I just finished reading Tim Beyers' breakdown of Akamai's
The simple answer? Very important. It may sound blasphemous, but the proxy can be just as important to shareholders as the 10-K, especially when it comes to evaluating management's integrity. Yes, I hear you screaming at me that nothing's as important as the 10-K. But let me take you through my twisted logic.
As an informed shareholder who is intimately familiar with your investments, annual reports may provide some surprises, but generally require little more than checking financials, comparing statements to last year, and looking for what's changed (which, granted, could be a lot).
The proxy, on the other hand, offers a glimpse into the minds of the directors and management you won't get in the 10-K. The proxy is where you meet the directors and see how the board is structured. And since executive pay is one of the board's responsibilities, you can read about that also -- something I would consider key to evaluating the integrity of these powerful individuals. Let's look at some examples.
In Duke Energy's
Or perhaps you own shares in storage giant EMC
Finally, if you want an example of a company where management's interests are truly aligned with shareholders', take a look at Univision's
There are many wonderful pieces of information in a proxy statement that you won't find elsewhere, and shareholders who ignore it do themselves a great disservice, particularly when it comes to evaluating company management.
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Fool contributor Chris Mallon doesn't like giving stock options as compensation, and he owns shares of Duke Energy and Univision through his private investment partnership.