Malcolm Rivera
Proxy materials are documents provided by publicly traded companies to shareholders to help them understand how to vote at shareholder meetings and make informed decisions about delegating their votes to a proxy. A full set of proxy materials includes a proxy statement, a proxy card or voter instruction form, and an annual report. The proxy statement must be filed by the company before shareholder meetings, disclosing material matters relevant for soliciting shareholder votes and final approval of nominated directors. It also provides information about the company's nominated directors, their background, and compensation. The proxy card or voter instruction form allows shareholders to instruct a broker on how to vote on their behalf if they are unable to attend the meeting.
| Characteristics | Values |
|---|---|
| Proxy materials provided by | Public corporations |
| Proxy materials provided to | Shareholders |
| Purpose | Help shareholders understand how to vote at shareholder meetings |
| Proxy materials provided | 30-40 days before an annual shareholder meeting |
| Proxy materials contain | Disclosure documents, proxy statement, proxy card or voter instruction form |
| Proxy materials sent by | Mail or digitally |
| Proxy statement discloses | Voting procedure, nominated candidates, compensation of directors and executives, any perks used by executives, any potential conflict of interest, related-party transactions, information about the audit committee, and persons with material ownership of the company's common stock |
| Proxy statement filed with | SEC as Form DEF 14A |
| Proxy statement filed using | SEC's database, EDGAR |
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What You'll Learn
Proxy statement
Proxy materials are documents provided by public corporations to enable shareholders to make informed decisions about how to vote at shareholder meetings. These materials are regulated by the Securities and Exchange Commission (SEC) and must be provided to shareholders between 30 to 40 days before an annual shareholder meeting.
Proxy materials include the proxy statement, which is a document that provides information about the company's operations, voting procedures, and the number of shares an investor owns, as well as which shares have voting rights. The proxy statement also includes details about the company's nominated directors, their background information, and their compensation. Any potential conflicts of interest between the company and its directors, executives, and auditors must also be disclosed in the proxy statement, including any related-party transactions. Additionally, the proxy statement provides information about the company's audit committee and the fees paid to its external public accountant.
The proxy statement is different from a proxy vote, where a shareholder agrees to have another person vote on their behalf. The proxy statement is filed in advance of the annual meeting and is used to solicit shareholder votes and final approval of nominated directors. It is important to note that not every shareholder can attend the annual meeting, so they may designate a proxy to vote on their behalf. This proxy can be a member of the company's management team or another representative who is more informed about the issue.
In addition to the proxy statement, the package of proxy materials may also include disclosure documents from the annual report and a Proxy Card or Voter Instruction Form. The Proxy Card or Voter Instruction Form allows shareholders to make decisions about how to vote before the annual meeting. Shareholders who own applicable voting shares in the company as of the record date may be eligible to vote on various issues, including electing board members, approving executive compensation, mergers or acquisitions, or stock compensation plans.
Companies have two options for providing proxy materials to shareholders: the "'notice-only' option" and the "'full set delivery' option". The "notice-only" option involves posting proxy materials on a website and sending a notice to shareholders informing them of the electronic availability of the materials. The "full set delivery" option allows companies to deliver a full set of proxy materials directly to shareholders, along with a notice of electronic availability. This option eliminates the need to provide paper or electronic copies upon request, as shareholders already have the full set.
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Voting procedures
Proxy voting is a common practice in shareholder meetings, allowing investors who cannot be physically present to be represented and have their interests protected. Proxy materials are typically distributed at least one month before the meeting and may be sent by mail, email, or both. These materials include an annual report, a proxy statement, and a proxy card with voting instructions.
The proxy statement is a crucial component of the proxy materials, as it outlines the issues to be voted on during the meeting. These issues can vary, but often include board elections, stock options, mergers and acquisitions, and corporate social responsibility matters. Shareholders have the right to limit the scope of their proxy vote to specific issues, retaining the power to vote on other matters themselves.
Proxy voting can be done in person by a designated proxy or by mail, phone, or online before the cutoff time. It is important to note that proxy rules may differ based on location, and some organisations may have specific requirements for proxy voting. For example, some organisations may require voters to authorise a specific person as their proxy by completing a proxy form.
To ensure a smooth process, organisations should establish clear procedures for nominating and confirming proxies. This includes verifying that proxies are accurately and fairly representing the intended voter. Proxy statements should also provide detailed information on the nominated candidates, including their backgrounds and positions, to aid voters in making informed decisions.
Additionally, proxy voting can be conducted anonymously, where an individual's vote is hidden, preventing external influences from swaying voters. This method can be particularly useful when an impartial outcome is desired.
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Executive compensation
Proxy materials are documents provided by public corporations to help shareholders understand how to vote at shareholder meetings and make informed decisions about how to delegate their votes to a proxy. These materials are regulated by the Securities and Exchange Commission (SEC) and must be sent to shareholders 30 to 40 days before an annual shareholder meeting.
Proxy materials contain a variety of information, including executive compensation. This section of the proxy statement provides details on the compensation of corporate officers, including directors' salaries, bonus and options plans, and other benefits. It also includes information on the company's compensation policies and practices, as well as any compensation plan design features applicable to executive officers.
The proxy statement may also reveal potential conflicts of interest related to executive compensation. For example, it may disclose company loans advanced to senior executives, which can impact the company's capital and financial health. Additionally, it may highlight related-party transactions, such as business relationships that may provide preferential treatment to certain executives.
The Compensation Committee plays a crucial role in reviewing and assessing executive compensation. They consider the risks associated with the company's compensation policies and practices, focusing on cash incentive compensation and equity awards offered to executive officers. This committee works in conjunction with the Board of Directors, who have the responsibility to set director compensation upon the recommendation of the Corporate Governance Committee.
In summary, the executive compensation section of proxy materials provides shareholders with transparent information about the compensation of corporate officers and helps them understand the company's compensation policies and practices. This information enables shareholders to make informed decisions and identify any potential conflicts of interest related to executive compensation.
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Board of directors
Proxy materials, also known as proxy statements, are documents provided by public corporations to allow shareholders to make informed decisions about how to vote at shareholder meetings. They are regulated by the Securities and Exchange Commission (SEC) and must be sent to shareholders 30 to 40 days before an annual shareholder meeting.
Proxy materials contain specific company information, including the company's voting procedure, the number of shares an investor owns, and which shares have voting rights. They also detail the nominated candidates for the board of directors, including background information, and the compensation of directors and executives. This includes salaries, bonuses, equity awards, and any deferred compensation.
The proxy statement must also disclose any potential conflicts of interest between the company, its directors, executives, and auditors. This includes listing any related-party transactions that have occurred between the company and its key personnel.
The package of proxy materials will also contain disclosure documents from the annual report and, most importantly, a Proxy Card or Voter Instruction Form for the upcoming annual shareholder meeting. Shareholders who are registered owners or beneficial owners will receive this. A registered owner is a direct owner of company shares, while a beneficial owner holds shares through a broker-dealer or bank.
Since the majority of shareholders cannot attend company meetings, they will often designate a proxy to vote on their behalf. This can be done electronically, by phone, or by mail.
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Shareholder proposals
Proxy materials are documents provided by public corporations to enable shareholders to make informed decisions about how to vote at shareholder meetings. They are also known as proxy statements. Proxy statements are filed with the Securities and Exchange Commission (SEC) as Form DEF 14A, or definitive proxy statement.
Proxy access rules have evolved over time, with the SEC playing a key role in their development. In 2010, the SEC passed a rule allowing certain shareholders to place candidates on the proxy statement. However, this rule was later struck down by the United States Court of Appeals in 2011. Despite this setback, proxy access rules gained momentum starting in 2015 due to initiatives from major institutional investors. As of 2018, a significant majority of S&P 500 companies had adopted proxy access rules.
It is important to note that not all shareholder proposals are successful or implemented. In some cases, proxy advisory firms play a significant role in influencing institutional shareholder votes. These firms help institutional shareholders vote their shares in a responsible manner. Additionally, broker-dealers have traditionally been permitted to vote on "routine" proposals on behalf of their shareholders if the shareholders do not return the proxy statement, although this practice has been controversial.
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Frequently asked questions
Proxy materials are documents provided by public corporations to allow shareholders to understand how to vote at shareholder meetings and make informed decisions about how to delegate their votes to a proxy.
A full set of proxy materials includes a proxy statement, a proxy card or voter instruction form, and the annual report.
A proxy statement is a document provided by a firm soliciting shareholder votes. It includes voting procedures, information about the company's nominated directors, board compensation, executive compensation, and audit fees and committee members.
