Alert | October 10, 2019
Company Hedging Policies: Observations from New Proxy Disclosures
By David Gordon, Dina Bernstein, Andrew R. Lash


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On December 18, 2018, the Securities and Exchange Commission (SEC) approved final rules requiring the disclosure of hedging policies in annual proxy statements.  The rules, which became effective for proxy statements filed in fiscal years beginning on or after July 1, 2019, implement a Dodd-Frank mandate. 

We reviewed the first 40 proxies that included the newly required disclosure (covering the period from August 23, 2019 to October 4, 2019) and observed the following about the companies we examined:

  • 100% have hedging policies in place;
  • 62% have hedging policies that cover directors and all employees;
  • 58% disclose policies that prohibit both transactions in company stock with a hedging function and derivative transactions generally; and
  • 60% include their hedging disclosure only in the Compensation Discussion & Analysis (CD&A) section of the proxy statement.