Bringing color to the proxy statement
At Home Group went public in 2016 and filed its first proxy statement in 2018. At that time ‘there was no color, no cover page, no bells or whistles, and we thought that was sufficient to cover our interests,’ says Meredith Hampton, vice president and associate general counsel of At Home. In 2019 the company faced its first say-on-pay vote and received only 49 percent support.
It was a wake-up call that something needed to change, and the response was two-fold: At Home needed to talk to its investors and understand what their expectations were in terms of executive compensation, but also needed to explain At Home’s compensation plan more thoroughly.
Hampton worked with DF King on a robust shareholder outreach plan, and benefited from the involvement of Larry Stone, who was serving as At Home’s lead independent director at the time and who remains chair of the compensation committee. As a company that had entered the public markets under a private equity sponsor model, the team quickly learned about the disclosure expectations placed on public companies.
‘It’s not that our investors were necessarily disagreeing or felt they wanted us to do something differently,’ Hampton says. ‘A lot of the time the questions they were asking and the conversations we were having were about misunderstandings or information they didn’t receive, information we thought we had put into the proxy statement. That’s when we realized [the importance of] the presentation of the information – how you actually get it in front of people – because people are busy and going through these as quickly as they can.’
The proxy statement uses infographics, charts and other visual cues to tell the story of a company that is adopting expansive disclosure regarding the executive compensation program and process. At Home’s proxy statement also includes a welcome letter from Stone, separate from the opening letter from the company’s chairman and CEO Lewis Bird.
In his letter, Stone dedicates 700 words to thoughtfully outlining what the company learned from its unsuccessful say-on-pay vote, its shareholder engagement, its subsequent compensation committee meetings and its process of drafting the proxy statement.
His letter also contains a helpful section outlining how the board responded to the Covid-19 pandemic and the role it played in oversight of the business transition during that period. That context helps to outline some of the compensation discussions that follow.
At Home’s proxy statement further presents a ‘graphic on what we heard and why we were where we were [with our] compensation philosophy,’ Hampton says. ‘[We discussed] how that has evolved as we went from our private equity sponsorship into a full public company model. And then what we heard in the outreach, who we reached out to and how we were going to reflect that.’
Hampton and the cross-functional team – which included representatives from legal, investor relations, outside counsel, a proxy design firm, a proxy solicitation firm, an independent compensation consultant and a financial printer – credit the process of engagement and enhanced disclosure with the 97.5 percent say-on-pay support the firm received this year.
To demonstrate such progress in proxy disclosure in such a short space of time is an impressive feat. Hampton says the team drew inspiration from a wide variety of sources, looking at other companies' proxy statements, best practice white papers and industry publications to determine how to present the At Home story in a visually compelling and digestible manner. She adds that it was a case of looking at many proxy statements ‘that we tried to emulate – it was a real cut and paste.’
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