Before you press that “print” button, take time for a “gut check” review. Someone who has been with the company for a while, and who is in the room when the board meets, should read the proxy from end to end. A straight read. In most cases, that person is going to be the corporate secretary.
Why do this? The gut check reader is checking to ensure that the disclosure is internally consistent. That the answer to “What picture are we trying to paint here?” comes across. That the proxy disclosure reflects the reality of what has been happening behind the scenes. That the disclosures match the discussions in the boardroom. If the gut check reader finds something concerning, the team should be prepared to address those concerns – even if final deadlines are looming.
For example, in my blog entitled “The Comp Team & Disclosure Drafters: Better Alignment of the Disclosure Process,” I point out that the timing of compensation committee meetings might require compensation disclosures to be drafted on a different timeline than other parts of the proxy – resulting in possible disjointed disclosure. The gut check reader can help catch disconnects.
Of course, the “gut check read” shouldn’t be limited to the proxy statement. It should be a part of any corporate disclosure process, including the earnings season documents and calls. The reader should be asking, “Do our 10-Q and earnings release capture the sense of how the earnings results felt this quarter?” and “Are these documents internally consistent?”
The person conducting the earnings gut check might well be different from the one that gut checks the proxy statement. But it always needs to be someone who can be a critical reader and who knows enough to recognize if something is amiss. It needs to be someone with access to the experiences and conversations that transpired during the quarter so they can discern what feels true – and what does not.
[Note this blog will be dark over the next two weeks as many of you suffer the peak of the proxy season while Broc goes on vacation…]