January 13, 2023
Glossy Best Practices
Alas, the Information Age has robbed us of many of life’s little pleasures, including access to hard copies of glossy annual reports. Nonetheless, the glossy annual report remains a fixture of the proxy solicitation materials that are required to be delivered to shareholders during each annual meeting cycle. In an effort to save costs and in recognition of the fact that the glossy annual report likely serves much less of an investor relations purpose when it is available electronically to shareholders, some companies have transitioned to a “wrap” format, where the Annual Report on Form 10-K is wrapped with a few extra pages that include the extra glossy annual report information and some additional IR messages, such as a letter from the CEO and/or the Chairman. I always try to remind folks of a couple things about their glossy annual report:
– Make sure the glossy annual report satisfies all of the informational requirements of Rule 14a-3 (or Rule 14c-3 in the case of information statements).
– The glossy annual report is a public document, so it is subject to the non-GAAP financial measure disclosure requirements in Regulation G. It is not a “filed” document, so it is not subject to the more stringent non-GAAP financial measure disclosure requirements in Item 10 of Regulation S-K.
– The glossy annual report should be subjected to the same disclosure controls and procedures as your SEC filings, even though it is not a “filed” document.
– Treat the statements in the glossy annual report as you would any other public statements, and try to avoid any material misstatements or omissions in the glossy annual report that could subject the company to liability under the antifraud provisions of the federal securities laws.
We here at TheCorporateCounsel.net have some excellent resources available for you in our “Glossy Annual Reports” and “Form 10-K Wraps” Practice Areas. Be sure to check out our “Annual Report & Form 10-K Wrap Handbook,” which provides comprehensive guidance for preparing and submitting your glossy annual report. If you do not have access to these resources, I encourage you to sign up today.
– Dave Lynn