Key facts
- The SEC proposed to end its oversight of corporate shareholder votes on topics like climate change or executive pay.
- SEC Chairman Paul Atkins stated the SEC lacks the statutory authority to oversee shareholder voting.
- New York State Comptroller Thomas DiNapoli criticized the move, stating it allows corporate management to shield themselves from accountability.
The U.S. Securities and Exchange Commission on Wednesday proposed to end its oversight of corporate shareholder votes on topics such as climate change or executive pay. Critics view this as a blow to corporate reforms and a shift of power away from investors to corporate managers, a move anticipated since last month. The SEC also proposed changes to end a rule requiring companies to produce glossy annual reports, stating they duplicate information in annual Form 10-Ks.
SEC Chairman Paul Atkins said in a statement that the Commission lacks the statutory authority to oversee shareholder voting, suggesting that states are better suited to manage this area. He noted the current environment of increased competition among states for corporate domicile as an opportune moment for the SEC to recognize these limits.
Investor resolutions on issues like carbon emissions, workforce diversity, and executive roles have been a significant part of corporate annual meetings, although their frequency has decreased in recent years. Activists are concerned that the SEC's proposed dismantling of established processes will reduce their influence on environmental matters and CEO compensation. The proposals are now open for a public comment period before further SEC action.
New York State Comptroller Thomas DiNapoli stated that the shareholder proposal process has been a cornerstone of American corporate governance for over 80 years, strengthening board oversight, improving risk management, and fostering dialogue between investors and companies. He added that the SEC's proposal allows corporate management to shield themselves from accountability.