Unlocking the Secrets Of a Proxy Statement

摘要

The corporate proxy statement―which most public companies will issue over the next three months―is fast becoming required reading. Now that Enron's implosion has raised concerns that cronyism and poor corporate governance might be commonplace, investors should pay closer attention to these dense legal documents, which provide details about the pay and perks of a company's top executives, directors, and outside accountants. "You need to determine whether you can rely on the directors and top management to act re- sponsibly when things go bad," says Ken Bertsch, director of corporate governance at TIAA-CREF, which manages $290 billion in assets. "The proxy statement can help you do that." Tyco International, for one, has firsthand experience of the closer scrutiny investors are giving proxies. The day after it filed its latest statement with the Securities & Exchange Commission on Jan. 28, investors pushed Tyco's share price down 20%. The reason? A disclosure that Tyco paid $10 million to an outside director and another $10 million to a charity he controlled fanned concerns about potential conflicts of interest. The company said the payments were for the direc-tor's help in arranging an acquisition. This came on top of worries about accounting irregularities that already had pum-meled Tyco shares.