Rising shareholder activity on sustainability issues and heightened interest in board diversity are increasingly reflected in the proxy statements of major companies. This is among key trends we observed in our just-published benchmark survey of the proxy statements from Fortune’s 250 largest firms.
The annual survey found evidence that proxy statements, through both their content and design, are responding to expectations for the greater disclosure transparency that is being driven by new regulations and shareholder activism. Or, as the report states,
“We continue to be optimistic that companies consider their readers more and more when drafting their documents.”
In a year in which major investors like Black Rock and Vanguard began to be more vocal on issues like climate change, half of the companies we benchmarked addressed sustainability in their proxy statements, a 32% increase over 2016.
Companies also show increasing attention to communicating on diversity, using graphics and skills matrices to quickly convey a profile of their board in terms of age, tenure and gender breakdown. Greater use of graphics or tables to communicate on boardroom refreshment are being used to address investor concerns about turnover rates, a factor that can impede progress in increasing the presence of women and minorities. For example, the low ratio of women in board populations of 2.6 / 11.26 promises to keep this issue at the forefront.
Say-on pay is another area in which disclosure is on the rise with companies increasingly opting for annual votes. Better shareholder dialogue, clearer disclosure and pay for performance initiatives appear to be having an impact: companies in our survey averaged 90.12% support for their say-on-pay votes with only four companies dropping below 50%.
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Other proxy statement elements addressed in the report include use of summaries and graphics, better design elements, increasing scrutiny of risk oversight and ways of telling the company’s compensation story.
The report notes that proxies also are an opportunity to communicate about shareholder engagement efforts, with 57% of surveyed companies reporting on their activities.
“Including this information in the proxy helps drive home the point that a company is paying attention to what the investment community thinks, ultimately fostering a closer relationship.”
The bottom line: your proxy statement can be considered an investment in improving disclosure that benefits both you company and your stakeholders – and pays dividends over time.
Contact us for a copy of our benchmark.