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A proxy statement is a statement required of a 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 firms which advise the shareholders...

Traditionally, broker-dealers 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.[1] The SEC approved the rule on July 1, 2009.[2]

In July 2010, the SEC announced that it was seeking public comment on the efficiency of the proxy system.[3]

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;[4] however, in Business Roundtable v. SEC[5] the rule was struck down by the United States Court of Appeals for the District of Columbia Circuit in 2011.[6]


  2. ^ Order Approving Proposed Rule Change, as modified by Amendment No. 4, to Amend NYSE Rule 452 and Corresponding Listed Company Manual Section 402.08 to Eliminate Broker Discretionary Voting for the Election of Directors, Except for Companies Registered under the Investment Company Act of 1940, and to Codify Two Previously Published Interpretations that Do Not Permit Broker Discretionary Voting for Material Amendments to Investment Advisory Contracts with an Investment Company. Release No. 34-60215; File No. SR-NYSE-2006-92. Discussed by the NY Times Dealbook at: Curbs on Broker Voting Are Approved.
  3. ^ SEC. SEC Votes to Seek Public Comment on U.S. Proxy System.
  4. ^ SEC Adopts New Measures to Facilitate Director Nominations by Shareholders.
  5. ^ Business Roundtable v. SEC, 647, April 7, 2011, p. 1144
  6. ^ What Would Proxy Access Look Like if Done Right?.

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