In the latest issue of The Corporate Executive, I published a piece titled “An Ode to Shareholder Engagement: Turning the Page in 2026.” In the article, I posit the potentially controversial thesis that the “modern” era of shareholder engagement – which was ushered in by the advent of the Say-on-Pay requirement in 2011 – has ended, and in 2026 we enter a new era for engagement that is marked by significant technological, business and regulatory changes that could have an enduring impact on the shareholder engagement landscape for public companies.
Looking back 15 years to the dawn of Say-on-Pay, we can observe that the seemingly innocuous advisory, non-binding vote on executive compensation certainly changed the game when it comes to shareholder engagement. In the article, I recount the practices that developed to facilitate robust engagement with shareholders on executive compensation, corporate governance matters and any number of ESG issues. The article notes:
A positive outcome of these “modern” engagement efforts is that companies and institutional investors were generally able to have an active dialogue about the issues that were important to both the companies and the institutional investors. While criticism has inevitably focused on the extent to which asset managers and proxy advisory firms articulated a specific agenda through their proxy voting guidelines and company engagements (particularly on topics such as climate, ESG and DEI), companies were at least able to benefit from the opportunity to present their perspectives for consideration by significant shareholders, and in many cases both sides benefited from the exchange of viewpoints.
The article notes that the curtain began to fall on the modern era of engagement last year, with the Corp Fin guidance indicating that the ability to file on Schedule 13G could be jeopardized when an investor explicitly or implicitly conditions its support of one or more of the company’s director nominees at the next director election on the company’s adoption of its recommendation with respect to certain governance and ESG matters, or when the investor states or implies that it will not support one or more of the company’s director nominees at the next annual meeting unless management makes changes to align with the shareholder’s expectations as articulated in its voting policies. Beyond the immediate impact of shutting down engagement meetings for a brief period at some asset managers, the long-term impact has been to make shareholder engagement activities more one-sided and potentially less effective. The trend calls into question the utility of engagement with certain asset managers, and while companies continue to seek out engagement opportunities, the incidences of productive engagement meetings seem to be on the decline, at least anecdotally.
The article also addresses significant changes on the investor side of the equation, with the Big Three announcing the establishment of separate stewardship teams focused on differing investment strategies during 2025 and the rise of “voting choice” or “pass-through” voting programs, which permit institutional and some retail investors to direct how their shares held by the fund are voted on proposals considered at company annual meetings. As these voting choice programs are adopted more widely, companies will have a more difficult time trying to understand how shares directed by the fund holder will be voted on proposals, altering the efficacy of engagement with a particular asset manager. Companies ultimately may need to pivot to much more “public” solicitation efforts that seek to reach the unknown investors participating in these voting choice programs.
Finally, I address the “elephant in the room” for engagement, and that is the role of the proxy advisory firms. Earlier this year, we have seen artificial intelligence enter the field, with JPMorgan Chase and Wells Fargo announcing plans to replace proxy advisory firms with internal proxy voting analysis powered by AI. At the same time, the proxy advisory firms are in the crosshairs of Texas, Florida and the federal government, with the outcome of legislation, rulemaking and investigations yet to be seen. Amidst the turmoil, Glass Lewis announced last Fall a pivot toward helping clients with more bespoke voting advice rather than maintaining a house policy, with these efforts facilitated by AI-powered technology.
If we have indeed entered the “post-modern” era of engagement, what will that mean for companies? Companies should continue to seek to engage with investors on executive compensation, governance, ESG and other matters (even if the investors are not necessarily engaging with them), and we should all be cognizant of the increasing role that technology plays in the voting recommendation and decision-making process when preparing proxy statements and other investor communications.
If you do not have access to all of the practical insights that we provide in The Corporate Executive, I encourage you to email info@ccrcorp.com or call 1.800.737.1271 to subscribe to this essential resource!
Yesterday, the SEC’s Investor Advisory Committee met to discuss public company disclosure reform and proxy voting by funds, and to consider a recommendation regarding the tokenization of equity securities.
On the topic of disclosure reform, the remarks of Chairman Paul Atkins noted a goal of moving to “a minimum effective dose of regulation” by using materiality as the north star, scaling disclosure requirements with a company size and maturity and moving away from “regulation by shaming” in the SEC’s disclosure requirements. In her remarks, Commissioner Peirce emphasized that disclosure reform should address companies spending a lot of time and attention preparing disclosures that may obfuscate, rather than add to the mix of information on which investors rely, citing certain mandatory executive compensation tables. The remarks of Commissioner Uyeda noted that effective disclosure requires significant effort, and that the SEC should consider reforms to reduce unnecessary burdens on public companies without compromising investor protection and capital raising.
In the panel discussions on disclosure reform that followed, panelists discussed the importance of financial statements and MD&A to investors. A panelist noted that the Commission could provide more guidance as to the standard of materiality, recognizing that materiality determinations with respect to any given topic can vary from company to company based on their circumstances. The panel explored the pros and cons of moving away from quarterly reporting, as well as the concept of more scaled disclosure based on company size. The length and complexity of risk factor disclosure was discussed, and the panelists identified several areas of Regulation S-K that could be significantly revised or eliminated.
Before I relinquish control of the blog this week, I want to take a moment to congratulate Meredith Cross, who will be receiving the William O. Douglas Award at next week’s dinner held by the Association of Securities and Exchange Commission Alumni (ASECA). Since 1992, ASECA has awarded the William O. Douglas Award annually to an SEC alumnus who has contributed to the development of the federal securities laws or served the financial and SEC community with distinction. For those who may not know, William O. Douglas served as Chairman of the SEC from 1937 to 1939 before being appointed to the Supreme Court by President Franklin D. Roosevelt in 1939. Suffice it to say, if there was a Mount Rushmore of federal securities law legends, William O. Douglas would most certainly be memorialized there.
I cannot think of anyone more deserving of the esteemed William O. Douglas Award than Meredith Cross. For the entirety of my career, Meredith has exemplified for me what it means to be the best of the best in our profession. She served at the SEC in two different tours, holding numerous senior positions in the Division of Corporation Finance, including as Director of the Division of Corporation Finance from 2009 – 2013. In private practice, I learned everything I needed to know about being an effective public company counselor from Meredith, as she is the go-to person for so many public companies, particularly when they find themselves in a crisis. Through her work at the SEC and in private practice, Meredith has truly been one of the most influential people in the federal securities laws, and she has always been so generous with her time in sharing her knowledge at our conferences and on our webcasts.
For me personally, I am incredibly fortunate to count Meredith as a friend and mentor. Liz and I recently spoke with Meredith about mentorship on the “Mentorship Matters with Dave & Liz” podcast, and I encourage you to listen to our wide-ranging discussion of the importance of mentorship. I can attest to the fact that mentorship truly does matter, because without Meredith’s inspiration and mentorship, I would not find myself where I am in my career today.
So, with all that said, congratulations to Meredith Cross on receiving the William O. Douglas award!
Yesterday, I addressed the efforts toward harmonization between the SEC and the CFTC, which may ultimately lead to cohabitation of the two agencies at the SEC’s Station Place headquarters, and later that day the SEC and the CFTC announced the signing of a historic Memorandum of Understanding to guide their coordination and collaboration. The announcement states:
The Securities and Exchange Commission and the Commodity Futures Trading Commission today announced that they have entered into a Memorandum of Understanding (MOU) to guide coordination and collaboration between the two agencies to support lawful innovation, uphold market integrity, and ensure investor and customer protection. The MOU reflects both agencies’ commitment to provide fair notice to market participants, respect individual liberty, and foster lawful innovation with the minimum effective dose of regulation to enhance U.S. competitiveness in finance.
“For decades, regulatory turf wars, duplicative agency registrations, and different sets of regulations between the SEC and CFTC have stifled innovation and pushed market participants to other jurisdictions,” said SEC Chairman Paul S. Atkins. “This updated Memorandum of Understanding will serve as a roadmap for a new era of harmonization between the agencies – one that is critical to support U.S. leadership in this next chapter of financial innovation. By aligning regulatory definitions, coordinating oversight, and facilitating seamless, secure data sharing between agencies, we will ensure our rules and regulations deliver the clarity market participants deserve.”
“America’s financial markets are the envy of the world because they scale and adapt to meet investor demands. Like our markets, the CFTC’s and SEC’s regulatory frameworks must also evolve and modernize to accommodate the needs of our market participants,” said CFTC Chairman Michael S. Selig. “This Memorandum of Understanding solidifies the agencies’ commitment to harmonize regulatory frameworks to provide comprehensive and seamless financial market oversight. By working together, we’ll eliminate duplicative, burdensome rules and close gaps in regulation for the benefit of all Americans and usher in a Golden Age of American finance.”
The MOU outlines four ways in which the agencies will work together “to clarify, coordinate, and harmonize policies and practices wherever feasible and relevant:”
– Providing regulatory clarity and certainty built on technology-neutral regulations, frameworks that account for emerging technologies, transparent decision-making, and well-defined regulatory boundaries;
– Sharing information and data concerning issues of common regulatory interest to fulfill their respective regulatory mandates, including, but not limited to, in connection with a specific incident, event, or activity;
– Closely coordinating and cooperating to remove obstacles where appropriate, to the lawful introduction of novel derivative products, crypto asset products, or other products to market participants, customers, and investors; and
– Enhancing the functioning of the underlying markets.
The announcement also notes the establishment of a Joint Harmonization Initiative that “will support coordination across the policymaking, examination and enforcement functions of each agency, particularly for joint applications and shared policy efforts,” including:
– Clarifying product definitions through joint interpretations and rulemakings.
– Modernizing clearing, margin, and collateral frameworks.
– Reducing frictions for dually registered exchanges, trading venues, and intermediaries.
– Providing a fit-for-purpose regulatory framework for crypto assets and other emerging technologies.
– Streamlining regulatory reporting for trade data, funds, and intermediaries.
At some point during my time as Chief Counsel of Corp Fin, I had to delve into the intricacies of the listed options market, and I recall that it was a fascinating world from a regulatory perspective that was very different from the market for listed common stock and debt securities. For example, The Options Clearing Corporation (OCC) acts as the central counterparty, guarantor, and issuer for all U.S. exchange-listed options. The OCC is an SRO that is overseen by the SEC. Prior to buying or selling an option, investors must read a copy of the Characteristics and Risks of Standardized Options, also known as the options disclosure document, which explains the characteristics and risks of exchange traded options. The offer and sale of standardized options are registered pursuant to Section 5 of the Securities Act on Form S-20, which is probably not an SEC form that you have had much interaction with over the years! You can save that bit of information for the next time you are participating in an SEC trivia competition.
Last week, the SEC announced that it will host a roundtable “to discuss listed options market structure, including facilitating competition in a quote driven market, evaluating the customer experience, and identifying opportunities and challenges for continued growth.” The roundtable will take place on April 16, 2026 at the SEC’s headquarters and via webcast. The announcement notes:
“The U.S.-listed options market has seen remarkable growth, particularly among retail investors,” said SEC Commissioner Hester M. Peirce. “The roundtable will offer the Commission a valuable opportunity to foster public dialogue that celebrates the market’s achievements while also considering areas for further reflection, ultimately supporting ongoing growth and expanding opportunities for all investors.”
The public is invited to submit comments on this topic by using the SEC’s online submission form or by sending an email to rule-comments@sec.gov.
We have two great webcasts coming up in March that are focused on the IPO process and newly public companies. The first – “Pre-IPO Through IPO: Compensation Strategies for a Smooth Transition” – is coming up next week on CompensationStandards.com. We’re also hosting a webcast the following week on TheCorporateCounsel.net called “From S-1 to 10-K: Avoiding Disclosure Pitfalls,” addressing the new disclosure expectations and increased compliance demands for companies entering into the Exchange Act reporting cycle.
Join the first webcast on Wednesday, March 18th, from 2:00 to 3:30 ET on CompensationStandards.com to learn about key compensation considerations from the pre-IPO phase through the offering and into the first chapter of public company life, with a focus on practical strategies for designing, implementing and communicating compensation programs and governance frameworks that support a smooth transition. Timothy Durbin of Morgan Lewis, Lauren Mullen of Alpine Rewards, Ali Murata of Cooley, Aalap Shah of Pearl Meyer and Maj Vaseghi of Latham will discuss:
– Assessing Existing Arrangements and IPO Impact
– Designing and Adopting New Equity Plans and ESPPs; Share Pool Strategy
– Managing “Cheap Stock” Issues; 409A Valuations
– Designing and Communicating Special IPO Awards
– Negotiating New Employment Agreements; Change in Control and Severance Terms
– Navigating Lockups, Blackout Periods and Post IPO Selling Mechanics
– Establishing the Post IPO Executive Compensation Program
– Building Compensation-Related Policies, Governance and Controls
– Communicating with Executives and Employees Through the Transition
We are reserving 15 minutes for any audience questions submitted in advance. Please send any questions to mervine@ccrcorp.com by this Friday, March 13th.
Our next webcast takes place on Tuesday, March 24th, from 2:00 to 3:30 ET on TheCorporateCounsel.net, and our outstanding panel will discuss the most frequent disclosure and compliance challenges that newly public companies face and offer insights into how to avoid the common missteps that can trigger SEC comments, investor scrutiny, and unnecessary risk. Tamara Brightwell of Wilson Sonsini, Brad Goldberg of Cooley, Keith Halverstam of Latham & Watkins and Julia Lapitskaya of Gibson Dunn will discuss:
– Entering the Exchange Act Reporting Cycle
– Risk Factors, Forward-Looking Statements, and Earnings Communications
– Form 8-K Current Reports
– Form 10-K and Proxy Statement
– Mechanics of the First Annual Meeting
– SOX, Internal Controls, and Disclosure Controls in the First Year
Please send any questions to be answered during this webcast to john@thecorporatecounsel.net by Thursday, March 19th.
Members of the website where the webcast is broadcast can attend the webcast (and access the replays and transcripts) at no charge. Non-members can separately purchase webcast access. If you’re not yet a member, you can sign up for a webcast or become a member of TheCorporateCounsel.net and/or CompensationStandards.com by contacting 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.
We will apply for CLE credit in all applicable states, with the exception of SC and NE who require advance notice. You must submit your state and license number prior to or during the live 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.
For as long as I have been practicing securities law, there has been talk about combining the SEC and CFTC into one agency or, short of that, finding ways for the two agencies to work together in harmony. At the beginning of the first Trump Administration, a potential combination of the two agencies was considered, but those plans never materialized. This time around, the focus is on harmonization of the regulatory frameworks of the two agencies, as Meredith noted back in September 2025.
In a speech earlier this week at the FIA Global Cleared Markets Conference (which focuses on derivatives), Chairman Atkins provided an update on the regulatory harmonization efforts of the SEC and the CFTC, which he described as an “approach toward a new golden age of regulatory coherence.” He described the role that substituted compliance can play under a principle that “where one agency’s framework achieves comparable regulatory outcomes, then it should be capable of satisfying overlapping requirements of the other,” and noted coordinated efforts on questions of interpretation and exemptive relief, including joint meetings on product applications and efforts to foster innovation.
Chairman Atkins noted that the SEC and CFTC are also “considering an updated Memorandum of Understanding (MOU) between the agencies to guide coordination and collaboration that can support innovation, uphold market integrity, and ensure investor and consumer protection.” He also described efforts to coordinate legal theories and remedial strategies from an enforcement perspective.
On the topic of swap and securities-based swap data, Chairman Atkins indicated that he has asked the Staff to consider any necessary amendments to Regulation SBSR (the securities-based swap reporting regime) with the goal of codifying a harmonized reporting regime with the CFTC. The Chairman ended his remarks with these thoughts:
The SEC and the CFTC operate under distinct statutes entrusted to us by Congress, and we must administer those mandates faithfully. But fulfilling our responsibility does not require fragmentation; in fact, it calls for coordination. Properly executed, harmonization furthers our statutory mission through a commitment to coherence across markets that increasingly function as an integrated whole. We can do better—and we intend to.
The United States leads global derivatives markets because our regulatory system is credible. Credibility rests on more than rules alone. It rests on clarity. On consistency. And on a widely held confidence that regulators coordinate intelligently in lieu of competing in turf wars that offer no benefit to investors.
The SEC maintains a page on its website dedicated to the SEC-CFTC Harmonization Initiative.
I tip my hat to Securities Docket for highlighting this Bloomberg article which describes ongoing discussions about the CFTC moving into the same Station Place office complex where the SEC is located. These discussions have involved the GSA, and the move would not take place until 2027. The article notes that, despite the potential for moving in together, the agencies are not planning to tie the knot:
The CFTC’s potential relocation highlights the continued realignment between the sister agencies, but their leadership insists there are no plans to consolidate into one. SEC Chairman Paul Atkins and CFTC Chairman Michael Selig, who until late last year worked for Atkins as the chief counsel on the agency’s crypto task force, are looking to eliminate duplicative regulations.
“It makes sense to have two separate regulators but what doesn’t make sense, and what Chairman Atkins and I have been very clear on, is the lack of coordination between the agencies,” Selig said in an interview last month with Bloomberg’s Odd Lots podcast. “We need to harmonize the two regimes to make sure that there’s not inconsistent and incompatible rules and that there’s not gaps.”
Unlike many countries that have one primary regulator for financial markets, in the US the SEC oversees stock and bond activities while the CFTC regulates derivatives trading.
The notion of combining the agencies has been kicked around since the 2008 financial crisis but their distinct regulatory missions and political obstacles have made that consolidation untenable.
The SEC’s home since 2005, Station Place is the largest private office building development in Washington, DC. The office complex is located next to (and is connected with) Union Station, which offers convenience for those commuting by train or Metro. I can recall moving into Station Place when I was at the SEC, and it was quite an upgrade from the SEC’s old headquarters at 450 Fifth Street, NW. The highlight for me at the time was that Marty Dunn placed the Office of Chief Counsel on a side of the building that overlooked the Union Station rail yard, so as I train buff I had endless entertainment watching the comings and goings of trains all day long.
With the deadline for Section 16 reporting by officers and directors of certain foreign private issuers just one week away, earlier this week the Staff issued several FAQs addressing key transition issues. Over on the Section16.net Blog, Alan Dye has posted a summary of these FAQs, which confirm that:
– All Section 16(a) reports (Forms 3, 4 and 5) must be filed via EDGAR in accordance with Regulation S-T unless the filing person has obtained a hardship exception under Regulation S-T Rule 202 allowing reports to be filed in paper. To be timely filed via EDGAR, a report must be submitted and accepted no later than 10:00 p.m., Eastern U.S. time on its due date.
– A person who is serving as a director or officer on December 18, 2025, must file Form 3 on March 18, 2026. If, however, the person is no longer a director or officer on March 18, the person is not required to file a Form 3.
– If a person is appointed or elected as a director or officer effective after December 18, 2025, but before March 18, 2026, their Form 3 will be due by the later of March 18, 2026, or the date that is ten days after the person became a director or officer. For example, a person who is appointed as an officer effective March 1, 2026, must file a Form 3 on March 18, 2026, while a person who is appointed as an officer effective March 15, 2026, must file a Form 3 by March 25, 2026.
– If an FPI initially registers a class of equity securities under Section 12 of the Exchange Act after December 18, 2025, but before March 18, 2026, a person serving as a director or officer as of the date the registration statement becomes effective must file a Form 3 on March 18, 2026. A person who becomes a director or officer after the registration statement became effective must file a Form 3 by the later of March 18, 2026, or the date that is ten days after the person became a director or officer.
– For an FPI that had a class of equity securities registered under Section 12 of the Exchange Act prior to March 18, 2026, Rule 16a-2(a)’s six-month look-back would not apply to require a director or officer to report on their first required Form 4 any transactions effected prior to March 18, 2026. In contrast, for an FPI that registers a class of equity securities on or after March 18, 2026, Rule 16-2(a) would obligate the FPI’s directors and officers to report on the first required Form 4 transactions effected prior to March 18, 2026, and within the six-month look-back.
If you do not have access to all of the practical resources available on Section16.net, I encourage you to become a member today. You can contact us at info@ccrcorp, 800-737-1271 or fill out this form to sign up today.
Yesterday, the SEC held its 45th Annual Small Business Forum. The Forum is hosted by the SEC’s Office of the Advocate for Small Business Capital Formation, and as Meredith noted in this blog from last month, the Forum seeks to bring together individuals with a wide range of viewpoints for the purpose of discussing and providing suggestions to improve securities policy affecting how companies raise capital from investors. Prior to the Forum, the Office of the Advocate for Small Business Capital Formation collects policy recommendations, and the Forum participants prioritize those recommendations. The top policy recommendations are published in a report that the SEC delivers to Congress.
At this year’s Forum the Chairman and Commissioners each delivered remarks. Chairman Atkins described the agenda for the Forum and called on the Commission to build on the concept of an “IPO on-ramp” that was addressed in the JOBS Act, noting:
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.
Raising capital through an IPO should not be a privilege reserved for those few “unicorns.” More and more, public investments are concentrated in a handful of companies that are generally in the same one or two industries. Our regulatory framework should provide companies in all stages of their growth and from all industries with the opportunity for an IPO, particularly one that represents a capital raising mechanism for the company, instead of a liquidity event for insiders.
Commissioner Peirce addressed the challenges faced by founders in raising capital, noting:
Fittingly, the first panel starts at the start, funding founders. Founders’ paths to raising money for their promising idea are riddled with regulatory landmines—a source of deep dismay and consternation for well-intentioned founders. The first thing they may encounter is the much-discussed concept of “Accredited Investor.” But simply knowing what makes an investor “accredited” does not solve a founder’s problems. Rather, it is just the beginning of a list of questions without neat answers. Can you sell only to accredited investors? It depends. What do you need to do to make sure that your investors are accredited? It depends. What information do you need to give to investors? It depends. Founders can find some help in wading through these questions on the SEC’s website. Today’s discussions could help to shape substantive steps by the SEC to make life easier for founders. Among the topics you might want to consider are a micro-offering exemption that would simplify early-stage fundraising: under such an approach, as long as an issuer stays below a set offering amount, it would be able to sell shares of its company to investors without any strings other than avoidance of fraud. A regulatory structure for finders, an idea under consideration by the Small Business Capital Formation Advisory Committee, also might help founders find funders.
Commissioner Uyeda addressed the interplay of federal and state securities laws, stating:
The interplay between federal and state securities laws should be a matter of continuing study by the Commission. It is both impractical, costly and unrealistic to expect an issuer to register a small securities offering in dozens of states. This is especially true given the lack of uniformity among states. However, states can play an important role in preventing fraud for offerings conducted in their jurisdiction.
Regulators should consider moving beyond a binary approach to preemption. For example, when an offering is qualified in the state of a company’s principal place of business, should the offering still be reviewed by multiple other states? Why should not a notice filing in the other states be sufficient? Such a framework could promote more effective oversight among state regulators, reduce the time it takes to fully comply with offering regulations, and maintain effective investor protection.
With all of the efforts now focused on capital formation in Congress and at the SEC, we suspect that the discussion and recommendations from this year’s Forum will be particularly useful to policymakers.
