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Stop the Insanity!

By Robert B. Lamm

A few years ago, when I served as in-house counsel to a major corporation, I asked a representative of one of our largest shareholders how much time she devoted to reviewing our proxy statement ' a document that had occupied a significant portion of my time and on which I had lavished considerable care and attention. “Oh,” she said, “your company represents one of our largest investments, so I spend about 20 minutes on it.” I was shocked, but she was not done. “Of course, when it goes to our proxy committee for a voting decision, I'd say five or 10 minutes max.” Shock turned to dismay; how could all that deathless prose be dismissed in so cavalier a manner?

I'm sure that those responsible for proxy statements at companies throughout the U.S. have had similar rude awakenings. We try to make our disclosures accurate and complete; we often go beyond minimally compliant disclosure to give our owners and the investing public a “feel” for our companies' businesses, how we operate, how our boards and their committees function, and how we compensate our management team. But the facts are that our disclosures are voluminous and getting more so every year (many companies' proxy statements are at or close to 100 pages, and some 10-Ks are in excess of 200 pages) that most investors don't have the time to read, much less digest, these documents and that those who do often find them overwhelming.

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