Despite investor concerns regarding the increasing length and complexity of proxy disclosures, CD&A word count continues to rise, with a 6.8% jump in 2018 to 9,728 words, according to Equilar's Innovations in Proxy Design report. The annual study, which looks at the top 100 US-listed companies by revenue, highlights disclosure as well as proxy design trends. Key findings of the report include:
Table of Contents on the Rise. A CD&A table of contents is in use by 30% of the Equilar 100, up from 15% in 2014; this reflects the need for investors to be able to find information quickly given the ever-increasing length of disclosure. Center Subscriber Deere & Co. is featured as an example.
Compensation Checklists Still in Use, But Declining. Rumors of its demise notwithstanding, the compensation program checklist (e.g., "what we do" and "what we don't do") is still very much a part of large company disclosure, with 84% of the Equilar 100 including such a list in 2018 (down from 90% in 2016, but still up from 75.8% in 2014).
Charts and Graphs. 89% of the Equilar 100 included a supplemental graph of some kind (such as a chart of the compensation planning process or comparison charts), while 56% included an alternative pay chart (realized or realizable pay), (with Center Subscriber Exxon Mobil featured as an example), up nearly 17% from 2017, and 29% included a pay-for-performance graph, an 8% increase over 2017.
Overall, large companies continue to "start with strategy" when it comes to CD&A disclosure, followed by a discussion of company performance, performance metrics and how they tie to strategy, and compensation payouts in relation to performance.