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Ernst & Young Finds Companies Getting Better at Proxy Disclosures

A new study by Ernst & Young finds that companies are improving in their efforts at proxy statement disclosures to investors in an examination of early filings this proxy season.

The study, Proxy season 2012: trends in proxy statement disclosure, found that S&P 500 companies are showcasing shareholder outreach efforts in the area of executive compensation, demonstrating strategic board composition and tightening company messaging around key topics of investor interest. A report indicates that regulatory reforms and enhanced disclosure rules around say-on-pay votes have made board communication strategies with investors a higher priority for many companies.

The early look at filings for the 2012 proxy season demonstrates that executive summaries and board letters to shareholders are a communication strategy. Large U.S. companies are increasingly using executive summaries and board letters to shareholders to tell their story and highlight governance practices as part of broader efforts to be responsive to shareholders around particular areas of investor interest, such as executive pay, shareholder engagement and sustainability.

Shareholder engagement is becoming a priority for some boards. An increasing number of companies—25 percent of those reviewed in the report—are disclosing shareholder engagement efforts in connection with say-on-pay votes. Companies made targeted pay reforms based on shareholder feedback, and followed up by communicating those pay changes and engagement efforts in the proxy statement.

Strengthened disclosures around board composition show the board as a strategic asset. Leading companies are now disclosing a skills matrix approach for board composition, showcasing how different director qualifications are strategically aligned to the company's business needs and why these areas of expertise are needed at the board level.

For more information, visit http://www.ey.com/US/en/Issues/Governance-and-reporting.

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