How to Read a Proxy Statement: Finding CEO Pay Data in SEC Filings
Every number on PlainCEOPay comes from a proxy statement filed with the SEC. Understanding the source document gives you deeper insight than summary data alone. This guide walks you through the sections that matter most.
The Summary Compensation Table tells you what the company reported. The Compensation Discussion & Analysis (CD&A) tells you why. Both are in the proxy statement. For a complete picture, you need both — the numbers and the board's rationale behind them.
What a Proxy Statement Contains
A proxy statement (Form DEF 14A) is one of the most information-dense documents public companies file. It covers executive compensation, board composition, shareholder proposals, audit committee reports, and more. For CEO pay research, three sections are most relevant:
The Compensation Discussion and Analysis (CD&A) is a narrative explanation of how the board's compensation committee makes pay decisions. It describes the philosophy behind the pay structure, the performance metrics used, the peer group the company benchmarks against, and why each executive received what they did. This is where you learn why the CEO got a 40% equity grant increase — was it a retention issue, a performance reward, or a market adjustment?
The Summary Compensation Table (SCT) is the standardized table that breaks down total compensation into components: base salary, bonus, stock awards (at grant date fair value), option awards, non-equity incentive plan compensation, change in pension value, and all other compensation. This is the source of the numbers on PlainCEOPay.
The Pay Ratio Disclosure, required since 2018, states the CEO-to-median-employee pay ratio. Companies must identify their median employee and calculate total compensation for that individual using the same methodology as the SCT.
The Summary Compensation Table
What it tells you: Exactly how much the CEO (and other named executive officers) received in each compensation category for the three most recent fiscal years. The total column is the legally defined measure of total compensation and the basis for the pay ratio.
What it doesn't tell you: The SCT reports grant date fair values for equity awards, not realized values. It does not show what previous years' equity awards are now worth. A CEO whose stock awards from 3 years ago have tripled in value is much wealthier than the SCT suggests. Conversely, a CEO whose recent grants are underwater has less total wealth than the SCT implies.
How to use it: Use the SCT to understand the compensation structure — what percentage is fixed (salary) versus variable (bonuses and equity). Compare the company's SCT data on PlainCEOPay against industry benchmarks to assess whether the pay level is typical for the sector.
Compensation Discussion & Analysis
What it tells you: The board's reasoning. The CD&A explains which performance metrics drive bonuses (revenue growth? EPS? TSR?), what peer group the company uses for benchmarking, and what the compensation committee believes is the right market positioning (25th percentile? median? 75th?). It also discloses any special one-time awards and the justification for them.
What it doesn't tell you: The CD&A is written by the company and reviewed by its lawyers. It is inherently a presentation document, not an independent assessment. The peer group selection, in particular, is often criticized — companies may choose peers that make their CEO pay appear moderate relative to peers, even if those peers are not the most natural comparators.
What This Means for You: A Practical Framework
Step 1 — Start with PlainCEOPay. Look up the company on our company search and review the summary compensation data. This gives you the key numbers quickly.
Step 2 — Check the industry context. Compare the numbers against the company's industry median. Is this CEO paid above or below peers?
Step 3 — Read the CD&A. Find the proxy statement on SEC EDGAR. Search for the company and filter for "DEF 14A." The CD&A section explains why the board approved the pay package — performance targets, peer benchmarking, and any special circumstances.
Step 4 — Check the peer group. The CD&A lists the companies the board uses as compensation benchmarks. Ask: are these genuine competitors of similar size and industry, or were they selected to justify a high pay number? Peer group manipulation is a well-documented practice in executive compensation.
Frequently Asked Questions
What is a proxy statement (DEF 14A)?
A proxy statement is a document public companies must file before their annual shareholder meeting. It contains executive compensation details, board member information, and shareholder proposals. The Summary Compensation Table is the primary source of CEO pay data.
Where can I find a company's proxy statement?
Proxy statements are on SEC EDGAR (sec.gov/edgar) — search by company name and look for "DEF 14A." Companies also post them on their investor relations websites.
What is the most important table for understanding CEO pay?
The Summary Compensation Table (SCT) breaks down total compensation into salary, bonus, stock awards, option awards, and other components. The total is the number used to calculate the CEO pay ratio.
Granted vs realized pay
The Summary Compensation Table (SCT) reports granted pay — what the board awarded for the fiscal year at grant-date fair value. The newer Pay Versus Performance (PvP) table reports realized pay — what the executive actually received after vesting and stock-price changes. These two numbers can differ by 5-10x for the same year. Granted pay is the headline; realized pay is what ended up in the bank account.
When a stock price falls between the grant date and the vesting date, realized pay can be much lower than granted pay. When the price rises, the opposite. PlainCEOPay surfaces both figures where the proxy provides them; the rankings page lets you toggle between granted (the conventional headline) and realized (the cash-out value).
CEO pay ratio disclosure
Since 2018, public companies must disclose the ratio of CEO total compensation to median employee compensation. This is the "pay ratio" line in the executive compensation section of the proxy. Companies can choose the methodology for identifying the median employee — most use a single year's W-2 data, but the rules allow other reasonable approaches. The methodology footnote explains the choice.
Pay ratios are not directly comparable across companies because workforce composition matters more than CEO pay. A retailer with 90% part-time hourly workers will report a much higher ratio than a software firm with 100% salaried engineers, even if the CEOs make identical absolute amounts. Read the ratio alongside the median employee figure to understand the workforce being compared.
Compensation Discussion and Analysis (CD&A)
The CD&A section comes before the tables and is the company's narrative explanation of its compensation philosophy. This is where you learn whether the board favors long-term equity vesting, short-term cash incentives, or hybrid structures. Pay attention to the named performance metrics (TSR, EPS, revenue growth, etc.) and whether targets were met — relative-TSR plans are increasingly popular and reduce pay sensitivity to broad-market moves.
Look also for the "say on pay" advisory vote results in prior years. Failed say-on-pay votes (under 50% approval) often presage governance changes in the following year.