Why have institutional investors become so outspoken on corporate governance issues at their portfolio companies?

The substantial increase in activism on corporate governance issues by large institutional shareholders and asset managers qua investors has been hard to miss. Now, joining the ranks of these other enormous asset managers and passive institutional investors—such as BlackRock and State Street (see, e.g., this PubCo post, this PubCo post and this PubCo post)—Vanguard has recently announced, in its Investment Stewardship Report for 2017, that it too has been taking a more active role in advocating for effective corporate governance at its portfolio investments. But what has triggered this shift?  After all, it’s not as though these institutional investors are new to the sport—they’ve been shareholders for many, many years, but mostly of the low-key variety.  Why this noisy advocacy now?

As the U.S. moves toward deregulation, the U.K. announces new corporate governance reforms

As discussed in this PubCo post, in November of  last year, the U.K. Government published a “Green Paper”  on Corporate Governance Reform, which, in the face of rising economic inequality, sought “to consider what changes might be appropriate in the corporate governance regime to help ensure that we improve business performance and have an economy that works for everyone.” The Paper requested input on several proposals, including pay-ratio disclosure, giving employees more influence on company boards and making say-on-pay votes binding, leading to “a broad-ranging debate on ways to strengthen the UK’s corporate governance framework.” The results are now in. Corporate Governance Reform, The Government response to the green paper consultation identifies nine proposals for reform that the U.K. Government intends to advance.   The reforms, many of which would not require legislation, are expected to become effective by June 2018 to apply in the following fiscal years. Whether any of these reforms will have a significant impact—either at home in the U.K. or as an influence abroad in the U.S.—remains to be seen.

NYSE proposes rule changes related to material news and dividend notices

The NYSE is proposing two changes with regard to material news: the first relates to a limitation on the issuance of material news in the period immediately after the NYSE close, and the second relates to a delay in the effective date of the NYSE’s recent rule change regarding notice to the NYSE of dividends and stock distributions.

GAO report on gold supply chain reveals little progress in responsible sourcing

The GAO has issued a new report on conflict minerals focused in this instance on the supply chain for artisanal and small-scale mined (ASM) gold in the DRC region.  The report also addressed efforts to encourage responsible sourcing of ASM gold and sexual violence in the region since the GAO’s last report in August 2016.

SEC sets (higher) fee rates for fiscal 2018, which begins October 1, 2017

On August 24, the SEC announced that it was, once again, hiking the fees it charges issuers to register their securities. In fiscal 2018, the fee rates for registration of securities and certain other transactions will be $124.50 per million dollars, up from $115.90 per million dollars last year. 

EY study shows continued increase in voluntary audit committee disclosures among the Fortune 100

With the SEC now considering whether to approve AS 3101, the PCAOB’s new enhanced disclosure requirement for the auditor’s report (see this PubCo post), and SEC concept releases and other disclosure projects still hovering in the ether, there seems to be a steady march by companies toward inclusion of more supplemental audit committee disclosures on a voluntary basis, according to a new study  by the EY Center for Board Matters. The study, which reviewed audit committee reporting in proxy statements by companies in the Fortune 100 for 2017, showed that companies in that elite group have demonstrated “[y]ear-over-year growth in voluntary audit-related disclosures in 2017 filings … similar to that seen in 2015 and 2016, indicating that companies and audit committees continue to reflect upon and make changes to the information that they communicate to shareholders.”

Deregulation? What deregulation? Two (persistent) campaigns for enhanced disclosure requirements

Notwithstanding the deregulatory emphasis of the current administration, two campaigns are currently being waged to convince the SEC to adopt new regulations mandating more disclosure—one related to human capital management and the other related to a frequent target, corporate political spending. Are these just pipe dreams? Is it time for a reality check? Or might there be some basis for believing that this SEC might act on these requests?