Stop the Insanity!

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.

In an Oct. 15, 2013 speech, Securities and Exchange Commission (SEC) Chair Mary Jo White stated that “ever-increasing amounts of disclosure make it difficult for an investor to wade through the volume of information to ferret out the information that is most relevant.” See The Path Forward on Disclosure.” She could just as easily have added that because of the difficulties involved, many investors don't even try to wade through the information. Retail investors may well give up entirely, but some institutional investors ' including some major investors ' farm out the task of reviewing these disclosures and, indeed, voting the investors' shares, to proxy advisory firms, such as Institutional Shareholder Services and Glass Lewis & Co.