Proxy statement
Encyclopedia
A proxy statement is a statement required of a United States
firm when soliciting shareholder votes. This statement is filed in advance of the annual meeting. The firm needs to file a proxy statement, otherwise known as a Form DEF 14A (Definitive Proxy Statement), with the U.S. Securities and Exchange Commission. This statement is useful in assessing how management is paid and potential conflict-of-interest issues with auditors. The statement includes:
SEC proxy rules: The term "proxy statement" means the statement required by Section 240.14a-3(a) whether or not contained in a single document.
In many cases, shareholder votes - particularly institutional shareholder votes - are determined by proxy firm
s which advise the shareholders...
Traditionally, broker-dealer
s have been permitted to vote for "routine" proposals on behalf of their shareholders if the shareholders do not return the proxy statement. This has been controversial, and in 2006 the NYSE Proxy Working Group recommended that the rules be modified so that uncontested director elections were not considered routine. The SEC approved the rule on July 1, 2009.
In July 2010, the SEC announced that it was seeking public comment on the efficiency of the proxy system.
There has been some controversy over "proxy access" which is a method to allow shareholders to nominate candidates which appear on the proxy statement. Currently, only the nominating board can place candidates on the proxy statement. The United States Dodd–Frank Wall Street Reform and Consumer Protection Act specifically allowed the SEC to rule on this issue. In 2010, the SEC passed a rule which allowed certain shareholders to place candidates on the proxy statement,; however, the rule was struck down by the United States Court of Appeals for the District of Columbia Circuit
in 2011.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
firm when soliciting shareholder votes. This statement is filed in advance of the annual meeting. The firm needs to file a proxy statement, otherwise known as a Form DEF 14A (Definitive Proxy Statement), with the U.S. Securities and Exchange Commission. This statement is useful in assessing how management is paid and potential conflict-of-interest issues with auditors. The statement includes:
- Voting procedure and information.
- Background information about the company's nominated directors including relevant history in the company or industry, positions on other corporate boards, and potential conflicts in interest.
- Board compensation.
- Executive compensation, including salary, bonus, non-equity compensation, stock awards, options, and deferred compensation. Also, information is included about perks such as personal use of company aircraft, travel, and tax gross-ups. Many companies will also include pre-determined payout packages for if an executive leaves the company.
- Who is on the audit committee, as well as a breakdown of audit and non-audit fees paid to the auditor.
SEC proxy rules: The term "proxy statement" means the statement required by Section 240.14a-3(a) whether or not contained in a single document.
In many cases, shareholder votes - particularly institutional shareholder votes - are determined by proxy firm
Proxy firm
A proxy firm is a company hired by corporate shareholders to cast proxy statement votes on their behalf. The top two proxy firms are Glass, Lewis & Co. and RiskMetrics/Institutional Shareholder Services. By some accounts, RiskMetrics ISS advised half of the common stock in the world as of 2010...
s which advise the shareholders...
Traditionally, broker-dealer
Broker-dealer
A broker-dealer is a term used in United States financial services regulations. It is a natural person, a company or other organization that trades securities for its own account or on behalf of its customers....
s have been permitted to vote for "routine" proposals on behalf of their shareholders if the shareholders do not return the proxy statement. This has been controversial, and in 2006 the NYSE Proxy Working Group recommended that the rules be modified so that uncontested director elections were not considered routine. The SEC approved the rule on July 1, 2009.
In July 2010, the SEC announced that it was seeking public comment on the efficiency of the proxy system.
There has been some controversy over "proxy access" which is a method to allow shareholders to nominate candidates which appear on the proxy statement. Currently, only the nominating board can place candidates on the proxy statement. The United States Dodd–Frank Wall Street Reform and Consumer Protection Act specifically allowed the SEC to rule on this issue. In 2010, the SEC passed a rule which allowed certain shareholders to place candidates on the proxy statement,; however, the rule was struck down by the United States Court of Appeals for the District of Columbia Circuit
United States Court of Appeals for the District of Columbia Circuit
The United States Court of Appeals for the District of Columbia Circuit known informally as the D.C. Circuit, is the federal appellate court for the U.S. District Court for the District of Columbia. Appeals from the D.C. Circuit, as with all the U.S. Courts of Appeals, are heard on a...
in 2011.
External links
- All Proxy Filings, Multiple Formats including EXCEL
- Recently filed proxy statements
- List of items required in proxy statements in Schedule 14A (SEC) (PDF) - note: the SEC published its final rules governing disclosure on August 11th, 2006. This Schedule does not reflect the additions and changes.
- {http://s.wsj.net/public/resources/documents/info-PROXYPRIMER1003_retro.html?mod=e2tw Wall Street Journal primer on how to read a proxy statement]