Proxy Season Survival Kit: Must-Have Guide and Checklist

Here we go again - proxy season is upon us! Use Shearman & Sterling’s quick reference guide and proxy drafting checklist to help ensure your disclosures comply with the most up to date guidance.

A few highlights:

• Pay versus performance year 2. In 2023 we saw some clear themes: placing the disclosure after CEO pay ratio, using the peer group index from the annual report’s performance graphs and selecting “adjusted earnings per share” as the company’s chosen metric. Review your decisions from year 1 and decide whether to make any adjustments.
  
  
• Clawbacks. A Dodd-Frank compliant policy must be filed as an exhibit to the annual report and indicate whether the filing contains errors or corrections to previously issued financial statements and if the corrections led to analysis of a clawback of executive compensation.
  
  
• Option grant timing. With the amendment to Rule 10b5-1, options granted to NEOs in 2024 (disclosed in the 2025 proxy) will require new disclosures on various filings. In particular, ensure that options aren’t granted during the blackout period (4 days before to 1 day after release of material information) to avoid disclosing an additional table.
  
  
• Director skills matrix. Ensure your matrix incorporates all relevant experience, skills and qualifications for each director including cybersecurity, data privacy, technology, human capital, climate and sustainability. The SEC issued extensive new guidance for cybersecurity that needs to be included in the annual report. While climate rules are pending, the SEC has urged that companies disclose information about climate-related impacts to the business.
  
  
• Diversity.  Examine diversity disclosures to ensure they state how diversity initiatives help achieve business objectives. Glass Lewis recently clarified that it may vote against directors for companies whose board composition does not meet their diversity standards.

The checklist also contains a number of useful “housekeeping” reminders of documents needing annual review, such as board committee charters, as well as recent SEC enforcement actions and comments on a range of subjects.