Lately I’ve been wondering if there really is a perfect time of the year to start working on a CD&A for the proxy season. And after years and years of writing and editing proxy statements, I think the answer is yes―the time is now (assuming of course that your organization is on a calendar fiscal year).
You do not and should not be waiting for year-end results to do a first pass at your draft. Improving the readability of your CD&A usually has very little to do with the final decisions being made about compensation. Rather, making your CD&A clear, concise, and easier for readers to understand is all about the writing.
So where is the best place to begin? Set aside some time to carefully read last year’s CD&A and make specific decisions about what needs to stay and what needs to go. This should be a highly-focused review with a fresh set of eyes (and for me, a nice new red pen and a cup of coffee).
Asking yourself questions as you review the document will help make your editing more effective. Here are some of my favorites:
- Are there leadership changes/transitions that need to be addressed? If yes, how does that affect the list of NEOs and surrounding narrative?
- What information from previous years is no longer relevant? For example, did we talk about specific business achievements, shareholder engagement efforts, changes to the plans, etc. that are now old news?
- Does the flow of the narrative make sense in the context of any new content we may need to create given our current performance and payout story? Are there ways in which I should move content around to help ensure the most important messages resonate effectively?
- Is there repetitive content that can/should be streamlined?
- Are there ways to add more visual elements to ensure our document is aligned with best-practices in CD&As?
Doing this exercise now will undoubtedly save you time in the end. Your commentary and marked-up document becomes the framework for a strong working first draft—allowing you to gauge the time and resources you will need to get through your drafting, review, and approval process and to start Q1 strong.
