Every year about this time, I start nudging my clients and colleagues to begin working on their CD&As for the upcoming proxy filing. The typical response I get is that it’s too early. I mean, it’s not even Halloween yet, right? Wrong.
Before we all know it, we’ll be well on our way to holiday weight gain and buried in year-end work. So, why wait? Even if you don’t have all the answers to fill in the CD&A blanks, there are still some very easy, yet highly productive things someone on your team could be doing to get ahead of the inevitable 11th hour fire drill in the first quarter of the year:
- Take another look at your reports from ISS and/or Glass Lewis. Even if you have high levels of support, it’s a good idea to review the proxy advisory firms’ commentary. You may find one or two things that you’ll need to consider addressing in your proxy statement.
- Look at what your peer group companies have done. There have been great strides made in the look, feel, and readability of CD&A narratives over the years. Make sure your CD&A isn’t lagging these trends—especially relative to your peers.
- Think about what’s changed this year. Give thought to how you’ll explain any program design or NEO changes, new performance metrics, salary increases and/or adjustments to your peer group, etc. Sometimes changes seem easy to explain on the surface, but once you get into it, it’s more complicated to write than originally thought.
- Read (really read) what you wrote last year. It’s likely been several months since someone on your team did a thorough read of your prior CD&A. Have someone dedicate a few hours to read it again now and identify areas that need editing. One easy example is your section on tax and accounting issues—with the change in rules, it’s very likely you’ll need to rework that language and perhaps considerably so.
It’s also important to note that doing these four things shouldn’t take a ton of time. It’s a quick and valuable readiness exercise to get the “easier” pieces of your CD&A identified and completed so that you and your team can focus on the more complicated pieces of the narrative when final decisions are made after the end of the year.
