Definitive Proxy Statement
The term proxy statement refers to a document companies provide to their shareholders outlining decisions the company will discuss at a special or annual shareholder meeting. The Securities and Exchange Commission requires companies to provide a definitive proxy statement to shareholders prior to a vote on important matters.
Publicly-traded companies are required by federal securities laws to disclose certain operating and financial information on an ongoing basis. A definitive proxy statement, also known as Form DEF 14A or Statement 14A, is a document that is filed with the Securities and Exchange Commission that discloses to shareholders facts and information concerning issues that require a vote by holders of the company’s stock.
A definitive proxy statement must be provided to shareholders at least forty days prior to a special or annual meeting. Typically, companies will provide a copy of the company’s annual report along with this document. The types of matters usually presented on these forms include:
- Nominees for Election to the Company’s Board of Directors
- Approval of Executive Compensation (inclusive of salaries, bonuses, stock awards and deferred compensation)
- Ratification of an Independent Registered Public Accountant
- Approvals of Stock Purchase Plans
- Approvals of Incentive Compensation Plans
Companies will normally include a “catch all” topic on this statement, which will use language such as “To transact other business that may properly come before the Annual Meeting.”