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Almost all publicly traded companies are legally required to file a proxy statement a minimum of once a year before the company’s annual meeting. The Securities and Exchange Commission (SEC) requires that each one companies provide its shareholders with information about the corporate , like executive compensation or on proposals that are up for a vote. This information is contained within the proxy statement, and therefore the document is supposed to enable shareholders to form informed voting decisions at a company’s annual meeting.
What’s a Proxy Statement?
A proxy statement may be a document containing the knowledge the Securities and Exchange Commission (SEC) requires companies to supply to shareholders in order that they can make informed decisions about matters which will be mentioned at an annual or special stockholder meeting. Issues covered during a proxy statement can include proposals for brand spanking new additions to the board of directors, information on directors’ salaries, information on bonus and options plans for directors, and any declarations made by the company’s management.
How Proxy Statements are Used
A proxy statement must be filed by a publicly traded company before shareholder meetings, and it discloses material matters of the corporate relevant for soliciting shareholder votes and final approval of nominated directors. Proxy statements are filed with the SEC as Form DEF 14A, or definitive proxy statement, and may be found using the SEC’s database, referred to as the electronic data gathering, analysis and retrieval system (EDGAR).
Receiving a Proxy Statement as a Shareholder
Obtain the proxy statement online. If you’re a shareholder during a company, the SEC requires that the corporate provide you a notice of all proxy material. This notice will contain a link whereby you’ll download or review a proxy statement online. the corporate is required to supply you this information a minimum of 40 days before a gathering at which shareholders are ready to vote.
- The notice also will provide you the date, time and site of the meeting.
- You’ll even be given instructions on how you’ll receive a paper copy of the proxy statement.
Evaluating a corporation Through Its Proxy Statement
check out the makeup of the board of directors. it’s important to notice whether a board of directors is comprised primarily of the company’s executives or whether there also are independent board members. An independent member may be a one that doesn’t have a serious financial stake within the company and doesn’t own any shares.
- Boards that are primarily crammed with independent members tend to supply more value to the corporate , making it a far better financial investment.
- Independent boards are more likely to exchange a failing CEO, if he or she isn’t benefitting the corporate .
- You’ll locate information about the board of directors within the management section of the proxy statement.
- As you read a proxy statement, you ought to read with a critical eye and question broad or unclear statements that are made, also as justifications that the corporate offers for compensation.