CD&A Disclosure

The CD&A is a required part of a public company's annual proxy statement. Its stated purpose is to give shareholders material information about a company's compensation objectives and policies for the named executive officers (NEOs). It also provides perspective for investors about the compensation numbers and narrative that follow. As such, the CD&A's real purpose is to explain the "compensation numbers." As everyone knows, this has become increasingly important in the last few years, primarily due to the mandatory "say on pay" shareholder vote on executive compensation. While the vote is not binding, it can get very embarrassing if shareholders do not approve executive compensation practices and policies.