What Is a Proxy Statement? Definition, Example, and Reading One

What Is a Proxy Statement?

By Adam Levy – Updated May 30, 2025 at 9:59 AM

Key Points

Proxy statements offer insights on board recommendations and executive compensation.
Investors can learn about compensation and conflicts of interest in proxy statements.
Reading proxy statements helps assess management’s alignment with shareholders' interests.

Many investors keep up with the stocks they own or are thinking of buying by monitoring quarterly earnings reports. The U.S. Securities and Exchange Commission (SEC) requires every publicly traded company to file a timely report of their finances every three months.

But another SEC filing that's worth your time as an investor is a company's annual proxy statement. A proxy statement is a document informing shareholders about matters to be brought forth and voted upon at the next shareholder meeting. It also contains information about the board of directors and executive compensation that can be very enlightening for current and prospective shareholders.

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Woman researching self-directed IRA providers at home at night. — Image source: Getty Images.

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A table displaying Berkshire Hathaway's executive compensation. — Image source: Berkshire Hathaway.

As you can see, Warren Buffett takes a salary of just $100,000 per year, the same salary he's taken for the past 25-plus years.

A proxy statement may also provide details on future compensation or milestone awards. For example, Tesla (TSLA -1.08%) established a CEO Performance Award in 2018 for Elon Musk with the following milestones:

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A table displaying milestones for Tesla's CEO bonuses. — Image source: Tesla.

As of the end of 2020, Musk had met one revenue milestone and three EBITDA milestones. Meanwhile, Tesla's stock price has risen to the point where Musk is eligible for all tranches upon achieving the financial milestones.

Another key piece of information investors will find on a proxy statement is a list of large shareholders and what percentage of equity interest they own and what percentage of voting interest they control. Facebook's (NASDAQ:FB) ownership table shows founder and CEO Mark Zuckerberg has full control over the company, (e.g., a majority of voting power) despite only owning 14% of the company's common stock, thanks to his control of the super-voting Class B shares.

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A table displaying Facebook's stock ownership. — Image source: Facebook.

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About the Author

Adam Levy is a contributing Motley Fool stock market analyst covering technology, consumer, and financial stocks and how policy, economic, and consumer trends shape personal finance, Social Security and retirement savings. Before The Motley Fool, Adam was a financial advisor at Edward Jones. He studied finance and electrical engineering at Carnegie Mellon University.

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Adam Levy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Tesla. The Motley Fool has a disclosure policy.