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6 things to check in that proxy statement

April 26, 2018

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Proxy statements offer a wealth of information for business journalists that is not available in other financial filings. (Photo: Pixabay user geralt)

Proxy statements are a gold mine for business journalists. The amount of information available is amazing and includes material not available in other financial filings.

Here are some areas to check, using the 2018 GE proxy as an example.

Board members and nominees

A company’s board is critical to proper governance as well as industry knowledge. The affiliations and backgrounds of directors can provide insight into the strategic interests of a company.

For GE, you’ll see representatives from finance, healthcare, energy, airlines, and hotels. Finance makes sense for any company, and the others are industries that are important markets for various parts of GE.

Shareholder proposals

Shareholders can bring up proposals for changes in corporate governance and how a company does business. Some of the suggestions, and the board’s responses (particularly in opposition) can give a clue into issues not just for the one company but others.

For example, one proposal suggested to end the use of earnings per share as a metric to determine management compensation. An aggressive share buyback program can boost EPS artificially.


Executive compensation is important to shareholders and to the general public, particularly in questions of pay equity, income inequality, and changes in employment policies. The totals are one aspect. Others include the balance between pay, shares of stock, stock options, additional benefits, and the rationale for how compensation is set, like the companies used for comparison and whether they seem a reasonable match in industry and size.

One example from GE’s compensation section is that the company plans to shift to more equity and less cash. Stock ownership is supposed to help align executives’ personal interests with those of the company. However, the question that arises is whether management could push to boost share prices through maneuvers like share buybacks instead of investing cash in something that might help foster improved financial performance.

And don’t forget the perquisites section, which in GE management case can include life insurance premiums, leased cars, personal use of aircraft, financial and tax planning, and relocation benefits that can be hefty.


Pensions can be interesting at a time when there are broad concerns about the viability of Social Security and savings rates among the public. As the proxy indicates, GE’s pension plan has been closed to new participants since 2012, although there are ongoing plans for management.

Major investors

To talk of shareholder interests as some general term is a popular mistake. Different shareholders have different interests. Some look long-term. Others are interested in shorter-term boosts to share price. In GE’s Common Stock & Total Stock-Based Holdings Table, you see that no director or executive owns more than 0.1 percent of common stock shares. BlackRock and Vanguard hold 6.1 percent and 7.2 percent respectively.

A related party or related person transaction refers to business done between the company and a person or entity that enjoys a special relationship. If you owned a company and your sibling was the CEO of another company, doing business with that second company would be under a special relationship. It doesn’t mean there is of necessity anything wrong with the transaction, but reviewing the relationship can be good journalism. A search for “related person” in the proxy brings you to page 24.

During 2016, Triland Partners Limited Partnership, a company in which Mr. Garden’s brother, Thomas Garden, is the managing general partner and sole owner, entered into transactions with a GE affiliate for the development and acquisition of certain renewable energy projects. These transactions were entered into before Mr. Garden joined the Board, and payments to Triland Partners by the GE affiliate during 2017 and 2018 for reimbursable expenses, overhead, and profit were approximately $950,000.

Mr. Garden is Edward Garden, chief investment officer and co-founder of Trian Fund Management as well as a member of GE’s board.

Even more

There is much more in addition. Look through the contents of a proxy statement and see what other information might be of particular interest in your coverage.


  • Erik Sherman

    Erik is an independent journalist and author who primarily covers business, economics, finance, technology, politics, and legal/regulatory, while elegantly expressing the complex and often incorporating data analysis.

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