DISCLOSURE DRAFTING TIPS

Welcome to my disclosure drafting tips! I hope to use this page to highlight some common errors that I find as I read annual reports, proxy statements, Forms ADV (or is that Form ADVs?), and other disclosure documents. The names have been changed to protect the innocent, but I promise: every “before” that you see here is real.

If your company has any particularly gnarly disclosure paragraphs that you want me to tackle, please send them along!

Some easy ways to trim fat

Originals

In accordance with the compensation program recommended by the Nominating and Corporate Governance Committee and approved by the Board, each non-employee director receives, following each annual shareholder meeting of the Company, a yearly restricted share unit award consisting of such number of shares having an aggregate fair market value of $185,000 on the date of grant.

 *  *  *  *

We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees (including our principal executive officer, our principal financial officer and our principal accounting officer). The Code of Business Conduct and Ethics is available on the Corporate Governance page of the Investor Relations section of our website at www.acmewidgets.com.

 *  *  *  *

To assist our Board of Directors in determining the independence of our directors, the Board has adopted Director Independence Guidelines that incorporate the definition of "independence" adopted by The Nasdaq Stock Market LLC, which we refer to as Nasdaq in this proxy statement.

 *  *  *  *

At the recommendation of the Compensation Committee, our Board of Directors adopted share ownership guidelines for our non-employee directors in July 2009, which our Board amended in 2017, and subsequently in 2019. The share ownership guidelines require our non-employee directors to hold a minimum number of shares of our common stock equivalent to five (5) times the annual cash retainer provided to non-employee directors.

Originals, with commentary

In accordance with the compensation program recommended by the Nominating and Corporate Governance Committee and approved by the Board [Do these details matter? We assume the Board approved the program, and are unlikely to care how it came about.], each non-employee director receives, following each annual shareholder meeting of the Company [what are the chances the company pegs its equity grants to someone else’s annual meeting?], a yearly [this is understood if the grants follow each annual meeting] restricted share unit award consisting of such number of shares [this is just awkward] having an aggregate fair market value of $185,000 on the date of grant.

 *  *  *  *

We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees (including our principal executive officer, our principal financial officer and our principal accounting officer) [why would anyone not think these folks are included in “all of our…officers”?]. The Code of Business Conduct and Ethics is available on the Corporate Governance page of the Investor Relations section of our website at www.acmewidgets.com [a direct URL is better if it isn’t unwieldy, and if it is unwieldy, you should fix that].

 *  *  *  *

To assist our Board of Directors in determining the independence of our directors [why else would the Board adopt independence guidelines?], the Board has adopted Director Independence Guidelines that incorporate the definition of "independence" adopted by The Nasdaq Stock Market LLC, which we refer to as Nasdaq in this proxy statement [if you insist on defining “Nasdaq,” fine, but please don’t make it ten words].

 *  *  *  *

At the recommendation of the Compensation Committee, our Board of Directors adopted [as above, do these details matter?] share ownership guidelines for our non-employee directors in July 2009, which our Board amended in 2017, and subsequently in 2019 [or these?]. The share ownership guidelines require our non-employee directors to hold a minimum number of shares of our common stock equivalent to five (5) [must you?] times the annual cash retainer provided to non-employee directors.

Rewritten

Each non-employee director receives, following each annual shareholder meeting, a restricted share unit award with an aggregate fair market value of $185,000 on the date of grant. [from 56 words to 27]

*  *  *  *

Our Code of Business Conduct and Ethics, which applies to all of our directors, officers, and employees, is available on the Corporate Governance page of the Investor Relations section of our website at www.acmewidgets.com. [from 58 words to 34]

*  *  *  *

Our Director Independence Guidelines incorporate the definition of "independence" adopted by The Nasdaq Stock Market (“Nasdaq”). [from 43 words to 16]

*  *  *  *

Our share ownership guidelines require our non-employee directors to hold a minimum number of shares of our common stock with an aggregate value equal to five times their annual cash retainer. [from 64 words to 31]