Securities Exchange Commission Agenda includes a number of executive compensation and corporate governance related rulemaking proposals.
On June 22, 2022, the SEC published its Spring 2022 Regulatory Flexibility Agenda. The Agenda identifies SEC Chair Gary Gensler’s priority rulemaking initiatives and rules that could be forthcoming in the next 12 to 24 months. A number of the Agenda items were carried forward from the Spring 2021 Agenda, while others are newly added or updated target dates for the issuance of rules. The Agenda includes the following rulemaking proposals on executive compensation and corporate governance related matters:
The SEC is under no obligation to meet its self-imposed deadlines under the Agenda and often does not.
Notable Commissioner Dissent
Upon the release of the Agenda, SEC Commissioner Hester Peirce issued a statement harshly critical of the Agenda. In the statement, Commissioner Peirce declared the:
Securities and Exchange Commission sets forth flawed goals and a flawed method for achieving them. The Agenda continues to shun issues at the core of our mission in favor of shiny objects outside our jurisdiction.
Ms. Peirce then launched a fusillade of criticisms against the Commission:
We used to focus on companies’ disclosure of economically material information; we now focus on disclosure of hot-button matters outside our remit. We once sought to protect retail investors; we now rush to the aid of professional investors. We once worked to help small and emerging companies raise the funds that are their lifeblood; we now work to increase their costs and shrink their investor base. We once hoped to increase the ranks of public companies by making it less costly and more beneficial to be public; we now look for ways to force companies to go public since we are making it costlier to go public and be public.
Regarding the rulemaking process, Ms. Peirce notes,
[t]he Agenda’s timetables reveal that the rush of radical rulemakings remains relentless, despite pleas from almost every type of market participant and other interested party that the Commission slow down so that the public can catch up and provide meaningful input on our outstanding proposals.
Ms. Peirce is one of two Republican appointed Commissioners, therefore her commentary may not gain much traction among the other three Democratic appointed Commissioners. Nevertheless, it may gain traction with some in Congress as well as with market constituents and, in the process, bring pressure on the SEC to rationalize its rulemaking initiatives.
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The Client Update is prepared by Meridian Compensation Partners’ Governance and Regulatory Team led by Donald Kalfen. Questions regarding this Client Update or executive compensation technical issues may be directed to Donald Kalfen at 847-235-3605 or firstname.lastname@example.org.
This report is a publication of Meridian Compensation Partners, LLC, provides general information for reference purposes only, and should not be construed as legal or accounting advice or a legal or accounting opinion on any specific fact or circumstances. The information provided herein should be reviewed with appropriate advisors concerning your own situation and issues.