food and Drug Administra- other stimulants could have horrible conse-
tion (FDA) is now investigating five quences—especially for children. All the while,
If Monster tries to ride out a storm this
deaths and one non-lethal heart the market for these drinks has seemed to
attack that have been linked to Monster energy expand exponentially. size without protecting itself better, it
drinks. The FDA inquiry came after Monster
Now, however, it seems the safety questions
will likely pay a very painful price in
Beverage Corp. was sued in California Superior
have reached critical mass. On the day the brand damage and litigation costs.”
Court by the parents of a 14-year-old Maryland
Maryland parents announced their lawsuit,
girl who claim the company’s marquee product
Monster’s share price dropped 16 percent. That
caused their daughter’s cardiac arrest.
alone is evidence that the radio-silence strategy
The actions are just the latest salvo against simply isn’t going to work anymore. Monster
As a start, the company needs to engage its crit- Both the third party experts and the most
Monster and other energy drink makers whose and others need to stop letting media critics,
ics in the digital venues that dominate prod- supportive facts need to be front and center in
products have caused increasing concern concerned parents, lawmakers, regulators, and
uct perceptions today. Right now, Monster’s company blog posts and during every effort
among food and beverage safety advocates. plaintiffs’ attorneys tell their story for them.
website (screenshot left) is extremely dark, to engage the digital and traditional media
As the inquiries have grown, we’ve heard little Even if Monster wins costly court cases, more
mysterious, foreboding and in many places, influencers who are now controlling Monster’s
in response to allegations that consuming con- are sure to follow unless the company takes
sexually themed. That’s perfect for attracting story online and in the mainstream media.
centrated amounts of caffeine, sugar, and steps to head them off now.
the disaffected, rebellious teenagers to whom
If Monster tries to ride out a storm this
the company markets. Unfortunately, about a
size without protecting itself better, it will
third of the visitors to its site now are parents,
likely pay a very painful price in brand
lawyers, regulators and aides to crusading
damage and litigation costs. Until now, only
lawmakers. Their prejudices and suspicions
teens and 20-somethings were paying atten-
are being reinforced by what they see. As such,
tion to Monster. Now it’s under the scrutiny of
the site needs to consider showing some less-
frightened moms and dads, their lawyers, and
threatening images and highlighting some posi-
the FDA. That should be enough to energize
tive information to meet the concerns of these
any company. L
critical audiences.
Gene Grabowski is an Executive Vice President at LEVICK
At the same time, Monster needs to enlist some and a contributing author to LEVICK Daily.
expert support—whether they be food scien-
tists, nutritionists, researchers, or even success-
ful athletes and entertainers—that can attest to
the safety and efficacy of its product. Above all,
the company must repeatedly hammer home
the best fact on its side now: that a can of Mon-
ster contains less caffeine than a Starbucks’
Image public domain. monsterenergy.com House Venti.
16 17

10. NACD BoardVision
Communicating Difficult Decisions
BLOGS worth following
Thought leaders Industry blogs
Amber Naslund Holmes Report
brasstackthinking.com holmesreport.com
Amber Naslund is a coauthor of The Now Revolution. A source of news, knowledge, and career
The book discusses the impact of the social web information for public relations professionals.
and how businesses need to “adapt to the new era
of instantaneous business. NACD Blog
blog.nacdonline.org
Brian Halligan The National Association of Corporate Directors
hubspot.com/company/management/brian-halligan (NACD) blog provides insight on corporate
HubSpot CEO and Founder. governanceand leading board practices.
Chris Brogan PR Week
Chrisbrogan.com prweekus.com
Chris Brogan is an American author, journalist, PRWeek is a vital part of the PR and communications
marketing consultant, and frequent speaker about industries in the US, providing timely news, reviews,
social media marketing. profiles, techniques, and ground-breaking research.
David Meerman Scott PR Daily News
davidmeermanscott.com prdaily.com
David Meerman Scott is an American online PR Daily provides public relations professionals,
marketing strategist, and author of several books social media specialists and marketing
on marketing, most notably The New Rules of communicators with a daily news feed.
Marketing and PR with over 250,000 copies in
print in more than 25 languages.
In this edition of NACD BoardVision, we explore the communications options available to
corporate leaders in this challenging economic environment with Mary Ann Cloyd, a Leader in Guy Kawasaki
BUSINESS Related
guykawasaki.com FastCompany
the PwC Center for Board Governance, and Peter Gleason, the Managing Director and CFO for
Guy Kawasaki is a Silicon Valley venture capitalist, fastcompany.com
the National Association of Corporate Directors. In an era of belt-tightening across the business bestselling author, and Apple Fellow. He was one Fast Company is the world’s leading progressive
of the Apple employees originally responsible for business media brand, with a unique editorial
landscape, honesty and transparency are essential to ensuring that difficult decisions are not only marketing the Macintosh in 1984. focus on business, design, and technology.
understood, but accepted and eventually embraced by employees, customers, and the full gamut
Jay Baer Forbes
of corporate stakeholders. jaybaer.com Forbes.com
Jay Baer is coauthor of, “The Now Revolution: 7 Forbes is a leading source for reliable business
Shifts to Make Your Business Faster, Smarter and news and financial information for the Worlds
More Social. business leaders.
Financial Communications Rachel Botsman
rachelbotsman.com
Mashable
mashable.com
Litigation Rachel Botsman is a social innovator who writes,
consults and speaks on the power of collaboration
Social Media news blog covering cool new websites
and social networks.
Corporate & Reputation and sharing through network technologies.
Public Affairs Seth Godin
sethgodin.typepad.com
Crisis Seth Godin is an American entrepreneur, author
and public speaker. Godin popularized the topic
of permission marketing.
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11. IN THE NEWS
Articles
USA TODAY | November 1, 2012
Trees One of Storm’s Biggest Killers
Productivity@Work | October 29, 2012
Joining—and Capturing—the Online Community
PR Week | October 29, 2012
Federal Agencies Use Social to Preach Preparedness
Reputation Rhino | October 29, 2012
Interview with Crisis Communications Expert Richard LEVICK—Part 1
Star Tribune | October 26, 2012
Best Buy Stock Hits a 10-year Low
THE URGENCY
OF NOW.