SEC Seeks Comment on the CEO Pay Ratio Rule
The U.S. Securities and Exchange Commission has asked issuers to submit comments on the challenges and costs they face in preparing for the agency's CEO pay ratio rule. This Dodd-Frank mandate would require most U.S. public companies to disclose the ratio between the total compensation received by their CEO and that earned by the issuer's median employee; companies with December 31 fiscal years would have to make their first disclosures in the spring of 2018.
NIRI, which has urged the SEC to reduce the burdens of this rule, encourages members to urge their companies to express their views on this mandate. Here are links to some of the comment letters that have been submitted by issuers with NIRI members:
In addition, the National Association of Manufacturers and the Society for Corporate Governance have submitted letters that ask for relief from this burdensome mandate.
Urge the SEC to Take Action to Improve Short-Selling Disclosure
In October 2015, NIRI joined with the NYSE Group in a rulemaking petition that asks the SEC to require 13(f) institutions to publicly report their short positions. In December 2015, Nasdaq submitted a similar rulemaking petition, which has been endorsed by the Biotechnology Innovation Organization, a trade association that represents biotech companies. In a May 2016 NIRI survey, 95 percent of U.S. IR practitioners said they agree that the SEC should adopt new rules to improve short-position disclosure.
NIRI encourages members to ask their companies (or clients) to write comment letters to the SEC that support this much-needed reform to improve equity ownership transparency. A briefing paper, comment letter templates, and letters from a growing list of companies can be found on NIRI's Short Selling page.
Write Your Lawmakers in Support of Proxy Advisor Oversight Legislation
NIRI is asking members to write their U.S. House and Senate lawmakers in support of the Corporate Governance Reform and Transparency Act, which would direct the SEC to regulate proxy advisory firms. This bill was approved by the House Financial Services Committee with bipartisan support in June 2016. Rep. Sean Duffy of Wisconsin plans to introduce a similar bill this year. The Society for Corporate Governance, Nasdaq, the U.S. Chamber of Commerce, and the Business Roundtable all have expressed support for this legislation, which would mandate a draft review process and require proxy firms to improve disclosure of their conflicts of interest. In a NIRI survey in May 2016, 87 percent of U.S. IR practitioners agreed that proxy firms should be required to provide proxy report drafts to all issuers.
To find the name of the U.S. House member who represents your area, please visit this link. For a listing of U.S. senators and their office addresses, please visit this link.
Support the "Brokaw Act" to Improve Transparency Around Hedge Fund Activism
U.S. Senator Tammy Baldwin of Wisconsin is seeking bipartisan support for her "Brokaw Act" bill, which seeks to modernize the 13(d) disclosure rules that apply to activist hedge funds that obtain more than a 5 percent stake in a public company. Under current 13(d) rules, which have not been substantially updated in more than 40 years, activist funds don't have to disclose their stakes and intentions until 10 days until after they cross the 5 percent threshold, which allows these funds and their allies to continue to accumulate shares in secret. Baldwin's legislation would reduce this reporting period to two days and broaden 13(d) disclosure to include derivatives, short positions, and other instruments. In a May 2016 NIRI survey, 92 percent of U.S. IR practitioners said they support these reforms.
NIRI encourages members to write their home state senators and express support for the Brokaw Act. For a listing of U.S. senators and their office addresses, please visit this link.