Industry Insights

What Investors Want to See in Your Proxy Statement


With the 2018 proxy season looming, companies need to shift focus to the strategic content development and design of their shareholder communications, in trend with the evolution of proxies as compliance documents to communication tools.

When it comes to the voluntary proxy disclosure, companies need to ensure that they are effectively addressing investor concerns. After reviewing public open letters to CEOs and directors from Blackrock and Vanguard, and the  Morrow Sodali's 2018 Institutional Investor Survey, Nasdaq's Governance Clearinghouse, identified five overarching investor concerns. We’ve featured Nasdaq’s full recommendations below:

Disclose the Company's Approach to Shareholder Engagement 

Vanguard's most recent open letter to board directors states that shareholder engagement "is a process, not an event." Larry Fink announced in his 2018 letter to CEOs that Blackrock's investment stewardship model has radically shifted focus from proxy voting to engagement with companies.

Investors want evidence that companies are cultivating open-ended dialogue with them, versus communicating on a transactional basis relative to specific issues or votes. Many companies disclose their shareholder engagement activity by including charts in their proxies that outline shareholder engagement events by season. Consider going a step further by adding a table that shares feedback your company has received from its shareholders, and the actions taken by the company in response to that feedback.

Outline the Board's Role in Setting Strategy

"A central reason for the rise of activism—and wasteful proxy fights—is that companies have not been explicit enough in their long-term strategies," states Larry Fink. Boards that clearly articulate their role in creating (and their understanding of) their company's strategy for long-term value creation are in a much better position to have short-term decisions supported by shareholders and the investment community.

Consider including high-level disclosure of the board's role in setting and reviewing company strategy within the proxy.

Demonstrate How Pay Aligns with Strategy

Companies devote entire sections of their proxies to the compensation discussion and analysis section (CD&A), but don't always make it easy for investors to answer their questions about pay: Does compensation of top executives support the company's strategy?

Consider making the CD&A section easier to navigate through the use of a "roadmap," detailed table of contents, and/or executive summary, which will help proxy voters quickly find the answers they are looking for. The executive summary at the beginning of the section will have greater impact if it includes the "why" of compensation decisions, versus just the "what."

The pay ratio disclosure rule is a mandated disclosure, but some companies also discuss gender pay equity (due to increased shareholder focus on this issue). Others are addressing the pay for performance question by including graphs or other visual elements to illustrate the alignment between pay and performance, including performance relative to peers.

Prove the Quality of Your Board

The range of complex issues that boards are increasingly called upon to navigate makes it critical to have a strong, experienced and forward-thinking team in the boardroom. Investors want to determine at a glance whether the board has the independence, skillsets, tenure, age, and diversity it needs to avoid group think and identify both opportunities for long-term growth and looming threats.

It is becoming a best practice to summarize highlights of board composition visually with skills matrices and infographics. Descriptions of leadership structure, the board refreshment process and statistics, and the director evaluation process are also key data points.

Many companies do not include metrics on racial or ethnic diversity in their proxies; however, board diversity continues to be a top concern of investors and activists, so if your company has a good diversity story to tell, don't be shy about disclosing it.

Highlight How the Company Manages Sustainable Growth

Investors focus on ESG issues are not going away any time soon—93% of the institutional investors surveyed by Morrow Sodali report that "ESG integration into investment decision making is either fully integrated or progressing towards full integration." These investors want companies to provide more detail around ESG risks and opportunities, including "enhanced disclosure around materiality and sustainable metrics linked to long-term business strategy."

Each year, more companies address corporate social responsibility and sustainability in their IR websites, annual reports, and proxies; many are publishing stand-alone environmental impact or sustainability reports. Consider enhancing ESG proxy disclosure by tying sustainability and corporate social responsibility efforts to results—but balance any such disclosure against potential liability concerns.

When refreshing and enhancing your company's proxy, don't focus entirely on cosmetic enhancements at the expense of robust content. Any investment in an intuitive, interactive proxy platform is wasted if investors don't understand—or agree with—your company's governance and compensation programs.

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Proxy 2018: Style Options 


Our 2018 Proxy Style Guide provides style options designed to engage investors and emphasize management's recommendations. 


Toppan Vintage

Toppan Vintage is a leading international financial printing, communications and technology company dedicated to delivering a hassle-free experience with the highest quality accuracy, reliability and value for your organization’s financial printing and communications needs.

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