The Advisors' Blog

– Subodh Mishra, ISS Governance Exchange

SEC Chair Mary Jo White, speaking Sept. 26 at the Council of Institutional Investors’ fall conference, told attendees the commission was pushing forward on governance-related rulemaking despite challenges faced by the resource-strained agency. In a question and answer session following a speech to attendees touting the agency’s enforcement record, White was noncommittal on when draft rules on clawbacks, pay-for-performance disclosures, and hedging and pledging of shares by executive–as mandated by the Dodd-Frank Act–would be put out, though stressed the agency’s commitment to deliver as quickly as possible.

Telling attendees the biggest surprise she faced upon assuming the chairmanship this spring was the “massive obligations and responsibilities” engendered by Dodd-Frank and the JOBS Act, which, she said, necessitated the creation of “parallel workstreams” to allow for the staggered and timelier roll out of draft rules. Speaking about specific rulemaking, White said she couldn’t predict when commissioners would approve a final rule on pay disparity ratio disclosures, now out for public comment, noting the agency “took seriously” all comments and reviewed them in “real time,” while cautioning that many comments are filed close to the end of 60 day rulemaking deadlines, which would draw out the process.

White also said the agency was focused on investors’ call for stronger clawback policies though noted the complexity of related rules “takes more bandwidth,” suggesting SEC staff remain months away from providing a draft rule to commissioners for consideration.

Notably, White also told attendees the agency was focused on and planned to “effect change” on mandatory arbitration provisions adopted by a growing number of companies. According to White, resolution of the issue would be dictated to some extent by state law, but the SEC does have authority to examine limits placed on the rights of shareholders through such provisions and would explore avenues for redress.

On matters related to ESG reporting, White told the largely public and labor pension fund delegates that Division of Corporation Finance staff are now focused on what may lie ahead for non-financial reporting, in response to a question regarding how the agency will address the matter as ESG reporting gains momentum.

“I worry about whether we’re doing the right disclosures,” White said. “One of things we must do is [ensure] for meaningful disclosures.” White also acknowledged questions over corporate political spending disclosures, pointing to a petition for rulemaking on the matter that at one point appeared close to being ready in draft rule form. “Given all of our mandated rulemakings, we don’t have bandwidth” to address issues beyond that which are Congressionally decreed, White suggested, noting the staff had yet to provide for any recommendations on the matter.