sec-proxy-analysis

Analyze proxy statements (DEF 14A) to extract executive compensation, governance information, and shareholder voting matters using Octagon MCP. Use when researching CEO pay, board composition, say-on-pay votes, and corporate governance practices.

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Install skill "sec-proxy-analysis" with this command: npx skills add octagonai/skills/octagonai-skills-sec-proxy-analysis

SEC Proxy Analysis

Analyze proxy statements (DEF 14A) to extract executive compensation and governance information for public companies using the Octagon MCP server.

Prerequisites

Ensure Octagon MCP is configured in your AI agent (Cursor, Claude Desktop, Windsurf, etc.). See references/mcp-setup.md for installation instructions.

Workflow

1. Identify Analysis Parameters

Determine the following before querying:

  • Ticker: Stock symbol (e.g., AAPL, MSFT, GOOGL)
  • Focus Area (optional): Compensation, governance, proposals
  • Comparison (optional): Peer companies, prior years

2. Execute Query via Octagon MCP

Use the octagon-agent tool with a natural language prompt:

Extract executive compensation details and governance information from <TICKER>'s latest proxy statement.

MCP Call Format:

{
  "server": "octagon-mcp",
  "toolName": "octagon-agent",
  "arguments": {
    "prompt": "Extract executive compensation details and governance information from TSLA's latest proxy statement."
  }
}

3. Expected Output

The agent returns structured proxy analysis including:

Director Compensation:

  • Stock awards valued at over $3 billion collectively
  • Comparison to peer compensation levels

Governance Framework:

  • Board standards for employees, officers, and directors
  • Governance policies and oversight

Voting Matters:

  • Non-binding votes on executive compensation frequency
  • Director compensation disclosures

Data Sources: octagon-companies-agent, octagon-sec-agent, octagon-web-search-agent

4. Interpret Results

See references/interpreting-results.md for guidance on:

  • Understanding compensation structures
  • Evaluating governance practices
  • Analyzing shareholder proposals
  • Comparing to peer companies

Example Queries

Full Proxy Analysis:

Extract executive compensation details and governance information from TSLA's latest proxy statement.

CEO Compensation Focus:

What is the total compensation for AAPL's CEO in the latest proxy statement?

Board Composition:

Analyze the board of directors composition and independence from MSFT's latest DEF 14A.

Say-on-Pay Results:

What were the say-on-pay voting results for AMZN in their latest proxy?

Peer Comparison:

Compare executive compensation between GOOGL and META based on their latest proxy statements.

Shareholder Proposals:

What shareholder proposals were included in JPM's latest proxy statement and how did they fare?

Proxy Statement Components

Executive Compensation (Item 402)

ComponentDescription
Summary Compensation TableTotal pay for Named Executive Officers (NEOs)
SalaryBase salary amounts
BonusCash bonus payments
Stock AwardsEquity grants at grant date fair value
Option AwardsStock options at grant date fair value
Non-Equity IncentivePerformance-based cash compensation
Pension ValueChange in pension/deferred compensation
All Other CompensationPerks, 401(k) match, insurance

CEO Pay Ratio

ElementDescription
CEO Total CompensationAll-in CEO pay
Median Employee PayMedian worker compensation
Pay RatioCEO pay / median employee pay

Compensation Discussion & Analysis (CD&A)

SectionContent
PhilosophyCompensation objectives and strategy
Pay MixBalance of fixed vs. variable pay
Performance MetricsGoals used for incentive pay
Peer GroupCompanies used for benchmarking
DecisionsRationale for pay decisions

Corporate Governance

AreaDetails
Board CompositionDirectors, independence, diversity
CommitteesAudit, Compensation, Nominating
Leadership StructureChair/CEO separation, lead director
Risk OversightBoard role in risk management
Shareholder RightsVoting standards, proxy access

Shareholder Proposals

TypeCommon Topics
GovernanceBoard declassification, majority voting
EnvironmentalClimate disclosure, emissions targets
SocialHuman rights, DEI reporting
CompensationPay for performance, clawbacks

Compensation Analysis

Pay Components Breakdown

ComponentTypical RangeWhat to Look For
Base Salary10-20%Stability, changes
Cash Bonus15-25%Metrics, achievement
Stock Awards40-60%Vesting, performance
Options5-15%Strike price, term
Other1-5%Perks, benefits

Pay-for-Performance Alignment

MetricStrong AlignmentWeak Alignment
TSR CorrelationPay tracks returnsPay disconnected
Metric RigorChallenging targetsEasy thresholds
VestingPerformance-basedTime-based only
Peer RankMedian positionOutlier high

Red Flags in Compensation

  1. Excessive perks - Private jets, security, housing
  2. Guaranteed bonuses - No performance link
  3. Option repricing - Underwater options reset
  4. Pension spiking - Inflated pension values
  5. Golden parachutes - Excessive change-in-control pay
  6. Tax gross-ups - Company pays executive taxes

Governance Assessment

Board Quality Indicators

FactorStrong GovernanceWeak Governance
Independence>75% independent<50% independent
DiversityDiverse backgroundsHomogeneous
TenureBalanced mixAll long-tenured
OverboardingLimited seatsDirectors overcommitted
Attendance>90% averageLow attendance

Committee Structure

CommitteeKey OversightBest Practices
AuditFinancials, controlsAll independent, financial experts
CompensationExecutive payAll independent, no interlocks
NominatingBoard compositionIndependent, clear criteria
RiskEnterprise riskDefined charter, regular meetings

Shareholder Rights

RightShareholder-FriendlyConcern
Voting StandardMajority votingPlurality only
Proxy AccessAvailableNot available
Special MeetingsLow thresholdHigh/no threshold
Written ConsentAllowedProhibited
Dual ClassSingle classMulti-class voting

Voting Analysis

Say-on-Pay Voting

Support LevelInterpretation
>90%Strong approval
70-90%Acceptable
50-70%Concerns raised
<50%Failed - action required

Director Elections

Support LevelInterpretation
>95%Strong support
80-95%Normal range
<80%Significant opposition
<50%Failed (if majority vote)

Shareholder Proposals

Support LevelInterpretation
>50%Passed - expect action
30-50%Significant support
20-30%Moderate interest
<20%Limited support

Analysis Tips

  1. Track trends: Compare compensation over 3-5 years, not just one year.

  2. Read the CD&A: Narrative explains rationale behind numbers.

  3. Check peer group: Ensure peers are truly comparable.

  4. Note changes: New compensation elements or governance provisions.

  5. Follow the votes: Declining support signals concerns.

  6. Review related transactions: Conflicts of interest disclosed.

Use Cases

  • Investment analysis: Assess management alignment with shareholders
  • Governance screening: Evaluate board quality and practices
  • Activist research: Identify governance improvement opportunities
  • Compensation benchmarking: Compare pay across companies
  • ESG analysis: Evaluate social and governance factors

Source Transparency

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