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Survey identifies preferred proxy statement features

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A survey by RR Donnelley examines how institutional investors read and use proxy statements as part of their proxy review and voting process.

According to the survey – What Institutional Investors Look for in Proxy Statements – 79 per cent of survey respondents indicated that they prefer to access proxy statements via online proxy advisors' platforms or on other online platforms, and 60 per cent said that they skip directly to particular information in the report, most specifically the compensation, disclosure and analysis (CD&A) section.
 
The survey results suggest that easy accessibility to key sections is essential to gaining shareholder support during the review and voting process.
 
The survey found that 84 per cent of respondents begin the proxy review process at the CD&A section, and 64 per cent read the proxy statement summary at the beginning of the report, indicating that institutional investors are most concerned with information about director independence, pay-for-performance alignment and disclosure of performance measures.

The design of the report also impacts how it is read; 83 per cent of respondents said that they prefer the use of plain English, and 67 per cent favour the use of graphs. However, 54 per cent of survey participants stated that over-engineered graphs that are complicated, poorly labelled or hard-to-follow, could potentially mislead investors.
 
"There is a growing gap between what it takes to meet the SEC's disclosure requirements and what information institutional investors look for in the proxy statements. This original market research helps companies bridge that divide," says Ron Schneider, director of corporate governance services for RR Donnelley's financial services group. "Our clients want to know if they should change their proxy statement. Along with our recently published Guide to Proxy Design, these results help companies align their statement designs with their unique corporate culture, governance profile and proxy objectives."

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