Complete Guide to SEC Regulation 14A Proxy Disclosures for Public Companies

A public company must file proxy statements to communicate critical information to shareholders so they can make informed decisions. Regulation 14A governs 14A proxy disclosure via Form DEF14A.

For public companies, understanding these requirements is more than a compliance exercise. It is essential for maintaining shareholder trust and ensuring the smooth execution of annual meetings, director elections, compensation approvals, or major corporate transactions.

Key dates of Proxy statements

• Proposals for inclusion in the next proxy statement
• Director nominees for inclusion under applicable laws or governing documents
• Notice of solicitations for alternative director candidates
• Non-Rule 14a-8 proposals

What are proxy statements, and when are they required?

Proxy statements are formal documents sent to shareholders when their vote is required on corporate matters. The Securities and Exchange Commission (SEC) requires companies to make certain disclosures through Form DEF14A (definitive proxy statements) in a systematic and standardized manner.

Common situations requiring proxy statements include are:

Annual General Meetings (AGMs)

AGMs typically involve votes on routine but essential governance matters. Here, shareholders may approve audited financials, elect directors, approve the appointment of auditors, or simply review the company’s performance.

Executive compensation

Public companies must periodically invite votes on executive compensation. Because executive pay influences leadership incentives and long-term value creation, 14A proxy disclosures must detail how executive compensation aligns with shareholder interests.

Election of directors

Shareholders can vote to elect or reappoint board members responsible for overseeing management. Before such elections are held, shareholders must be informed of each nominee’s biography, qualifications, and other relevant information through proxy statements.

Mergers and acquisitions (M&As)

M&As can alter ownership structure and control. Hence, companies are required to disclose the rationale, financial terms, risks, and fairness opinions through proxy statements for going through with such transactions.

Stock splits

Stock splits affect the number of outstanding shares, and hence, 14A disclosure must detail how companies must disclose the purpose, expected impact, and mechanics of the split through proxy statements.

Dividends

Although boards typically decide on dividends, some companies require shareholder approval to change dividend policy or authorize special distributions.

Share buybacks

Share buyback programs may require shareholder approval since they alter ownership and affect the company’s liquidity.

Please note that this is not an exhaustive list. Depending on the circumstances, companies may need to take votes on various matters not discussed here.

What kind of information must be disclosed in 14A proxy statements?

As a rule, companies should include any information material to the matters being voted upon.

For annual meetings or director elections, Regulation 14A mandates specific 14A proxy disclosures under Regulation S-K, including the following disclosure requirements:

Financial statements

Companies must provide consolidated and audited balance sheets (2 most recent fiscal years) and income statements (3 most recent fiscal years) prepared in accordance with Regulation S-X.

If smaller reporting companies cannot prepare such financial statements, they can submit the financial information prescribed under Article 8 of Regulation S-X.

Companies that do not qualify as smaller reporting companies must provide disclosures on any material quarterly changes and information about oil and gas producing activities (if any).

Management’s discussion and analysis (MD&A)

Proxy statements must include MD&A addressing the company’s financial condition, liquidity, capital resources, and results of operations.

This section should also include a qualitative and quantitative analysis of any market risks your company is exposed to.

Description of business activity and operating segments

To enable shareholders to analyze performance at a granular level, you must provide a brief description of business activities in the most recent fiscal year and describe operating segments by industry, geography and product classes

Information about directors and executive officers

14A Proxy disclosures under the regulation 14A requires you to disclose the names and principal occupations of such individuals, as well as the names and principal business of their employers.

This helps shareholders assess leadership qualifications and potential conflicts of interest.

Performance graphs

Companies must furnish the performance graph when directors are to be elected. This graph should compare the company’s cumulative total shareholder return against:

• A broad equity market index such as the S&P 500 and
• An industry or line-of-business index and peers (based on industry or size)

The measurement period typically covers the five preceding fiscal years. If companies change their index, they must provide both old and new comparisons and disclose the reason for the change.

When can you omit 14A proxy information?

14A proxy disclosure rules allow omission if Certain conditions wherein companies may omit information include:

• Unknown information: If the information is genuinely unknown and cannot be reasonably obtained, it may be omitted, provided you include a brief statement explaining why it is unavailable.
• Already/to-be disclosed information: If certain information is already included in other proxy materials or will be disclosed to everyone in connection with the same meeting or subject matter, you may omit it as long as you clearly reference the document that contains said information.

These exceptions are narrow. You should assume disclosure is required unless an explicit exemption applies.

Eqvista – Precision-Driven Support for Compliant 14A Proxy Disclosures!

Preparing a comprehensive and accurate proxy statement is a major challenge. Public companies must balance tight reporting timelines with evolving regulatory expectations, all while ensuring shareholders have the clarity needed to make informed voting decisions.

Eqvista’s valuation team provides the critical support needed to navigate these challenges, especially at key moments such as soliciting shareholder approval for major M&A transactions.

We deliver accurate, timely, detailed, and defensible fairness opinions that enhance the quality and credibility of your DEF14A filings. Contact us to learn more!