Krispy Kreme Doughnuts wins award for Best Proxy Statement (Small to Mid-cap)
After laying a strong foundation for its governance policies over the last two years, the challenge for Krispy Kreme Doughnuts’ legal team has been maintaining the company’s drive for excellence in corporate governance.
Investors have rewarded the company for strengthening its accountability and improving its public disclosures: over the 12 months from the end of June 2012 to the start of July 2013, Krispy Kreme’s stock price rose by more than 300 percent. Some of that impressive share price appreciation is due to the firm’s emphasis on shareholder engagement, which included a revamping of its proxy statement. The use of plain English, upfront summaries of the company’s financial performance, governance practices and approach to executive compensation, and an easy-to-follow format make the document easy to digest and navigate through. Photographs of directors and various charts and graphs make it more visually appealing. The result has won Krispy Kreme recognition for the best proxy statement (small to mid-cap) in Corporate Secretary’s 2013 awards.
As Krispy Kreme has an unusually large number of retail shareholders, the firm believes its public disclosures must be accessible to an audience that extends beyond institutional investors. ‘We’ve focused on shareholder engagement and shareholder communication, trying to speak as clearly and transparently as we can with shareholders about what we’re doing at Krispy Kreme and how we’re driving the business,’ says senior vice president, general counsel and secretary Darryl Marsch.
Marsch adds that clarity was extremely important for this year’s proxy statement because the company had to explain to shareholders how it would handle a very complex tax issue. This had to be communicated correctly in order to maintain investor confidence. ‘Explaining something as dry as a tax issue to our shareholders was a bit of challenge, so we got some very good help from some very good experts, and the product turned out great,’ Marsch says.
In fact, the Krispy Kreme corporate governance team worked with outside law firms, an accounting firm, a compensation consultant and a proxy solicitor to prepare its proxy statement, but Marsch says listening to the shareholders and then addressing their concerns in a transparent way is the key to preparing an effective proxy statement. ‘[Shareholders] are telling us what they want, and that’s probably the best way to stay on top of the issues that are important to your company,’ he says.
‘It’s really looking to our shareholder base and having good engagement with it throughout the year that is going to lead us to continue to have what those shareholders consider to be good governance.’
For photos of the 2013 awards, click here.
