• Evaluating management is a critical component of analyzing a stock. Look
for management teams that act like shareholders, rather than hired hands.
• Get compensation information from the proxy statement—SEC form
DEF-14A. Check out how much management is paid and whether pay
varies with the company's performance. If a pay package makes you cringe,
it's too high.
• Avoid companies that give loans to executives, have many related-party transactions,
or give out too many stock options. Look for executives that have substantial
stock ownership positions.
Make sure the company discloses enough information for you to properly
analyze the business. "We don't disclose that" is often code for, "The news
is bad, so we'd rather not say."
