Companies continue to revamp proxy reports

Illustration courtesy of twobee on

Illustration courtesy of twobee on

Rob Swystun, Pristine Advisers

The ye old proxy report has gone ahead and gotten itself a facelift.

From the thin-papered document weighed down with legal mumbo jumbo to a colorful, glossy magazine-inspired document, the proxy report has come a long way in a short time.

Prudential Financial Inc., Johnson & Johnson, and Pepsico have all revamped their reports in recent years, giving them a healthy dose of pizzazz, as John Engen points out for Corporate Board Member magazine. But it’s not about making it look good (well, it’s not all about that, anyway). It’s also about presenting the information in a clear and concise manner that people can digest easily. (Not something the business world is generally known for.)

Coca-Cola Co. gave its proxy report a facelift in 2012, giving it a shot of colorful graphics and summaries that use plain language in place of dreadful legalese to explain how Coke is performing and how that relates to things like executive compensation, good governance practices and director backgrounds.

“The old proxy was lovely. It did what it was supposed to do, but it looked old,” says Gloria Bowden, Coca-Cola’s associate general counsel and secretary. “We thought, ‘This is our most important shareholder communication of the year. Why do we have this antiquated document that doesn’t match how our customers interact with us?’”

The facelifts make it easier for investors to get to the information they’re after. New disclosure requirements have continued to make statements longer and for large investors who own shares in a myriad of companies, it’s impossible to analyze all of the reports at the same time.

The new reports are less about filling a Securities and Exchange Commission requirement and more about giving the company an opportunity to tell a story on its own terms and maybe head off some negative recommendations from proxy advisers.

“We’re seeing companies thinking of the proxy less as a compliance document and more as an opportunity to communicate with constituents,” says Holly Gregory, a partner with law firm Weil, Gotshal & Manges.

The new-look proxy reports are adorned with CEO letters, easily digestible bullet-point summaries, information about executive compensation and the board’s voting recommendations on proposals.

Directors are the real rock stars of these new proxy reports, often getting the chance to address shareholders with letters, having their bios and qualifications included and — most importantly — what value they bring to the board.

And no new-look proxy report would be complete without plenty of colorful charts, graphs and pictures, including pictures of the board.

But, with all this focus on storytelling and disclosure, what companies don’t include can be just as telling as what they do include.

“We can always tell when a board doesn’t have much diversity, because they don’t put photos in the proxy,” says Anne Sheehan, director of corporate governance for the California State Teachers’ Retirement System.

It seems that even the biggest, most faceless corporations are finally starting to realize that design counts. Everywhere.


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