At Nasdaq, the proxy statement is produced internally by a cross-functional working group whose members all have additional jobs to do. This team includes representatives from investor relations, internal audit, legal, the corporate secretary and the design team.
It’s all the more impressive, then, that Nasdaq’s 2020 proxy statement has been judged 'best in class'. Erika Moore, Nasdaq’s assistant general counsel, says it takes the working group about six months to complete the proxy statement each year.
The attention to detail and flair for design is apparent from the front cover, which is consistent with Nasdaq’s other disclosures and sets the tone for a highly visual document with infographics, charts, a table of contents and landing pages. ‘[Our design team] works every year to make the proxy statement eye-popping and engaging for our stockholders,’ says Moore.
‘Not only that but it also thinks about how [the proxy] ties into our business, so this year the team designed original cover artwork that highlighted the fact that we’re a technology firm and we’ve used it for other brand initiatives within Nasdaq.’
Readers of proxy statements – investment stewardship professionals and proxy advisers – often talk about the desire for easy-to-navigate documents and that’s certainly achieved with Nasdaq’s. The contents page is color-coded, with each color matching the landing page. This investor-centric thinking is a central part of the development of the proxy statement each year, Moore says.
That led Nasdaq’s proxy statement team to significantly bolster its ESG reporting in 2020. The company introduced a section on ESG and corporate culture for the first time in 2019 and built on it this year. ‘We’ve been hearing for several years now that stockholders are interested in companies’ approaches to ESG, in terms of risk oversight and the company’s own initiatives,’ Moore says.
‘This year we led with a discussion of our ESG governance. We thought our stockholders would want to know that our board is overseeing our ESG and which committees are doing what. We then tried to sprinkle that through the proxy statement.’
Three specific examples of this ‘sprinkling’ come in the form of three separate landing pages: one dedicated to the evolution of Nasdaq’s corporate culture, one dedicated to employee networks, affinity groups and diversity and inclusion efforts, and one dedicated to the ESG products Nasdaq offers to its clients.
The drive to increase readability goes deep into the proxy statement. In the compensation discussion and analysis, for example, Nasdaq’s team created a section dedicated to named executive officers (NEOs). Each NEO has a page devoted to his or her executive compensation, with a detailed breakdown of how that compensation is calculated.
The director profile section is similarly impressive: Nasdaq uses color photos of the board of directors, as well as detailed biographies and a skills matrix. And if those factors aren’t enough to articulate the diversity reflected on Nasdaq’s board, there are further explanatory notes on the director identification and election process, as well as on compensation and refreshment.
Turning her attention toward next year, Moore says she expects human capital management to be an even bigger focus – mentioning the SEC’s updated Regulation SK ruling, which will require disclosure on some human capital management issues.
‘I think in the proxy, investors are going to want to hear how companies handled the Covid-19 pandemic, particularly in relation to their employees and any kind of executive compensation decisions they may have made in connection with the pandemic,’ she explains. 'Following on from that with the recent social justice events in the US, [investors will be interested in] what companies are doing in terms of diversity disclosures and their inclusion programs.’
Firms that are earlier on that human capital management disclosure journey could do worse than take inspiration from Nasdaq’s 2020 proxy statement.
You can read more about the Corporate Governance Awards in the Corporate Secretary Yearbook, produced by IR Magazine's sister publication Corporate Secretary
Ben Ashwell
Ben Ashwell is the editor at IR Magazine and Corporate Secretary, covering investor relations, governance, risk and compliance. Prior to this, he was the founder and editor of Executive Talent, the global quarterly magazine from the Association of...
