A Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises held a hearing titled: "Corporate Governance: Fostering a System that Promotes Capital Formation and Maximizes Shareholder Value." The following issues were discussed: (i) institutional investor reporting; (ii) "materiality" disclosures; (iii) proxy access and related proposals; (iv) proxy advisory firms; (v) conflict minerals; (vi) the clawback provision; (vii) "say-on-pay" disclosure; and (viii) board diversity.
The Delta Strategy Group Summary listed the following "key takeaways" from the hearing:
- Darla C. Stuckey (President and CEO, Society of Governance Professionals) and Anne Simpson (Investment Director, California Public Employees' Retirement System) said the reporting requirement for institutional investors under Section 13(f) of the Securities Exchange Act for long positions (45 days) versus short positions (one day) should be updated and revised to fix the timing mismatch.
- John Engler (President, Business Roundtable) urged the SEC to make a renewed commitment to the "materiality" standard for corporate disclosures, as public disclosures should not be an avenue to drive political and social agendas within public companies.
- Three of the witnesses advocated for raising the shareholder threshold (stock holding period of one year and at the $2,000 level) for submitting proxy proposals. Ms. Simpson disagreed.
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