How to Read a 10-K
Although learning how to read a report sounds daunting, you might be surprised at how much valuable information they offer.
PART III
These items cover the following topics.
Item 10 "Directors, Executive Officers and Corporate Governance" requires information about the background and experience of the company's directors and executive officers, the company's code of ethics, and certain qualifications for directors and committees of the board of directors.
Item 11 "Executive Compensation" includes detailed disclosure about the company's compensation policies and programs and how much compensation was paid to the top executive officers of the company in the past year.
Item 12 "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" requires information about the shares owned by the company's directors, officers, and certain large shareholders, and about shares covered by equity compensation plans.
Item 13 "Certain Relationships and Related Transactions, and Director Independence" includes information about relationships and transactions between the company and its directors, officers, and their family members. It also includes information about whether each director of the company is independent.
Item 14 "Principal Accountant Fees and Services" requires companies to disclose the fees they paid to their accounting firm for various types of services during the year.
Although these disclosures are required by the 10-K, most companies meet this requirement by providing the information in a separate document called the proxy statement, which companies provide to their shareholders in connection with annual meetings. If the information is provided through the proxy statement, the 10-K would include a statement from the company that it is incorporating the information from the proxy statement by reference – in effect directing readers to go to the proxy statement document to find this information. Keep in mind that the proxy statement is typically filed a month or two after the 10-K. For more information on proxy statements and shareholder voting in corporate elections, see the SEC'sSpotlight on Proxy Matters.