A proxy statement—a report a public company files with the Securities and Exchange Commission (SEC) and distributes to shareholders in connection with its annual meeting, detailing the composition and compensation of the board of directors, who are elected by shareholders—is not generally the most captivating (or even illuminating) piece of writing.
But, though some shareholders may have been left scratching their heads at tech company Teradata’s proxy statements in the past, what they get now is a whole lot more lively, engaging, and informative. The new statement isn’t exactly a celebrity weekly, but its conversational tone and helpful infographics have replaced traditional legal language and opaqueness, and the improvement is due in no small part to the efforts of Molly Treese, the company’s chief corporate and governance counsel. She’s helping the company be more transparent with its shareholders, particularly in light of the SEC’s recent say-on-pay regulations regarding
executive-compensation disclosures in proxy statements, which have emboldened shareholders to seek out more information and make more demands regarding corporate governance and compensation programs.
Taking into account shareholder input in these areas, Teradata has, among other things, moved toward a more diverse board and extended the terms of the time periods that are used to measure performance-equity awards from one year to three years. The latter effort was a major challenge. The longer horizon had many execs tugging nervously at their collars, especially given that they work in a rapidly changing tech landscape in which a company’s fortunes can change in the blink of an eye. “A lot of people weren’t comfortable with a three-year performance period at first, but shareholders wanted it so much that we kept working to make it happen,” Treese says. “We’ve gotten there over time.”
But, even with the company doing all the right things, it knew that if shareholders lacked the endurance to get through its proxy statements, they would never arrive at that conclusion, and then all Teradata’s efforts would be for naught. This is where the storytelling ability Treese has honed over her more than twenty-five years practicing law has come in.
“I’ve always tried to understand my audience,” Treese says. “When communicating to the business as a lawyer, I’m thinking, ‘What do they need to know? What are the key takeaways I need to convey? What are the basic elements of the information I’m sharing that they need to remember?’ I bring that same attitude to our communication with shareholders. We have a great turnaround story, and it’s important that they can easily understand our story: what we’re doing and why.”
In addition to designing the revamped proxy statement, Treese has also set up calls with key shareholders to tell the company’s story. Like many software companies, Teradata has moved to a subscription pricing model, which has impacted its financial statements and made the need to communicate with shareholders even more urgent.
“We’re in a business transformation from a historic enterprise-data warehouse provider to a more nimble data-analytics company,” Treese says. “Our whole business model is changing, our financial performance is shifting as well, and revenue per share is impacted. We get less revenue up front, but it’s now on a more predictable timeline, and it’s not always easy for shareholders to understand how that benefits the company, so we’ve taken care to explain this important evolution in our proxy statement.”
Looking ahead, Treese thinks the trend toward greater dialogue and openness between companies and their shareholders will only grow. “We’re seeing shareholders having a bigger voice,” she says. “Major shareholders are trying to set the bar higher for companies. They want more diversity on the board, and they ask that executive compensation be tied to robust performance goals in a way they can understand. Equality and sustainability are going to be themes we will all be seeing more in the future. Basically, shareholders are saying, ‘We’re investing in you, and we want to see that you’re on the right path.’ We are making a lot of great changes at Teradata, and we are working hard to make it easy for shareholders to understand our progress.”
Photo by Carmen Nauseef
Thompson Hine LLP:
“Molly Treese is an innovative leader who really understands the challenges and opportunities inherent in her industry. Her thoughtful and strategic counsel has been indispensable to Teradata’s success and outstanding growth.”
—J. Shane Starkey, Partner-in-Charge, Cincinnati