The NASPP Blog

As you begin to wrap up proxy season, it’s time to start pulling together all of those supporting documents you’ve referenced in your proxy statement into one location. Proxy reporting is undoubtedly a reoccurring event, but not one we perform on a daily or monthly basis. What often happens with these non-routine projects is when we need to perform them again, we discover we’ve forgotten how to do them or where to obtain various supporting documentation e.g., what report do I run in my stock plan database to assist me in completing my “Grants of Plan-Based Awards” table. Similarly, when we are new to a process, such as proxy reporting, we often spend too much time and energy trying to figure out how to get these non-routine projects done. If you have ever been in this position, then I’m talking to you!

To take the mystery out of these types of non-routine or novel tasks, consider using a tie-out binder. The tie-out binder can be used to leave a document trail that anyone can follow in your absence, it can educate somebody new to the job and it is a way to substantiate data.

Why so important?

First, if you leave the company, and there are no documented records about the work you did on a project, everything related to the project next time it happens becomes a challenge for your replacement. This also results in a lot of wasted time and lost work productivity for this person.

Second, just think how much easier your life will be the next time you perform the task if you don’t have to rely on your memory or the memory of your colleagues to work through a project; having to piece together work because your memory has failed you also results in a lot of wasted time and lost work productivity.

And, finally, the tie-out binder is an invaluable way to substantiate data. I can’t tell you how many times I’ve been asked, “Where did that number come from?” If you have a tie-out binder on hand, you can save unnecessary hours of searching for work papers that support the numbers you’ve reported in your filings.

What to include?

• A copy of your “as filed” proxy statement or similar document i.e., Form 10-Q or 10-K.
• Supporting documents for any numbers that appear in the filings, such as reports you generated from various databases, spreadsheet calculations and important correspondence. (These supporting documents should be arranged in your binder in a way that follows the order in which the information appears in the document.)
• A final audit of your “as filed” document to the supporting documentation mentioned above. You want to make sure that every number in the filed document matches its counterpart in the supporting documentation. This is one of the most basic, and most valuable, ways to audit your work. It is the best way to find mistakes or locate numbers that have been inadvertently transposed. It is also the best way to easily locate back-up documentation for a number referenced in your master document.

Final thoughts

This probably goes without saying, but be sure to prepare your tie-out binder prior to filing your proxy statement or other related financial reports. Doing so will give you comfort about the numbers you’ve reported in your filings and will allow you to correct any mistakes before you formally report them. Further, be sure that your tie-out binder includes a clear description of its purpose and the period of time it covers e.g., “as filed 2009 proxy statement” noted on both its cover and spine so that it can be easily located by anyone at a later point in time. Another good practice here is to keep all of your tie-out binders in a single location in chronological order at your organization. And one more thing, your tie-out binder should be neat, and free of clutter; save the clutter for a separate, more informal file.

On a separate note, I wanted to let you all know that I am handing back these weekly blogs to my colleague, Rachel Murillo, who has returned from maternity leave.  A warm welcome back to Rachel!  Thank you all for letting me blog for you over the past couple of months. I look forward to making occassional “guest appearances” here from time to time in the future.

-Robyn