| In this memo, Pay Governance examines comment letters from investors that were submitted to the SEC in response to the agency’s proposed expansion of Non-Accelerated Filer status and Emerging Growth Company accommodations, along with submissions related to the SEC’s Executive Compensation Disclosure Roundtable. The key takeaways from Pay Governance include: 1. Large institutional investor respondents have not weighed in – The largest asset managers have not submitted comment letters, and it is unclear if they support or oppose the SEC proposal. 2. Reform should focus on usability – Commenters supported better dashboards, standardization, XBRL tagging, improved visuals, clearer metrics, and comparability. 3. Broad rollbacks face resistance – The most consistent message was opposition to $2B NAF status, exemption of 80%+ of issuers, and a blanket five-year IPO on ramp. 4. Investor respondents value transparency – Investor respondents continue to use CD&A, Pay Versus Performance, CEO Pay Ratio, Say-on-Pay, perquisite disclosure, and auditor attestation for governance and voting decisions. |
| The SEC’s proposed amendments to expand Non-Accelerated Filer (NAF) status and broaden Emerging Growth Company (EGC) accommodations and SEC Executive Compensation Disclosure Roundtable generated very few comment letters from investors. Notably absent from the comment process were many of the world’s largest index fund managers and institutional investors creating uncertainty regarding where some of the largest holders of U.S. equities ultimately stand on the SEC’s proposals. The few comment letters that were provided by institutional investor respondents were remarkably consistent. Across both the EGC proposal comment letters and the Roundtable submissions, investor respondents overwhelmingly supported maintaining existing executive compensation disclosure requirements, governance protections, and internal control standards. Opposition extended beyond traditional governance activists. Public pension funds, asset managers, labor-affiliated investors, faith-based investors and international institutional investors largely converged around the view that transparency should be improved, not reduced. |
