How would you feel about your salary being available for the world to see? That is one of the privileges embraced by the top 5 compensated individual at publicly traded companies.
The SEC requires public companies to make a variety of public disclosures including quarterly financial statements, changes to executive team, new material agreements, acquisitions/divestitures, etc.
However, the most interesting public disclosure is The Proxy.
The proxy (or SEC Form DEF 14A) is where you can find the good stuff.
The proxy includes the total compensation of the CEO, CFO & three other most highly compensated executive officers for the past three years. The compensation table includes salary, cash bonus, stock awards, other equity arrangements, and all other compensation.
Tip: read the footnotes for the perks (e.g. private plane, security service, executive life insurance, etc).
Below is a snapshot from Apple’s 2018 proxy:
Board member and executive team bios
- Who are the board members?
- Who comprises the executive team?
- How old are they?
- What is their background?
Board member compensation
The Board of Directors compensation is also disclosed in the proxy.
Wouldn’t it be great to make $250,000/year to show up to a handful of meetings? Not a bad for a side hustle.
Have you heard of golden parachutes? The proxy is where you can find why getting fired from a public company can look alot like winning the lottery.
The proxy outlines how much the Company paid their audit firm. Fees are broken out by: audit, audit-related, tax, and all other.
Note: this is makes for great market research to better understand public company targets in your local market.
Security Ownership of Certain Beneficial Owners and Management
This section of the proxy outlines the who owns chunks of stock in the company.
Certain beneficial owners: typically is comprised of large mutual funds or other entities that own more than 5% of common stock.
Management: How much skin does the executive team have in the game? Note: Calculate the implied wealth from stock ownership (# of shares X current stock price).
How to: Find the Proxy
Interested to take a peek?
- Navigate to Edgar – Company filings
- In “Fast Search”, enter the ticker symbol of a public company
- Search in the “Filing Type” or scroll down to DEF 14A (not DEFA14A)
- Click “Documents”
- Click link next to “DEFINITIVE PROXY STATEMENT”