The proxy is the official notice to shareholders of proposals that will be voted on at the annual meeting. These proposals can include the election of company directors, executive compensation plans and changes to the company's bylaws. They can include proposals from dissident shareholders to change the company's governance structure.
Proxies also include biographies of the company's board members and information on compensation of the CEO and other highly paid executives. The "Summary of Compensation Table" shows earning over the last three years and includes salary, stock options, bonuses and other perks.
Reports from both the audit committee and the compensation committee are included in the proxy.
Proxy statements are filed with the SEC as form DEF 14A.
Proxies are usually filed about six weeks before the annual shareholders meeting. Most companies hold their annual meeting in the spring.
"In the annual proxy statement, a company must disclose information concerning the amount and type of compensation paid to its chief executive officer, chief financial officer and the three other most highly compensated executive officers A company also must disclose the criteria used in reaching executive compensation decisions and the degree of the relationship between the company's executive compensation practices and corporate performance." From The SEC. Executive Compensation.
An article from The Washington Post, "Clarifying Executive Compensation," explains how to read the Summary Compensation Table.
For compensation data on a company or group of companies, use one of these databases:
Four items must appear in the Summary Compensation Table:
The Conference Board surveys Fortune 500 companies annually and produces these reports on compensation practices: