SEC Form DEF 14A is a type of proxy statement the SEC requires companies to file before they hold an annual meeting or conduct a shareholder vote. A company's 14A filing contains important financial information and corporate governance committee information. Keep reading to take a deeper look at the SEC Form 14A, including SEC filing details for this proxy statement.
Key Elements of SEC Form DEF 14A
The DEF in this proxy statement's name stands for definitive. In other words, the company must certify that this proxy statement is the definitive version and not a preliminary version.
In some cases, companies can keep the filing confidential. If this box is checked, only the SEC is privy to the information contained in the SEC Form DEF 14A. The company must also select a checkbox to certify what, if any, filing fee was paid for the form.
Moving past this introductory section, the DEF 14A proxy statement requires that companies make certain mandatory disclosures in advance of the upcoming shareholder vote, including:
- Names and qualifications of nominees for director-level positions
- Executive compensation data and rationale, since shareholders get to vote on executive compensation packages in what is referred to as a "Say on Pay" vote
- Details on shareholder proposals to be voted on during the annual meeting
- Corporate governance information, including committees, corporate governance policies, and board oversight functions
SEC Form DEF 14A Filing Requirements and Deadlines
A company must file SEC Form DEF 14A whenever a shareholder vote is forthcoming. This often coincides with an annual meeting, but there may be interim votes that also require this form to be filed. The form is typically filed a few weeks before an upcoming vote. This ensures that shareholders will have adequate time to review information, including policies to be voted upon, before the meeting.
While shareholders may not exercise their right to vote, companies are nonetheless required to provide the DEF 14A to them in a timely manner. If they do not, the Exchange Act gives the SEC the right to penalize the company for failing to comply with regulations.
The SEC watches out for late or missing SEC filings. Companies are notified of their delinquency and given a chance to catch up. If the company does not take this chance or continues in its delinquency, it could face penalties, including a revocation of its registration.
Even if a company files its proxy materials on time, the SEC could decide that the disclosures do not sufficiently comply with SEC Form DEF 14A instructions. If this to happens, the SEC would issue comments to the company, essentially asking for a revision to the form.
Impact of SEC Form DEF 14A on Corporate Governance and Investor Relations
As mentioned, SEC Form DEF 14A makes key disclosures that relate to corporate governance, support transparency and educate shareholders on key priorities and issues, bolstering positive investor relations.
When preparing a DEF 14A, company stakeholders must conduct an internal review and work closely with legal counsel. This level of thorough preparation helps to ensure the DEF 14A is accurate, complete and trustworthy. Without this level of preparation, the company could find itself in a lengthy back-and-forth with SEC regulators seeking to clarify aspects of the initial filing.
It's true that some investors do not read this form, much less know what is SEC Form DEF 14A. Yet other investors study the form with a close eye to understand how the company acts on an issue that is of primary importance to them.
The DEF 14A provides the company with an opportunity to foster transparency and trust by explaining aspects of its operations. The 14A helps to set the tone on questions of executive pay, board effectiveness, and corporate actions. Does the corporate governance committee share the same priorities as shareholders do? Is this commitment born out through action, such as a policy that cements an ESG commitment?
Just as a well-prepared 14A can build trust before an upcoming vote, a poorly prepared or rushed 14A can lead shareholders to draw negative conclusions. For example, they may scrutinize a policy and decide to challenge it because they don't like it or don't understand the need for it.
The SEC Review Process and Amendments
Sometimes, the SEC comments on or requests amendments to a 14A after it has been filed. This often happens when there were not enough SEC filing details included in the original form. For example, if something was omitted or if there was a significant error made in the initial filing, the SEC may request an amendment. The SEC will also ask for an amendment if new, relevant information emerges after the DEF 14A. If a company needs to make changes or respond to comments, the first step should be thoroughly reading and understanding the SEC guidance.
Executives should share the SEC guidance with legal counsel and any advisors, such as auditors, who helped prepare the form. Working together, these parties can make revisions, document changes and respond to requests for clarification or revision. The SEC encourages companies to keep them informed during the revision process, as this can preserve the goodwill of both regulators and, in this instance, shareholders.
When all requested changes have been made, legal counsel and advisors can conduct a final review of the new DEF 14A, making sure that it aligns with regulatory expectations as outlined in the SEC's letter. Once the proxy statement is in good shape, it can be refiled with the SEC.
Not only does the 14A proxy statement convey need-to-know information to shareholders before the annual meeting, but also it is vital for corporate governance and compliance. It explains board priorities in clear language, breaks down executive pay packages and the rationale for compensation levels and summarizes company performance on metrics that matter to investors, with additional information forthcoming in an annual report.
While SEC filing details about the information contained in the DEF 14A will help companies prepare and file their 14A, many companies are looking for additional proxy statement solutions. DFIN offers a calendar that tracks SEC filing deadlines, which can help companies avoid late filings, as well as shareholder engagement resources that can help companies outline and draft their proxy statements.
