Recently, I blogged about how you should remain vigilant when using AI to help draft disclosure – and I parsed an example to scare you into not over relying on AI. In that example, AI drafted something that was strictly boilerplate. It doesn’t know your company’s facts and it can be tone deaf. It can overgeneralize, be inconsistent and miss material facts. And it doesn’t apply judgment about materiality or investor and proxy advisor perception.
In fact, it provides a good example of the type of vague proxy disclosure that proxy advisors and investors abhor – and that plaintiffs’ lawyers could be drawn to when considering which disclosures should be a target of a lawsuit.
But there are ways that AI can help the drafting process – here are six ways:
- Create a first draft of a summary for the forepart of the proxy or a CD&A summary if one is used (or even more of the proxy once you get comfortable with AI).
- Pull together performance metrics and think of different ways to potentially lay them out.
- Analyze the proxies filed by peer companies including those in the same industry.
- Analyze whether you may need to modify who you identify as your peer group companies.
- Analyze the proxies filed by companies with similar situations and note whether there are particular disclosures that are best suited to describe the fact pattern you have.
- It can help to cross-check numbers across your various compensation tables.
Remember the warning – you must always double-check what AI produces and not blindly rely on its results…and you should always use a “closed system” AI tool when working with confidential information (including anything related to a draft of the proxy)…
Authored by
Broc Romanek