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Proxy Statement & Annual Report Flashcards

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  1. What is a 'proxy contest' or 'proxy fight'?

    Answer: A situation where a dissident shareholder solicits proxies to elect alternative board members or pass resolutions

    A proxy contest occurs when a dissident shareholder or group solicits proxies in competition with management to elect directors or pass resolutions against management's wishes.

  2. Which section of the annual report on Form 10-K contains the company's audited financial statements?

    Answer: Item 8 – Financial Statements and Supplementary Data

    Item 8 of Form 10-K contains the audited financial statements, including balance sheet, income statement, cash flow statement, and notes.

  3. What is 'broker non-vote' in the context of proxy voting?

    Answer: When a broker withholds votes on behalf of street-name shareholders on routine matters due to no instructions

    A broker non-vote occurs when a broker holding shares in street name has no instructions from the beneficial owner on non-routine matters and therefore does not vote those shares.

  4. What does 'street name' ownership mean in proxy distribution?

    Answer: Shares held by a broker or bank on behalf of the beneficial owner

    Street name ownership means shares are registered in the name of a broker-dealer or bank as nominee, while the beneficial owner holds the economic interest.

  5. Under SEC rules, which of the following is considered a 'routine' matter allowing broker discretionary voting?

    Answer: Ratification of the independent auditor

    Ratification of the independent auditor is generally considered a routine matter, allowing brokers to vote uninstructed shares, while director elections and say-on-pay are non-routine.

  6. What is the primary purpose of the Compensation Discussion and Analysis (CD&A) in a proxy statement?

    Answer: To explain the objectives, philosophy, and decisions behind executive compensation programs

    The CD&A provides a principles-based disclosure of the material factors underlying the executive compensation program and how pay decisions were made.

  7. What information must appear in the Summary Compensation Table of a proxy statement?

    Answer: Total compensation for the CEO, CFO, and the three other most highly compensated executive officers

    The Summary Compensation Table must disclose compensation for the CEO, CFO, and the three other highest-paid executive officers (NEOs) for the three most recent fiscal years.