The SEC requires additional information in the proxy statements that describe the compensation packages of a company’s top executives. A Wall Street Journal article published coon after the requirement became effective offered a list of recommendations about how shareholders might use this additional information. Included in the list: Compare executive pay with shareholder returns, check to see if executive compensation is linked to stock market performance, find out how much company stock is owned by the executives, and beware of changes in the auditor.
REQUIRED:
Explain what a proxy statement is, and discuss how each of the recommendations listed above may provide useful useful information to the shareholders.