The New Process for Proxy Statements: SEC Pros Share Their Tips
SEC filing pros may not get into the trenches in the proxy preparation process yet, but as the document grows in size and complexity, some general counsels are turning to SEC filing teams for tips on streamlining the complicated process of developing a modern proxy statement.
Reasons why GCs and SEC reporting teams should partner on the proxy and 8-K
SEC requirements for more transparency into corporate governance—combined with investor demands for more accountability from the board of directors—have transformed the proxy statement into a high-impact shareholder communication. Today, it’s not unusual for a company to file a 100-page proxy statement.
In 2021, proxy disclosure trends reflect the same themes that SEC filers have worked with for most of 2020: the effects of COVID-19 across all disclosures, new SEC rules around human capital management, and the continued focus on ESG issues and diversity. As these topics converge across regulatory filings, some corporate secretaries are looking for better solutions, improved processes, and lower costs.
Follow the leaders
One of those companies that recently upgraded their proxy process is Horace Mann (NYSE: HMN), a $12-billion-in-assets financial services company that serves the education market.
“We need to keep all our public filings united around the same story, and it made sense to produce the proxy on the same platform that the rest of our company uses,” says Linea Michael, Assistant Vice President, Corporate Governance and Operations, who is responsible for governance updates and producing the Horace Mann proxy statement. “We had a smooth transition and I had more control over the process.”
SEC Professionals Group member Heather Wietzel, Vice President of Investor Relations and Enterprise Communication at Horace Mann, assisted in the transition. As a working member of the proxy team, she represents the investor’s point of view. In her enterprise communication role, she is responsible for making sure that all documents, including the proxy statement, align with corporate messaging.
“We get a lot of synergy from consolidating all our filings in the same place, and can confidently cross-reference our narrative and messaging,” she says. “For investor relations, I actively link earnings data to our news release, conference call scripts, and investor supplements.”
Linea and Heather offer their insights about this transition:
Control and transparency reduce risk
Look for a platform that reliably links data to the same source used in multiple reports. This feature saves time, reduces errors, and bolsters confidence and trust in the data. At Horace Mann, the team created, edited, managed, and filed the 2020 proxy statement directly from their SEC reporting platform. “The proxy is a sensitive, high-profile document, and there is no room for error,” says Linea.
Leverage the skills of all your stakeholders through collaboration and communication
Developing the proxy statement requires more input from key stakeholders than ever before. “Working from home during the early days of the COVID-19 pandemic proves that it doesn’t matter where you’re sitting or where you are located,” says Heather. “Our team and our data are connected in the cloud, where it’s secure and accessible on demand.”
The burden is on you to create an engaging document
“Most investors, rating agencies, and other stakeholders don’t have the time or bandwidth to figure out the important aspects of your story themselves,” says Linea. The burden is on proxy teams to produce a document that is clear, concise, and user-friendly, and this requires resources outside the GC’s office. Horace Mann is increasing its use of graphic design to simplify complex material and enhance the readability of long documents. Last year, the in-house communications team developed new graphics and headlines for the CSR report and adapted the same headline treatments for the 10-K and 2020 proxy.
Reduce anxiety and partner with the SEC filing team to submit your 8-Ks
Don’t stop at the proxy statement. There is every reason to manage 8-K submissions through the same technology used by the SEC filing team. By their nature, 8-Ks contain time-sensitive, newsworthy material information. How many times have you read about a company that had to re-file an 8-K to correct an error?
At Horace Mann, all 8-Ks are managed through one platform, giving them the same controls, permissions, and audit trail of other regulatory filings. Perhaps more important, says Heather, is the quick turnaround. “We don’t have to waste time fooling around with formatting and forms in the EDGAR system.”
All in all, the Horace Mann team believes the transition to the cloud was successful. “We improved the graphic presentation of the proxy, reduced our costs, and shaved a few days off our production schedule,” says Linea. “And because we're now using the same platform, there were no incremental costs.”
This was reposted from the SEC Professionals Group website. The SEC Pro Group is a community of in-house professionals who actively prepare and file financial reports with the U.S. Securities and Exchange Commission. Learn more about membership.
About the Author
Steve is Senior Director of Product Marketing and Accounting Industry Principal at Workiva. Previously, Steve served as an accounting leader in multiple roles including Vice President and Controller for Backcountry.com, a private equity owned, online retailer of outdoor products, and as the Director of SEC Reporting for Overstock.com (NASDAQ: OSTK), a $2 billion revenue, online retailer of home goods and blockchain technology company. His experience includes multiple acquisitions, debt offerings, an IPO, and the world’s first digital debt and equity offering (by Overstock). Steve is the Executive Advisor of the SEC Professionals Group, and a former member of the US XBRL Data Quality Committee. He began his career as an auditor in public accounting, received his Accounting degree from the University of Arizona, graduating summa cum laude, and received a Master of Accountancy and Information Systems degree from Arizona State University.