Registrants and investors are increasingly placing greater focus on proxy statement presentation. As a result, over the last few years, proxy statements have evolved into more effective disclosure and marketing tools as registrants have adopted a number of best practices, including providing a proxy statement summary and CD&A executive summary.
RR Donnelley recently released the results of its survey of institutional investor use and review of proxy statements. The results of the survey indicate that registrants are on the right track, but should continue to make improvements in the content and presentation of their proxy statements. A summary of the survey results is available here.
Some key takeaways of the survey include the following:
- Respondents reported that proxy advisor recommendations were not the greatest influence on their voting decisions. Rather, internal policies or analysis were, followed by direct engagement with the company and disclosure in the proxy statement.
- Pay-for-performance alignment was reported as the most important factor for making voting decisions, followed closely by director independence and the company’s corporate governance profile and performance measures. Of these categories, respondents indicated that pay-for-performance and performance measures were the least clearly and effectively disclosed.
- A considerable majority of respondents reported that they skip to a specific section of the proxy statement when reviewing it. Not surprisingly, respondents rely on the CD&A executive summary and proxy statement summary, with 84% reporting that the CD&A executive summary is helpful and 64% reporting that the proxy statement summary is helpful in their proxy review.
- Respondents overwhelmingly reported a preference for accessing the proxy statement through one of a variety of online sources. As a result, registrants should be mindful that online readability and navigation are critical to investors’ review of their proxy statements. Respondents favor a detailed table of contents, section headings and sub-headings and graphics to assist in their proxy review, but find that too much data makes a graph look “over-engineered” and difficult to follow.
The RR Donnelley survey is a good reminder to registrants that proxy statements are as much a marketing tool as a disclosure tool. As such, as companies prepare for the 2014 proxy season, they should continue to evaluate their proxy statements to improve the clarity and content of their disclosures, as well as their format and presentation.