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Beyond Plain Language CD&As
by Frank Monahan
I honestly feel sorry for the proxy reviewers over at the SEC. They are not
happy about the writing quality of the submitted Compensation
Discussion and Analysis, henceforth referred to as the (“CD&A”) and if
present trends continue they are never going to be. All they want is a
plain language explanation of the what, how, why, when and where of
executive compensation. But that is precisely what they will never ever
get. Consequently, I’d like to put forward this Comp Guy’s proposal for a
new approach for the heretofore mentioned CD&A.
But first let me explain why the CD&A can never be written in plain
language. It can be summed up in a single word, “lawyers”, “attorneys”,
“legal counsel”, “corporate legal representatives” and dare I say,
“paralegals.” O.K. I realize that was more than one word but I wanted
you to really get the point. As long as lawyers, attorneys etc. are involved
in the writing of this key section of the proxy statement, it will never
involve anything remotely like plain language.
The truth is lawyers just can’t help themselves. It’s not that they want to
be bad. It’s just that plain English writing goes against every fiber of
their being. You don’t become a lawyer, attorney etc. by using plain
language. You become a lawyer, attorney etc. by exploiting plain
language. Having thus arrived, one can no longer go back. Once you
become a lawyer, attorney etc. you forever waive your rights to speak,
write and even think in plain language ever again. It should be noted
that paralegals still have the ability to do some speaking, writing and
thinking in plain language but such a phenomenon is limited to
weekends and holidays.
Nevertheless, our dear friends over at the SEC begin each new proxy
season with an unbridled optimism that this year it will be different.
Maybe this year the attorneys will have listened to the SEC’s clarion call
to write something that can be readily understood by non-lawyers. I’ve
done the calculations and there is a higher probability that a monkey
sitting at a typewriter will churn out a plain language CD&A before an
attorney sitting at that very same typewriter. And take my word, it’s a
statistically significant mathematical difference.
But I have a way out of this dilemma. My proposal will solve the problem
in a way that will get past the lawyers on the very first draft and will even
satisfy the good folks over at the SEC. It is a proposal that is so simple,
people will wonder why someone in the government had not thought of it
first. My proposal is this: write the CD&A using texting lingo. What better
way to get to the point than by using the no nonsense get to the point
technique used by teenage drivers everywhere. If it can’t be written with
one hand on the steering wheel and one hand on the cell phone, than it
simply cannot be submitted to the SEC.
Let me illustrate the difference between the two approaches.
Lawyer’s Version of Plain Language
The ostensible purpose of our executive remuneration methodology has
its roots in the historic foundations of our civilization and can be
attributable to an infinite number of variables including but not limited to
physiological, psychological, sociological, anthropological,
epidemiological, and some would argue greediological factors. In
recognition of the aforementioned factors and indeed some additional
yet unaforementioned factors, we have devised a plan (this is often
referred to as a “scheme” in the U.K. but outside counsel has advised
us against using the term “scheme” anywhere in this discussion save
for the two uses in this parenthetical) that is something of a recompense
for their stellar performance or at least their attendance from time to time
at what we call our corporate office. It is imperative that we allocate
sufficiently ample resources in the mutually beneficial endeavor of
soliciting the highest quality executives into our enterprise, maintaining
their loyalty for as long as we deem it expedient and to ensure their
wholehearted and full engagement whilst there. Of course, in the
unlikely event that we decide to get rid of them, we will ensure the
adequacy of alternative remuneration in almost full compliance with the
IRC Section 280G. In fact, we intend to almost fully comply with sections
279G and 281G as well.
We provide remuneration in the forms of a fixed guarantee component
which is intended to ensure our executives with sufficient liquidity for
maintenance of a lifestyle to which they have become accustomed. In
addition, we provide an annualized opportunity to double or triple the
fixed component and really start to pile on the kinds of exquisite goods
and services that their spouses or in some cases, ex-spouses
demand. Furthermore, we offer enhanced leverage opportunities with
our long term incentive program which is where the highest percentage
of upside lies. This assumes, of course that we have adequately
sandbagged the performance metrics. We also have other programs
which include planes, trains and automobiles (well, planes and
automobiles for sure) but we prefer not to talk about them in this
unfortunate political environment. We hope you understand.
Texting Lingo Version
we seek 2 attract retain n motiv8 r suits
sal LO$$$
yearly boon LO$$$$$$$
lti prog LO$$$$$$$$$$$$$$$$$$$
oder LO?????????????????????????????????????????
See what I mean. Before you can say the words, “multiple car accident”
your point has been made.
In anticipation that the SEC would invite your comments for a brief
window of time on this innovative new idea, I’d suggest you go ahead
and start texting them now.
LOL
A Comp Guy
© Frank Monahan 2009
by Frank Monahan
I honestly feel sorry for the proxy reviewers over at the SEC. They are not
happy about the writing quality of the submitted Compensation
Discussion and Analysis, henceforth referred to as the (“CD&A”) and if
present trends continue they are never going to be. All they want is a
plain language explanation of the what, how, why, when and where of
executive compensation. But that is precisely what they will never ever
get. Consequently, I’d like to put forward this Comp Guy’s proposal for a
new approach for the heretofore mentioned CD&A.
But first let me explain why the CD&A can never be written in plain
language. It can be summed up in a single word, “lawyers”, “attorneys”,
“legal counsel”, “corporate legal representatives” and dare I say,
“paralegals.” O.K. I realize that was more than one word but I wanted
you to really get the point. As long as lawyers, attorneys etc. are involved
in the writing of this key section of the proxy statement, it will never
involve anything remotely like plain language.
The truth is lawyers just can’t help themselves. It’s not that they want to
be bad. It’s just that plain English writing goes against every fiber of
their being. You don’t become a lawyer, attorney etc. by using plain
language. You become a lawyer, attorney etc. by exploiting plain
language. Having thus arrived, one can no longer go back. Once you
become a lawyer, attorney etc. you forever waive your rights to speak,
write and even think in plain language ever again. It should be noted
that paralegals still have the ability to do some speaking, writing and
thinking in plain language but such a phenomenon is limited to
weekends and holidays.
Nevertheless, our dear friends over at the SEC begin each new proxy
season with an unbridled optimism that this year it will be different.
Maybe this year the attorneys will have listened to the SEC’s clarion call
to write something that can be readily understood by non-lawyers. I’ve
done the calculations and there is a higher probability that a monkey
sitting at a typewriter will churn out a plain language CD&A before an
attorney sitting at that very same typewriter. And take my word, it’s a
statistically significant mathematical difference.
But I have a way out of this dilemma. My proposal will solve the problem
in a way that will get past the lawyers on the very first draft and will even
satisfy the good folks over at the SEC. It is a proposal that is so simple,
people will wonder why someone in the government had not thought of it
first. My proposal is this: write the CD&A using texting lingo. What better
way to get to the point than by using the no nonsense get to the point
technique used by teenage drivers everywhere. If it can’t be written with
one hand on the steering wheel and one hand on the cell phone, than it
simply cannot be submitted to the SEC.
Let me illustrate the difference between the two approaches.
Lawyer’s Version of Plain Language
The ostensible purpose of our executive remuneration methodology has
its roots in the historic foundations of our civilization and can be
attributable to an infinite number of variables including but not limited to
physiological, psychological, sociological, anthropological,
epidemiological, and some would argue greediological factors. In
recognition of the aforementioned factors and indeed some additional
yet unaforementioned factors, we have devised a plan (this is often
referred to as a “scheme” in the U.K. but outside counsel has advised
us against using the term “scheme” anywhere in this discussion save
for the two uses in this parenthetical) that is something of a recompense
for their stellar performance or at least their attendance from time to time
at what we call our corporate office. It is imperative that we allocate
sufficiently ample resources in the mutually beneficial endeavor of
soliciting the highest quality executives into our enterprise, maintaining
their loyalty for as long as we deem it expedient and to ensure their
wholehearted and full engagement whilst there. Of course, in the
unlikely event that we decide to get rid of them, we will ensure the
adequacy of alternative remuneration in almost full compliance with the
IRC Section 280G. In fact, we intend to almost fully comply with sections
279G and 281G as well.
We provide remuneration in the forms of a fixed guarantee component
which is intended to ensure our executives with sufficient liquidity for
maintenance of a lifestyle to which they have become accustomed. In
addition, we provide an annualized opportunity to double or triple the
fixed component and really start to pile on the kinds of exquisite goods
and services that their spouses or in some cases, ex-spouses
demand. Furthermore, we offer enhanced leverage opportunities with
our long term incentive program which is where the highest percentage
of upside lies. This assumes, of course that we have adequately
sandbagged the performance metrics. We also have other programs
which include planes, trains and automobiles (well, planes and
automobiles for sure) but we prefer not to talk about them in this
unfortunate political environment. We hope you understand.
Texting Lingo Version
we seek 2 attract retain n motiv8 r suits
sal LO$$$
yearly boon LO$$$$$$$
lti prog LO$$$$$$$$$$$$$$$$$$$
oder LO?????????????????????????????????????????
See what I mean. Before you can say the words, “multiple car accident”
your point has been made.
In anticipation that the SEC would invite your comments for a brief
window of time on this innovative new idea, I’d suggest you go ahead
and start texting them now.
LOL
A Comp Guy
© Frank Monahan 2009
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