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Corporate Comment

A Good Year

Compiling an outstanding annual report.

By Carolyn M. Saenz, AACP

March/April 2008 Table of Contents


Working for a privately held company or in a corporate legal department gives paralegals the opportunity to interact with all divisions of the company in the preparation and filing of annual reports. Publicly held corporations are required to file various reports with the Securities and Exchange Commission and the majority of those reports can be filed online through EDGAR (See www.sec.gov). Shareholders and investors are interested in seeing the financial results of a company, and potential investors want to know if the services or products bear further scrutiny for investment. Paralegals can be part of the team that produces the proxy, the notice of annual meeting of shareholders, the proxy statement and the annual report.

Pertinent to the Proxy

The proxy should have a date line, signature line and a space for printing the shareholder’s name. Also include information as to how the proxy should be filed (many are filed with the secretary of the corporation), and the deadline (the date and time). Regarding the time, be sure to include the applicable time zone where the meeting will take place (e.g., Eastern Standard Time, Central Standard Time, etc.). Some states, such as Indiana, Arizona and parts of Kentucky do not observe daylight saving time. The proxy and ballot will generally need to be returned to the secretary of the corporation via fax, e-mail or regular mail.

Since the candidates for various offices will be listed in the proxy statement, the paralegal should compile the candidate’s name, the office for which he or she is running, the term of office and a biography. Try to keep all the biographies the same length. If there are multiple candidates for the same office, be sure to list the names in alphabetical order. The biography should include the age of the candidate, his or her work history, and information regarding post-high school education and any special certifications or licenses. If the candidate was previously a director of the corporation, list the date when he or she was first elected.

If the person is an “inside” director, this also should be noted in the biography. Most public corporations have a mixture of “inside” and “outside” directors to give balance to the board as to corporate experience, and many board positions have staggered terms.

Note that if any titles are used, for example, “Esq.,” then all the candidates should be given titles, such as: Jennette Brown, Esq., Mr. Abraham Graham and Dr. Sheila Woods. Titles are optional, but the courtesy should be applied uniformly.

The paralegal should keep in mind that the type size and format of the proxy might be modified by the printing company because the draft document might not be prepared in the exact type style with margin justifications, columns, etc., so be sure to check with the financial group or advertising group to see what the preferred type style is.

A Brief Note About Ballots

Paralegals can draft the ballot, which is much briefer than the proxy but contains similar information. Ballots should include the corporation’s name, the date of the annual meeting, a list of the candidates’ names and the offices for which they are running. In addition to the candidates’ names, include boxes to be checked by the shareholder and an additional box for write-in candidates’ names. Always include a signature line and date on the ballot as well.

Giving Notice

The Notice of Annual Meeting of Shareholders is separate from the proxy, but it also can be combined with the proxy statement. If the proxy is a lengthy and detailed document, the Notice can be prepared as a separate document. The Notice should contain the title “Notice of Annual Meeting of Shareholders” with the current date.

The Notice also should state how the shareholder can vote if he or she can’t attend the meeting in person. Votes can be made in person, electronically via the Internet, by facsimile or by giving a ballot and proxy to another shareholder to hand to the secretary of the corporation.

Some large corporations give admission tickets for attendance to the annual meeting, and these tickets are mailed along with the proxy and the notice. If the meeting is off-site at a theater or convention center, using admission tickets helps determine the security that will be needed to admit only shareholders. You should check with the marketing group to find out if arrangements need to be made to have tickets printed.

Compiling the Annual Report

Paralegals are able to gather and coordinate much of the information needed to compile the annual report. The report is a snapshot of the activities of the past year and future plans. Corporations frequently utilize the annual report to showcase their company.

The cover of the report customarily has the company’s logo on it with the corporation’s name. Paralegals can work with the advertising department’s layout artist to decide how the information will be placed in the report. Be sure the copyright notice is placed somewhere in the report.

The first page of the report will be an index, which should be left as the last task so that the page numbers and index match. The message from the chairperson of the company will appear next, along with a recent photograph. You can offer to assist the advertising group in scheduling the photography session for the chairperson and anyone else who will be included in the annual report. Be sure to advise the officers and directors well in advance of their photography session, and consider suggesting possible venues for the sessions. Many companies prefer to use a park or their city as a background in the photographs, rather than the formality of the board room.

The chairperson’s message should reflect the income, revenue and earnings for the year (make sure that these numbers match what is reported in the 10-K reports filed with the SEC), a brief history of the company and other information. For example:

  • Did the corporate headquarters relocate?

  • Has the company sold or acquired any subsidiaries in the past fiscal year?

  • What has the company done regarding technology? (This is always a “biggie” in today’s world of identity theft.)

  • Were there any promotions of, or changes in, the officers of the corporation?

  • How does the company rate with Standard & Poor’s and the Dow Jones Industrial Averages?

  • What was the highest dividend paid over the past year?

The language in the chairperson’s message should be written in plain English so that “nonfinancial” individuals can readily understand the information. Include a statement indicating that the more detailed financials are reflected in the 10-K report. Ask the chairperson to sign the message so that the signature also is reproduced in the annual report. If you are given the liberty of editing the chairperson’s message, keep your target audience in mind. Completing this task gives any paralegal the opportunity to show off his or her writing skills.

The annual report also should include an organizational chart showing the structure of the corporation and indicating the major subsidiaries. This can be set out in block form, utilizing different colors to reflect the structure. At the top of the chart, a short statement about the corporation should explain the chart. Since the chart probably will be based on the chart from the previous year, be sure to check minute books and other corporate documents to make sure that all acquisitions, sales and mergers are listed correctly.

On another page, the financial highlights of the past fiscal year should be presented by using a bar graph, reflecting the net income with comparisons to last year. Financial pages are an opportunity for a company to flaunt its “bragging rights” and the advertising group generally has input on this portion of the report.

Other financial highlights should show the Consolidated and Condensed Financial Statements for the past fiscal year, with comparisons to last year. These pages should be printed on white paper so that they are easy to read. Paralegals can get the information from the financial group so it can be formatted for the annual report. Financials frequently are shown with some zeroes missing, so be sure to state the numerical denomination. (For example, “amounts in thousands.”)

Other sections of the annual report might reflect the individual subsidiaries, the products and services, and the markets served and distribution channels. With diverse corporations, it can be helpful for the report to show the geographic locations of the various entities. Toward the end of the report, list the senior management team (include photographs where possible) with names and titles. Again, be sure to check the corporate minute books and records so names and titles are correct.

In today’s competitive environment, many corporations participate in community events and fundraisers, or make contributions to charities. Compile this type of information, along with photographs from the events, and draft a page about these contributions to include in the annual report. Photographs of employees also should be part of this section and the paralegal can schedule photography sessions.

Following the community events section, there usually is a statement from the corporate compliance officer regarding the ethics of the company, as well as the company’s commitment to providing high-quality products and services as a world-class organization.

At the end of the annual report, include a statement, generally written as a letter, by outside auditors as to the financial condition of the corporation. Also, be sure to include the corporation’s name, physical address and a toll-free telephone number.

Once you have compiled these documents, they should be circulated to all officers, directors, financial and marketing persons, and others for review and comment. Make sure you are aware of deadlines for the draft, final preparation and printing, so that the mailing to the shareholders is in compliance with the corporation’s regulations and SEC requirements.

Careful Preparation

The compilation and drafting of the reports and documents that are a part of the fiscal year-end package are critical because they highlight the successes and health of the corporation. The para­legal’s skills and effort are very important because of the accuracy and care needed in the preparation of the documents. Numerous managers and senior officers might view the reports, as well as the shareholders and security analysts. An accomplished paralegal certainly can take pride in being part of such a team.


A Sample Proxy

BE IT KNOWN that I, _________, the undersigned shareholder of XYZ Corporation, hereby constitute and appoint the Secretary of XYZ Corporation as my true and lawful attorney and agent for me and in my name, place and stead, to vote as my proxy at the Meeting of Shareholders of the said corporation, to be held on the ____ day of ______ 2008 or any adjournment thereof, for the transaction of any business which may legally come before the meeting, and for me and in my name, to act as fully as I could do if personally present; and I herewith revoke any other proxy heretofore given.

WITNESS my hand and seal this ____ day of _______ 2008.


_____________________________(print name)


A Sample Notice of Annual Meeting of Shareholders

The 20th Annual Meeting of XYZ Corporation will be held at 9:00 a.m. on Friday, July 13, 2008, at the corporation’s headquarters, 2 Anywhere Street, Suite 200, Anytown, OH 00021. All shareholders of XYZ Corporation are encouraged to attend the meeting and participate in matters coming before the corporation, including the election of directors of XYZ Corporation.



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