Objectively applying the 83 transparency criteria for the proxy statement during our “Transparency Awards” process, my alma mater – Lockheed Martin – won best proxy this year after coming in second last year. Here’s their 2024 proxy statement.
Bearing in mind again that the criteria are objectively applied, here are seven reasons – among many others – why the company’s proxy is so fine:
- Overall, there’s a thoughtful balance of summaries and details, as well as visuals and narrative, throughout the proxy.
- The proxy emphasizes board priorities and engagement including a letter from the board and governance practices presented as board commitments. Another nifty disclosure is that the board committee disclosures include “2023 Focus Areas” at the top:
3. Board skills, competencies and attributes are presented visually in the aggregate and individually. The relevance of each skill and link to company strategy is explained. Many companies just say what the skill is – or what they are looking for – but don’t present that “link.”
4. The risk disclosures are good, including the discussion of emerging risks – with a tie back to the skill matrix and why certain skills are needed on the board.
5. The CD&A includes graphics helpful to users to understand the company’s comp program and its compensation decisions. For example, there is this “2023 Compensation Elements” table that is quite comprehensive with metrics, weighting, performance periods and vesting terms:
6. There are a bunch of the type of graphics that companies pursuing transparency use – but there are also unique visual elements employed, including this decision-making process table that explains the role for each of management, compensation consultants (management’s and the board’s), compensation committee and board and whether they develop, review, recommend, approve or ratify compensation decisions:
7. The “Table of Contents” includes a list of “Frequently Requested Information”…
