Complex SEC Filings

To raise big gifts from SEC insiders, you need to understand their financial picture.

Consider a real scenario: Mr. William X, an alumnus of Bigtime University (names changed for confidentiality), had a multi-faceted compensation package from ABC Corporation, a publicly traded company that employed him as the CEO. There was a regular annual salary, as well as an annual target incentive bonus, and the stock options, and the “class M-3 prime time-based shares,” all of which added up to about $6M-$7M each year for the next four years. And then there were the “class M-3 prime performance-based shares,” which would be awarded when the company’s stock price hit two different targets. (Technically, the share price didn’t just need to hit the target: it needed to have a 60-day average that exceeded the targets.) These performance-based stock awards were worth $18M and $35M.

Although this all made it clear that Mr. X had a lot of income, and would have a lot of equity in ABC Corporation, he was also subject to minimum shareholding requirements. This meant that even though he owned lots of really valuable stock, the company required that he hold onto it. So he couldn’t do anything with it anytime soon.

All of these messy details were intricately buried in the ABC Corporation’s proxy statement, the DEF 14A filing reported to the Securities and Exchange Commission. (81 pages, not including appendices)

Part of what made Mr. X’s compensation even more complicated was the fact that his employer, ABC Corporation, had only recently gone public. Information about his past compensation and equity in the company was reported in Form S-1. (307 pages, not including appendices)

In the months after ABC Corporation went public, Mr. X also acquired and disposed of additional shares in the company. Each time this happened, there was a Form 4 on file with the SEC, detailing every transaction.

Of course this was not the first time Mr. X was listed as a public company insider in SEC filings. Prior to this CEO role, he had held an executive position at EFG Corporation, and the prior year’s 118-page DEF 14A filing detailed his complicated compensation package there, in addition to the myriad direct and indirect ways he held stock in the company. These included restricted stock units, equity incentive plan shares, deferred compensation accruals, pension benefits, outstanding stock options, and separation agreement payouts. 

Given that Mr. X was a prospective major gift donor for Bigtime University, the school was interested in understanding his financial picture so they could craft a well-informed solicitation strategy. There were several questions Bigtime U. needed to consider related to Mr. X, and their answers were buried within the hundreds of pages of DEF14A, S-1, and Form 4 filings.

You need good research, even if you don't have a full-time researcher.

Unfortunately, Bigtime U. did not have a prospect researcher on staff who could perform this complex research. To solve this problem, they enlisted the help of Itasca Partners LLC to research Mr. X’s financial situation with regards to ABC Corp. and EFG Corp. Itasca Partners dug in to the multiple forms and filings, made sense of all the pertinent details, and consolidated the most important information into a two-page summary that described the findings in addition to providing recommendations and considerations for short-term and long-term solicitation strategies.

Download a free copy of the report here!