Each year, we conduct a benchmark study of the proxy statements filed by companies in the S&P 250, closely examining their content and design. The results of our study provide insight into how corporations approach their proxy filings and how they can improve disclosure transparency.
COVID-19 has had a significant impact on corporate performance, and a related impact on executive compensation. In many cases, long-term equity awards that were granted before March 2020 have lost value, and performance goals for annual bonuses have become unrealistic.
With the second annual U.S. Transparency Awards behind us, we want to share some disclosure trends that we saw in 2020 annual reports and proxy statements. Highlights: strategy disclosure in 10-Ks, proxy summaries remain a priority, and shareholder engagement makes several proxy statement appearances.
The importance of corporate transparency and efforts to promote it have grown beyond mere tick-the-box exercises to become major initiatives incorporating investor relations (IR) teams, their governance colleagues and outside parties.
A recent study by Labrador and BVA Group, a research and consulting firm, shows that rewriting typical corporate disclosures in plain language has distinct benefits. In short, people can absorb information faster, are more likely to understand and remember what they read, and view plain language documents more favorably. Companies that produce such documents generate a valuable asset: trust.