2019 Proxy Season Best Practices and Trends | FTI Consulting

2019 Proxy Season Best Practices and Trends

Corporate Finance & Restructuring

January 28, 2019

The proxy statement serves to directly communicate with shareholders on everything from compensation to corporate governance, company strategy and performance. Institutional investors (and proxy advisory firms ) are continuously increasing their demands on transparency and disclosure preferences, resulting in many public companies spending a substantial amount of time and resources to create state-of-the-art proxies. As the 2019 proxy season commences, public companies need to stay abreast of the most recent trends and developments when drafting their disclosure.

Proxy Best Practices and Trends include:

  • Proxy Summary Messaging – The most effective proxy statement executive summaries are used as an opportunity to tell your story and ensure that the most important proxy themes are captured by investors
  • Reduce Text and Replace with More Visuals and Graphics - The use of visuals and graphics are essential to convey complex and robust information in a concise and easy to understand format, and they can also draw the reader’s attention to key themes and takeaways
  • Provide More Rationale Behind Compensation Decisions – The compensation transparency bar has been raised and requires companies to disclose the rationale behind why decisions were made and the factors/processes used to set compensation programs and levels for Named Executive Officers (NEOs)
  • Improve Board Compensation Disclosure – Board compensation disclosure is expected to look more like a simplified version of executive compensation reporting due to increased scrutiny in recent years by investors and proxy advisory firms
  • Enhance ESG Disclosure – Large institutional investors continue to believe that long-term value is partially tied to ESG-related factors, and they have significantly increased their focus on sustainability and corporate responsibility issues. Companies should be reacting to this new investor priority by increasing the quality and robustness of ESG-related disclosure

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