It’s peak proxy season, the time of year when America’s publicly traded companies make a slew of disclosures related to their annual meetings. Which means it’s a great time to witness a phenomenon that would be heart-warming were it not happening at shareholders’ expense: the generosity that top executives and directors show toward their relatives.
Transactions with related parties, which include both relatives of and entities controlled by company insiders, have a long and checkered history.
After the 2001 implosion of Enron, which used such transactions to mask its financial shenanigans, the Securities and Exchange Commission began requiring better disclosure on anything exceeding $120,000. As a result, proxy statements often include interesting information about the relatives of top executives or directors who are on the payroll or have other business dealings with the company.