As Commissioner Crenshaw reminded us during yesterday’s Investor Advisory Committee meeting, as we settle back into a work routine after the holidays, she won’t be doing the same, at least not as an SEC Commissioner. The 18-month extension of her term expires on January 3.
Commissioner Crenshaw has been the only Democrat on the Commission since former Chair Gensler and Commissioner Lizárraga resigned in January 2025. The SEC will be working with a 3-0 composition, and as DealBook reports, we don’t know if or when someone will be named to replace her or to fill the fifth, currently vacant seat.
A bipartisan composition may not really impede the SEC’s ability to advance its rulemaking agenda, but DealBook says Commissioners can “force topics into open meetings, help shape internal discussions and issue public dissents,” and those public dissents apparently do more than make our blogs more interesting. The NYT noted in March that dissenting policy statements “are sometimes cited by private litigants in the courts” and “can make their way into court decisions.”
Speaking of the SEC’s agenda, this is a great time to remind you about next week’s webcast “The (Former) Corp Fin Staff Forum.” Tune in at 2 pm ET on Thursday, December 11, to hear from former Senior Corp Fin Staffers. Sidley’s Sonia Barros, WilmerHale’s Meredith Cross, Gibson Dunn’s Tom Kim, Edward Jones’ Keir Gumbs, and our colleague Goodwin’s Dave Lynn will update you on the SEC’s rulemaking agenda, Staff interpretations and disclosure review from the Corp Fin perspective.
In remarks on Wednesday at the 2025 Institute for Corporate Counsel, Commissioner Uyeda addressed such hot topics as a potential shift away from quarterly reporting, shareholder proposals and mandatory arbitration, so it might seem strange that I’m focusing this blog on his commentary on robo-voting (when institutional investors purportedly automatically follow proxy advisor voting recommendations without independent review). But whether you think robo-voting remains prevalent and a major problem, or you think the concern has been overblown, Commissioner Uyeda’s commentary — suggesting that, “depending on the facts and circumstances, funds and asset managers using [proxy voting advisory businesses (PVAB)] for voting decisions may have formed a group for purposes of Section 13(d)(3) or Section 13(g)(3) of the Securities Exchange Act” — will probably interest you. Here’s an excerpt:
Indeed, the Commission itself raised this issue in 2020 when it stated that “[u]se of a proxy voting advice business by investors as a vehicle for the purpose of coordinating their voting decisions regarding an issuers’ securities” would raise issues under the SEC’s beneficial ownership rules. Of course, a group is not formed simply because a shareholder independently determined how it wants to vote on an issue, announced its voting decision, or advised others on how it intended to vote.
The key is that the vote is based on an independent decision by the shareholder itself. If, in lieu of such independent decision-making, funds and asset managers automatically vote shares solely based on PVAB recommendation regarding shareholder proposals that have the purpose or effect of influencing control over the company and the aggregated voting power of such persons exceeds 5% beneficial ownership, such persons may have formed a group and need to file a Schedule 13D even if they beneficially own less than 5% on an individual basis.
To the extent that funds and asset managers are engaging in “robo-voting” based on PVAB recommendations, such practices should be reviewed to determine whether they comply with the Exchange Act and SEC rules. The evaluation of whether a group has been formed should take into account the business realities of the arrangements, particularly if robo-voting results in coordination of voting practices where owners of the same securities vote in tandem with each other with the effect of influencing control of an issuer. The substance of such arrangements has implications under Section 13(d) of the Exchange Act and we should not shy away from scrutinizing such consequences.
It seems (to me at least) that robo-voting has gone down in recent years, but it also seems hard to discern causation (meaning, where an investor truly automatically votes in line with a benchmark recommendation) from correlation (where there’s a high degree of alignment of votes with benchmark recommendations despite the shareholder making independent decisions). For example, we’ve blogged about how, for a substantial portion of fund families, 99% of their votes align with a proxy advisor’s benchmark recommendation. But we’ve also shared that large institutional investors largely don’t automatically vote in accordance with proxy advisor benchmark policy recommendations. This is a suggestion by Commissioner Uyeda that the SEC scrutinize these practices, so we’ll have to wait to see where this goes.
As Liz shared last week, the agenda for yesterday’s Investor Advisory Committee meeting covered a lot of ground – including regulatory changes in corporate governance, tokenization of equity securities and disclosure of AI’s impact on operations. With respect to AI disclosures, the IAC considered a discussion draft prepared in advance by the IAC’s Disclosure Committee with recommendations to the Commission to issue further AI-related disclosure guidance applicable to issuers.
Here’s an excerpt from that discussion draft:
Specifically, the Committee recommends that the Commission integrate AI disclosure guidance as part of existing disclosure items. Reg S-K items 101, 103, 106, and 303 are flexible enough to accommodate the rise in the use of AI by registrants and it may not be necessary to add a sub-chapter focused solely on AI. Issuers already provide disclosures to the markets concerning capital expenditures, R&D, Risks, Human Capital Management, Governance under existing Reg. S-K items . . .
To that end, the Committee recommends that, with respect to its AI disclosure, the Commission require issuers to:
– Define what they mean when they use the term “Artificial Intelligence”,
– Disclose board oversight mechanisms, if any, for overseeing the deployment of AI at the company, and
– Report separately on how they are deploying AI and, if material, the effects of AI deployment on (a) internal business operations, and (b) consumer facing matters.
The recommendations were informed by a March 2025 IAC panel discussion, and this topic had been on the IAC’s agenda for some time before that — beginning during the Biden Administration. IAC member John Gulliver expressed concern that the recommendations would increase disclosure requirements at a time when the Commission now looks to streamline them. For that reason, these recommendations may not get much traction in the near term. Remarks by Chairman Atkins suggest he believes existing disclosure requirements already sufficiently address AI.
[W]ith every emerging development, the question for the SEC to consider is not necessarily its novelty, but whether our existing disclosure framework sufficiently provides investors with material information about it. And on that point, I believe that investors can rely on our current principles-based rules to inform them of how AI impacts companies.
Indeed, we should resist the temptation to adopt prescriptive disclosure requirements for every “new thing” that affects a business. Our principles-based rules were intentionally designed to allow companies to inform investors of material impacts of any new development, including how AI affects their financial results, how AI can be a material risk factor to an investment, and how AI is a material aspect of their business model.
Tuesday’s webcast – “This Year’s Rule 14a-8 Process: Corp Fin Staff Explains What You Need to Know” – featuring Corp Fin Chief Counsel, Michael Seaman, Corp Fin Counsel, Emma O’Hara, Cooley’s Reid Hooper and Gibson Dunn’s Ron Mueller and moderated by our colleague Liz Dunshee addressed a ton of procedural questions on the new 14a-8 process for the 2026 proxy season. The webcast replay is already posted and available for free — even for folks who aren’t members of TheCorporateCounsel.net.
In the meantime, here are just a few of the open questions addressed during the program (subject to the SEC’s standard disclaimer):
– The Staff doesn’t need the Rule 14a-8(j) notices to be particularly long, whether or not they seek a response. The notices only need to include information required by the rule (the proposal, an explanation of why the company believes that it may exclude the proposal, which should, if possible, refer to applicable authority, like prior Division letters, and an opinion of counsel, if applicable) plus the reasonable basis representation, if you want a response.
That said, the Staff recognizes that these notices might also be written for other audiences (e.g., the proponent, proxy advisors, other shareholders and other stakeholders) and include much more detail than the Staff needs for their purposes, although the Staff won’t be doing a in depth analysis of this material since that wouldn’t accomplish the intended purpose of reducing the burden on the Staff’s time.
– If the company wants a response and includes a reasonable basis representation, there is no magic language required, and it has already taken a few forms based on what has been submitted to date (see a few examples already posted). While the announcement refers to an “unqualified” representation, you don’t need to include the word unqualified. “Unqualified” was included in the announcement to avoid the representation being subject to assumptions. The company’s inclusion of language like “we represent we have a reasonable basis” will trigger the Staff’s process to issue a response.
– With the Staff continuing to respond to Rule 14a-8(i)(1) no-action requests, they were asked about no-action requests that raise multiple bases for exclusion — for example, (i)(1) and (i)(7). To this, the Staff noted that they hope companies don’t combine other basis for exclusion with their (i)(1) requests.
Finally, keep in mind that the sec.gov shareholder proposals site remains in flux — especially as it relates to no-action letters that were submitted prior to the announcement. Keep checking back since it will make more sense as it is further updated. For example, as companies that submitted a no-action request before the announcement submit their 14a-8(j) notices, those files will be moved to their appropriate bucket depending on whether they include the reasonable basis representation (in which case they’ll be included under Responses to Rule 14a-8(j) Notifications) or not (in which case they’ll be included under Rule 14a-8(j) Notifications With No Division Response Forthcoming). (They are currently in the “no response” bucket.)
They discussed so much more — like what to do with correspondence with the proponent, what to do if a proposal is received after the 14a-8(j) deadline and how companies will consider whether to exclude a proposal, especially where there are limited Staff concurrences. Listen to the full replay for more.
Following up on its recent review of insider trading policies adopted by the SV150, Wilson Sonsini recently published a report on its survey of Rule 10b5-1 trading plan guidelines at SV150 companies. They looked at cooling-off periods, minimum and maximum terms, trading outside of the trading plan, early termination restrictions, and mandatory use of plans. This blog shares some highlights:
– A majority (53 percent) of guidelines adhere to the Rule 10b5-1 minimum cooling-off periods, but some apply longer cooling-off periods to additional personnel or impose longer durations than the minimum required in the rule.
– A significant minority (44 percent) of guidelines impose a minimum term, a maximum term, or both, with minimum terms ranging from three months to one year, and maximum terms ranging from one to three years.
– Nearly one-third (32 percent) of guidelines prohibit trading in company securities during the term of a trading plan outside of the trading plan, with some providing for limited exceptions such as dispositions of gifts.
– Many of the guidelines impose restrictions on early termination of trading plans including, for example, requiring notice or prior approval, only allowing early termination during an open trading window, or only allowing early termination when the insider is not aware of material nonpublic information.
– Only a small percentage of companies (11 percent) require company insiders to transact in company securities through trading plans, generally limited to directors, Section 16 officers, and, in some cases, other management or designated personnel.
Here’s more info on some alternative approaches to cooling-off periods:
– 28% apply the D&O cooling-off period to everyone.
– 16% of companies had approaches to cooling-off periods categorized as “other.” Of those, nine guidelines provide for the director and officer cooling-off period for directors and Section 16 officers but provide for something other than the minimum 30-day cooling-off period for all others.
– Variations include: The later of 30 days or the opening of the next trading window; the later of 60 days or the opening of the next trading window; and 90 days. Two sets of guidelines provide for the Rule 10b5-1 default cooling-off periods but include additional persons (management or other designated employees) in the director and officer cooling-off period, and one set of guidelines provides for a 120-day cooling-off period for everyone.
California climate bills SB 253 and SB 261 were sailing along towards implementation. Despite litigation challenging the laws, the lower courts initially refused to issue injunctions against them. Plaintiffs were appealing to the Supreme Court for an emergency injunction that seemed like a long shot. Then, somewhat unexpectedly, the Ninth Circuit Court of Appeals enjoined SB 261, staying the law pending the outcome of litigation. However, confusion remained as to whether this injunction applied to all in-scope companies, or only those parties to the lawsuit. The California Air Resources Board (CARB) clarified this week that it would not enforce SB 261 against any companies at this time. A recent Gibson Dunn memo discusses CARB’s statement:
On December 1, 2025, the California Air Resources Board (‘CARB’), the state agency responsible for enforcing SB 261, responded to the injunction by posting an enforcement advisory stating it would not enforce the law ‘against covered entities for failing to post and submit reports by the January 1, 2026, statutory deadline.’ Instead, CARB ‘will provide further information—including an alternate date for reporting, as appropriate—after the appeal is resolved.’
SB 261 is now in limbo, meaning companies will not be required to report on climate-related financial risk. Its counterpart, SB 253, has not been enjoined and is still set to come into force. SB 253 requires disclosures of emissions data, and the first reports are due on August 10, 2026. It’s unclear if and when SB 261 will be enforceable, but if the law survives its court challenges, then we’ll likely hear more from CARB regarding compliance timelines.
PracticalESG.com members can learn more about SB 261 and SB 253 here. If you’re interested in a full membership to PracticalESG.com with access to the complete range of benefits and resources, sign up now and take advantage of our no-risk “100-Day Promise” – during the first 100 days as an activated member, you may cancel for any reason and receive a full refund. If you are not a member, but you follow PracticalESG.com blogs, beginning January 15, 2026, those blogs will no longer be available without a PracticalESG.com membership. But there’s a new membership level just for the blogs – and sign up is live with a limited time incentive. If you obtain a blog-only membership before January 15, 2026, you can take advantage of a 50% discount off the regular first-year membership ($249.50 for a 2026 membership versus $499 regular price).
Yesterday, Chairman Atkins rang the NYSE opening bell and delivered a speech entitled “Revitalizing America’s Markets at 250.” He was introduced by NYSE president Lynn Martin, who focused her remarks on the declining number of publicly traded companies and the rising cost of going public, noting that the exchange looks forward to working with the SEC to create a simpler framework and reduce the regulatory burdens imposed on public companies.
In his speech, Chairman Atkins outlined his “vision to strengthen U.S. capital markets for the next century and what the SEC is doing now to lay that groundwork” and restated the three pillars of his plan to make IPOs great again – including disclosure reform, “de-politicizing” shareholder meetings and reforming the litigation landscape for securities lawsuits. On disclosure reform, he highlighted two main goals:
– To root disclosure requirements in the concept of financial materiality; and
– That disclosure requirements scale with a company’s size and maturity.
On materiality, he noted:
[O]ur disclosure regime is most effective when the SEC provides, as FDR advocated, the minimum effective dose of regulation needed to elicit the information that is material to investors, and we allow market forces to drive the disclosure of any additional aspects of their operations that may be beneficial to investors.
In contrast, an ineffective disclosure regime would be one where the SEC requires that all companies provide the same information without the ability to tailor the disclosure to their specific circumstances, with the only view that such information should be “consistent and comparable” across companies.
He cites the SEC’s executive compensation disclosure rules as an example of where he feels disclosure requirements have gone off the rails:
[E]arlier this year, the SEC held a roundtable that brought together companies, investors, law firms, and compensation consultants to discuss the current state of the agency’s executive compensation disclosure rules and potential reforms. Somewhat to my surprise, there was universal agreement among the panelists that the length and complexity of executive compensation disclosure have limited its usefulness and insight to investors. We need a re-set of these and other SEC disclosure requirements, and this roundtable was one of the first steps to execute my goal of ensuring that materiality is the north star of the SEC’s disclosure regime.
With respect to the scalability of disclosure requirements, he suggested:
[T]he SEC should give strong consideration to the thresholds that separate “large” companies, which are subject to all of the SEC disclosure rules, and “small” companies that are subject to only some of them. The last comprehensive reform to these thresholds took place in 2005. This dereliction of regulatory upkeep has resulted in a company with a public float of as low as $250 million being subject to the same disclosure requirements as a company that is one hundred times its size.
For newly public companies, the SEC should consider building upon the “IPO on-ramp” that Congress established in the JOBS Act. For example, allowing companies to remain on the “on-ramp” for a minimum number of years, rather than forcing them off as soon as the first year after the initial offering, could provide companies with greater certainty and incentivize more IPOs, especially among smaller companies.
Notably, in his conclusion, Chairman Atkins reiterated the ambitiousness of his agenda, saying, “But these are only the first steps in a broader effort to realign our markets with their most fundamental purpose, which is to place the full measure of American might where it belongs: in the hands of our citizens instead of the regulatory state.”
Late last month, ISS launched a PR campaign in the form of this “Protect the Voice of Shareholders” website, with the goal of correcting “misinformation about ISS and the role of proxy advisers” and helping “ensure investors’ and shareholders’ right to invest how they choose is preserved and protected.” Launched in the wake of various lawsuits and regulatoryinitiatives, the website says:
Excessive or agenda-driven regulation of proxy research firms could impair the ability of institutional investors to help ensure effective corporate governance and accountability at the companies in which they own stock, which in turn can adversely impact the retirement savings of millions of Americans. It can also undermine the free market.
Here are some facts highlighted on the site that you may or may not know:
– Approximately 90% of voted shares processed by ISS globally are tied to voting policies customized by the investor, instead of utilizing ISS’ Benchmark or Specialty policy options.
ISS voting recommendations reflect how its institutional investor clients want to vote the shares they own or manage in public companies, and the factors they deem most relevant to those voting decisions. Clients can choose these criteria by choosing from a wide array of voting guidelines, including ISS’ Benchmark policy, which is developed with input from investors and public comment, thematic ISS policies for those focused on faith-based investing, governance, or other such considerations, or customizable policies reflecting a client’s specific considerations. Clients not only choose their voting policy, but they also receive reports outlining the rationale underlying ISS’ recommendations and do not always choose to vote in accordance with its recommendations. Clients also may elect to receive shareholder meeting research that is informational only and does not include voting recommendations.
– The ISS Benchmark policy voting aligned with board recommendations on management-sponsored resolutions approximately 96 percent of the time for S&P500 companies during the 2025 proxy season.
– ISS has implemented a firewall to segregate the work of ISS-Corporate, the business unit which provides products and services to publicly traded companies, from the ISS teams preparing research on publicly traded companies: ISS Research works independently of ISS-Corporate; ISS-Corporate is physically separated and is separately managed; ISS Research team members do not know the identity of ISS-Corporate clients; and ISS-Corporate maintains a “Blackout Period” during an issuer’s solicitation so that it does not sell to issuers during that period.
To provide transparency and demonstrate the independence of our proxy research, ISS discloses to institutional clients the identity of all ISS-Corporate subscribers, the types of products and services they receive, and the fees paid to ISS-Corporate.
The website also touts ISS’s recent victories in courtrooms — as it now turns to sway the court of public opinion.
Today on CompensationStandards.com at 2:00 pm Eastern, join us for the webcast “Equity Award Approvals: From Governance to Disclosure” to hear Troutman Pepper Locke’s Sheri Adler & David Kaplan and Pay Governance’s Jeff Joyce discuss common foot faults for equity award approvals and share best practices to help you dot your i’s and cross your t’s when awarding equity in 2026. The panel will be covering the following topics:
Not Your Kindergartener’s Math: Share Counting
Planning Ahead: Award Design
Approval Formalities:
Who Approves?
What Gets Approved?
Grant Timing, Sizing and Disclosure
Documenting and Communicating Awards
Members of CompensationStandards.com are able to attend this critical webcast at no charge. If you’re not yet a member of CompensationStandards.com, subscribe now. If you need assistance, contact our team at info@ccrcorp.com or at 800-737-1271. Our “100-Day Promise” guarantees that during the first 100 days as an activated member, you may cancel for any reason and receive a full refund. The webcast cost for non-members is $595.
We will apply for CLE credit in all applicable states (with the exception of SC and NE, which require advance notice) for this 60-minute webcast. You must submit your state and license number prior to or during the program using this form. Attendees must participate in the live webcast and fully complete all the CLE credit survey links during the program. You will receive a CLE certificate from our CLE provider when your state issues approval, typically within 30 days of the webcast. All credits are pending state approval.
This program will also be eligible for on-demand CLE credit when the archive is posted, typically within 48 hours of the original air date. Instructions on how to qualify for on-demand CLE credit will be posted on the CompensationStandards.com archive page.
I know, too soon! But here we are. Memos on annual reporting and proxy season are starting to roll in. One of your early questions might be: “Do I need to make any updates to D&O questionnaires?” The answer is: not necessarily. But here are some things you may want to think through:
– Do the independence questions capture close personal friendships and other social ties with management as potentially material relationships for the board’s consideration? As this Mayer Brown alert notes, companies are taking another look at this question after an SEC enforcement action, although you may have already considered this last year.
– Do you need to update questionnaires to address EDGAR Next Form ID requirements for new directors and officers? If you haven’t already added, the alert says you should be including “whether the applicant, any account administrator, or the Form ID signer has been convicted of, or civilly or administratively enjoined, barred, suspended, or banned in connection with federal or state securities violations (noting that this requirement is not subject to a 10-year lookback).”
– Should your questionnaires collect information about skills in cybersecurity and AI? The alert says you may want to supplement your expertise questions to address the board’s fluency in “digital transformation, cyber risk, and AI governance.”
– Is your board diversity question part of a stock exchange section? If so, you may choose to move it to a general section and conform the demographic self-identification categories to the federal EEO-1 form (as Goodwin did in its form D&O Questionnaires).
With few changes, maybe this is the year to invest some time in improving the understandability and usability of your questionnaires.
