If you’re joining a publicly listed company at a senior level, the best way to research in advance of negotiations is to look up their proxy circular (note: also called a management information circular, proxy statement, DEF14A or notice of meeting, but I’ll use proxy circular for ease of reference). A proxy circular is a document that public companies are mandated to produce annually and publicly disclose. It’s similar to an Annual Report, except instead of financials, it focuses on Board of Director profiles and governance, executive compensation levels and design, performance, and talent priorities. It gives you an inside look at how executive compensation decisions are made, which can give you a significant advantage in negotiations.

Reviewing the proxy circular is most helpful for C-suite level executives given these are the executives who have their pay disclosed (the CEO, CFO and next three highest paid executives in the company). However, it's also important for any senior level employee to see how the company thinks about compensation, how they pay their people in practice, and how the bonus programs and equity work. The more information you have, the better position you're in to negotiate.

You can find the proxy circular on SEDAR (Canada) or EDGAR (US). Additionally, many companies have them included in the Investor Relations section of their website. While they can be daunting, there are certain parts that are both worth your time and quick to review. I’ve outlined the five main items you should review in a proxy circular below.

1. Summary compensation table. If you only have five minutes, this is the one section I would look at. This table outlines the salary, bonus, equity compensation and other perks of the CEO, CFO and next three highest paid executives in the company. It shows their compensation for each of the last three years, and includes sign-on awards and one-time grants. This provides you with an in-depth look at how the top executives in the company are paid over time. If you’re joining the C-Suite, it essentially shows you exactly what your peers make. If you’re joining another executive level, it gives you great insight into the company's pay mix and levels.

  • Note this table shows compensation that is paid out, not target compensation. A new offer might include a $225K salary, $75K target bonus and $100K stock option grant. However, the actual compensation paid out in a year (and reflected in a summary compensation table) might be $223K salary (based on different pay periods in the year), $90K annual bonus (given company performance was above target), $100K stock option grant, and a one-time award of $40K. Target compensation and what is actually paid out in practice can be quite different.

2. Bonus plan design. Most proxy circulars will outline the target bonus amounts for each executive. For example, a target bonus of 50% of salary for the CEO, and 40% for the other executives. This will give you an idea of what level of bonus to expect based on what level of role you’re going into, and where there may be room for negotiation. Additionally, you should be able to see the metrics used to assess bonus payouts. Are they based on individual performance, company metrics like revenue or operating income, or a mix? This can help you assess how likely it will be to achieve bonus payouts.

3. Equity plan design. Understanding how equity is designed is so important in being able to negotiate it. Equity is complex, and often unique to each company, so reading this section in detail can help you see where there may be room to push. Equity is where the material wealth is often made, and anecdotally I have seen women negotiate equity much less than men, and there is a study that supports this: the Rutgers Institute found male employees held an average of $105K in company shares, whereas women only held $26K. There are many ways to get creative around what you ask for with equity, especially in sign-on awards and multiple year equity cycles, so make sure to utilize this section.

4. Historical payouts and upcoming changes. Proxy circulars will most often outline how the bonus has actually paid out over the last few years. This is important for determining how tough the bonus goals are, and what kind of bonus you can expect. Similar to bonus, how has the equity paid out? Have they granted any one-time awards or used Board discretion for payouts? You can also look to the future as companies often disclose upcoming program changes, in both pay design and pay levels. This can be helpful to make sure what you’re negotiating for is most relevant to the programs they have in place now.

5. Peer group. A company’s peer group is who they look to when they set pay levels. For example, Microsoft looks to the compensation of Amazon, Apple, and Facebook (among others) when setting their executive pay. Most companies will have a group of 10-15 peers that are similar to them in industry, location, size and scope. This is great insight to help you triangulate what compensation you'll be asking for. As an example, if you’re entering a Chief Operating Officer role at a company but that role doesn’t currently exist, you can look at how your peers pay their Chief Operating Officers and use that to inform your negotiations.

6. Compensation philosophy. Every company (should) have a unique strategy, and within that a unique compensation philosophy which guides how they pay their people. While sometimes these can be generic, there also can be great information within them. For example, what pay positioning does a company target (higher than peers or lower than peers?) Does the company have heavily performance-based compensation (bonus and equity) or do they focus more on salary? What factors does the company take into account when setting pay levels? This will provide you with the framework of how a company makes pay decisions, which you can build your negotiation around.