Here’s a series of excerpts from this six-page report about drafting letters from leadership for your proxy penned by Labrador’s Meredith Shaughnessy (the report contains numerous disclosure examples):
- Why Should You Include a Letter? – Similar to the CEO letter that typically accompanies a “glossy” Annual Report, proxy letters provide an opportunity to discuss company performance. But where the Annual Report letters tend to delve deep on financial performance, letters in proxy statements—particularly those from independent board members—focus on performance accountability, explaining how the company’s governance and risk frameworks, as adopted and overseen by the Board, support the company’s strategy and creation of long-term value for shareholders and other stakeholders.
- Who Are The Letters From? And How Many Letters Are There? – Having a single letter is the most common structure by factor of 2 : 1. And, if a company has a combined Chair/CEO, it is most common for a proxy letter to come from the Chair/CEO, either as a solo letter or a joint letter with the Lead Independent Director (LID). Beyond that, however, there is wide variation in the structure and author of proxy letters.
- When Should You Rethink The Structure And Author of Your Letters? – After a company decides on the Who, What, Why and How Many for its proxy statement, it tends to maintain the same structure and authors’-year-over-year. A review of Dow 30 proxy statements from the past several years shows that changes to leadership letters’ structure and authors often followed a significant development, such as CEO or Board leadership succession, proxy fight or other high-profile corporate matter.
Note: I am happy to note that recently retired Keith Bishop has rebooted his popular blog about California and Nevada law – Calcorporatelaw.com – on Substack. Check it out!
