sec-corp-governance

SEC Corporate Governance

Review corporate governance practices and board composition from SEC filings for public companies using the Octagon MCP server.

Prerequisites

Ensure Octagon MCP is configured in your AI agent (Cursor, Claude Desktop, Windsurf, etc.). See references/mcp-setup.md for installation instructions.

Workflow

1. Identify Analysis Parameters

Determine the following before querying:

• Ticker: Stock symbol (e.g., AAPL, MSFT, GOOGL)
• Focus Area (optional): Board, committees, policies, proposals
• Comparison (optional): Prior year, peers

2. Execute Query via Octagon MCP

Use the octagon-agent tool with a natural language prompt:

Review corporate governance practices and board composition from <TICKER>'s latest proxy statement.

MCP Call Format:

{
  "server": "octagon-mcp",
  "toolName": "octagon-agent",
  "arguments": {
    "prompt": "Review corporate governance practices and board composition from ORCL's latest proxy statement."
  }
}

3. Expected Output

The agent returns structured governance analysis including:

Proxy Statement Information:

• Filing date and annual meeting details
• CEO and key contacts

Key Governance Areas:

• Director election proposals
• Shareholder voting policies
• Governance disclosures

Data Sources: octagon-companies-agent, octagon-sec-agent, octagon-web-search-agent

4. Interpret Results

See references/interpreting-results.md for guidance on:

• Evaluating board quality
• Assessing governance practices
• Understanding shareholder rights
• Identifying governance concerns

Example Queries

Full Governance Review:

Review corporate governance practices and board composition from ORCL's latest proxy statement.

Board Composition:

Analyze board of directors composition, independence, and diversity for AAPL.

Committee Structure:

Extract audit, compensation, and nominating committee details from MSFT's proxy statement.

Director Qualifications:

What qualifications and experience do GOOGL's board nominees bring?

Governance Policies:

Review corporate governance guidelines and policies from JPM's latest proxy.

Shareholder Proposals:

What shareholder proposals are included in AMZN's latest proxy statement?

Board Composition Analysis

Independence Assessment

Category	Best Practice
Board Independence	>75% independent
Lead Director	If CEO is Chair
Committee Independence	100% for key committees
Audit Financial Expert	At least one required

Director Demographics

Dimension	What to Track
Gender Diversity	Representation percentages
Ethnic Diversity	Background representation
Age Distribution	Balanced tenure
Geographic	International perspective
Industry	Relevant experience

Director Qualifications

Qualification	Relevance
Industry Experience	Sector knowledge
CEO/C-Suite Experience	Leadership perspective
Financial Expertise	Audit oversight
Technology	Digital transformation
Risk Management	Enterprise risk
International	Global operations

Committee Structure

Audit Committee

Requirement	Best Practice
Independence	100% independent
Financial Expert	At least one designated
Meetings	Quarterly minimum
Responsibilities	Financial oversight, internal controls

Compensation Committee

Requirement	Best Practice
Independence	100% independent
Expertise	Executive compensation experience
Advisor	Independent consultant
Responsibilities	Executive pay, equity plans

Nominating/Governance Committee

Requirement	Best Practice
Independence	Majority independent
Responsibilities	Director selection, governance policies
Process	Transparent nomination criteria

Other Committees

Committee	Purpose
Risk	Enterprise risk oversight
Technology	Digital/cyber oversight
Sustainability	ESG oversight
Finance	Capital allocation

Governance Policies

Key Policies

Policy	Description
Governance Guidelines	Board operating principles
Code of Ethics	Conduct standards
Stock Ownership	Director/executive requirements
Clawback	Compensation recovery
Anti-Hedging/Pledging	Stock restrictions

Shareholder Rights

Right	Shareholder-Friendly
Majority Voting	For director elections
Proxy Access	Nomination rights
Special Meetings	Low threshold (10-25%)
Written Consent	Ability to act
No Poison Pill	Or with sunset

Antitakeover Provisions

Provision	Effect
Classified Board	Delays takeover
Supermajority	High approval threshold
Poison Pill	Deters acquirers
Dual-Class Stock	Concentrates control
Blank Check Preferred	Board authority

Leadership Structure

Chair/CEO Separation

Structure	Assessment
Separate Chair	Best practice
Combined with Lead	Acceptable with strong lead
Combined, No Lead	Concern

Lead Director

Responsibility	Description
Board Leadership	Independent voice
Executive Sessions	Leads non-management meetings
CEO Evaluation	Performance oversight
Shareholder Communication	Access point

Related Party Transactions

Key Disclosures

Type	What to Review
Family Transactions	Deals with relatives
Director Transactions	Business with directors
Major Shareholder	Controlling shareholder deals
Officer Transactions	Executive arrangements

Red Flags

1. Material amounts - Large related party business
2. Recurring - Ongoing dependency
3. Below market - Off-market terms
4. Complexity - Difficult to understand
5. New relationships - Recently established

Director Elections

Voting Standards

Standard	Description
Majority	Must receive >50%
Plurality	Most votes wins
Majority of Quorum	>50% of attending

Contested Elections

Factor	What to Track
Activist Proposals	Dissident nominees
Vote Results	Support levels
Settlement	Negotiated outcome
Proxy Fight	Full contest

Governance Benchmarking

ISS/Glass Lewis Assessment

Factor	What Matters
Board Quality	Independence, diversity
Compensation	Pay for performance
Shareholder Rights	Voting, access
Audit	Financial oversight

Peer Comparison

Compare across competitors:

• Board size and composition
• Committee structure
• Governance policies
• Shareholder rights

Governance Quality Indicators

Strong Governance

Indicator	Description
Independent Board	>80% independent
Diverse Board	Multiple dimensions
Separate Chair	Or strong lead director
Shareholder Rights	Proxy access, majority voting
Responsive	Addresses concerns

Weak Governance

Indicator	Description
Low Independence	<50% independent
Homogeneous	Lack of diversity
Entrenched	Long tenure, classified
Limited Rights	Supermajority, no access
Unresponsive	Ignores proposals

Analysis Tips

1. Check independence definitions: Companies may define differently.

2. Track tenure: Long-serving directors may be less independent.

3. Review overboarding: Directors on too many boards.

4. Assess attendance: Low attendance signals disengagement.

5. Compare to peers: Industry context matters.

6. Monitor changes: Year-over-year governance evolution.

Use Cases

• Investment screening: Governance quality filter
• Proxy voting: Inform voting decisions
• Activist analysis: Identify targets
• Risk assessment: Governance-related risks
• ESG analysis: Governance pillar evaluation