Transparency Takes a Hit, but Some Proxies Shine in New Rankings

Labrador reports transparency took a step back this year among S&P 100 companies, as overall transparency scores slipped from an average of 49% to 44%.

The culprit? The current risk environment in the U.S. that has companies proceeding with caution around DEI and sustainability disclosures.

Still, many companies were recognized for their standout disclosures.

This year’s overall winner: Lowe’s, with runners-up including AIG, American Express, ConocoPhillips, and Dow.

Other standout performers:

• Lockheed Martin: Best Proxy Statement
• Johnson & Johnson: Best Plain-Language Proxy
• Dow: Best Sustainability/ESG Report

Proxy Statements: A Silver Lining. Interestingly, while overall transparency dipped, companies are getting better at telling their story in key areas. Average scores for proxies climbed from 48% to 52% with improvements in connecting board skills with corporate strategy, and emphasizing director roles in long-term value creation.

And companies continue to focus on the big-picture:

• Letters from leadership are on the rise (24% now issue a joint Chair/CEO + Lead Independent Director letter, up from 17%).
• Mission, vision, and purpose statements are featured up front in 50% of proxies (up from 45%).
• Graphics and visuals are more common in company overviews (64% vs. 51%) with increases in peer comparison graphics and executive pay scorecards/summaries.

• Risk oversight discussions explain how Boards, Committees, and management divide risk responsibilities (75% up from 64%).

While proxies are getting prettier, they’re also getting longer. The average length has stretched again—now 111 pages, up from 107.

The Bottom Line. Proxy disclosures could see a big makeover if the SEC amends current disclosure rules.  We will hear about the status of these potential changes from Luna Bloom, Chief, SEC Office of Rulemaking at the Center’s annual meeting on November 5-6^th. Register now to be a part of the discussion.