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The Ideal Proxy Statement

The Ideal Proxy Statement

David F. Larcker, Brian Tayan
Stanford Closer Look Series. February

Institutional investors are highly dissatisfied with the quality of information that they receive about corporate governance policies and practices in the annual proxy. Across the board, they want proxies to be shorter, more concise, more candid, and less legal. The largest complaint involves executive compensation and the inability of investors to determine whether senior management is paid appropriately.

Based on recent survey data from major institutional investors, we describe the information that shareholders would like to see in the “ideal” proxy statement.

We ask:

  • What changes can companies make to proxies that contain the information that investors want in a format that is easy to read and navigate?
  • Would shareholder understanding of corporate governance practices improve if companies provided clearer and more succinct data?
  • How might the debate about executive compensation change?