Last week, the Center for Audit Quality announced the publication of its 12th annual “Audit Committee Transparency Barometer Report.” The report is compiled by the CAQ and Audit Analytics to measure disclosures about financial oversight and other audit committee responsibilities. The CAQ’s announcement notes:
As audit committees navigate emerging risks including economic disruption and the rapid integration of artificial intelligence, investors need insights into board composition, expertise, and oversight processes. This year’s Barometer shows that while skills matrix disclosure continues at high rates and disclosure of cybersecurity expertise on boards has grown, most disclosure areas have stagnated or declined, providing audit committees with an opportunity to enhance transparency about their evolving oversight responsibilities.
Key findings of the report include:
– 90% of S&P 500 companies disclosed the board of directors’ skills matrix, an increase from 85% in 2024. S&P MidCap companies (80%) and S&P SmallCap companies (70%) also showed slight increases.
– 65% of S&P 500 boards disclosed they have a cybersecurity expert—representing a 5-percentage point increase from 2024.
– Stagnation and decline of audit committee disclosures were observed across several measures, including (for S&P 500 companies): disclosure of the annual evaluation of the external auditor (decreased from 39% to 38%); considerations in appointing or (re)appointing the external auditor (remained flat at 50%); and factors contributing to the selection of the audit partner (decreased from 17% to 16%).
The report concludes:
As the role of the audit committee continues to evolve, it is essential to maintain robust disclosures. Audit committees have an opportunity to re-evaluate their disclosures in light of the period of disruption that we are facing, to provide greater transparency to investors and other stakeholders about how the audit committee is fulfilling its oversight responsibilities. These disclosures ultimately enhance trust and instill confidence in the audit committee’s leadership.
Well folks, this has been quite year – and 2026 promises to be even more of a wild ride in the securities and corporate governance space. Given all that is going on, be sure to join us tomorrow for our webcast “The (Former) Corp Fin Staff Forum,” which will take place from 2:00 – 3:00 pm Eastern here on TheCorporateCounsel.net. We have assembled a panel of SEC All Stars to provide the latest update on the SEC’s rulemaking agenda, Staff interpretations and disclosure review from the Corp Fin perspective. We will discuss the most important initiatives at the SEC and in Corp Fin – and provide practical guidance about what you should be doing as a result. Our illustrious panelists for the program are:
– Sonia Barros, Partner, Sidley Austin LLP
– Meredith Cross, Partner, WilmerHale LLP
– Tom Kim, Partner, Gibson, Dunn & Crutcher LLP
– Keir Gumbs, Chief Legal Officer, Edward Jones
– Dave Lynn, Partner, Goodwin Procter LLP, and Senior Editor, TheCorporateCounsel.net
The topics that we plan to cover include:
– The SEC’s regulatory agenda for public companies and capital formation
– Recent Staff guidance and the implications for companies
– The SEC’s evolving approach to shareholder proposals and ESG matters
– The Corp Fin approach to filing reviews under new leadership
– What to expect from Corp Fin in 2026 and beyond
This is the webcast that you do not want to miss! But if you do, we will have an archive of the recording and transcript available after the show.
Members of TheCorporateCounsel.net are able to attend this critical webcast at no charge. If you’re not yet a member, try a no-risk trial now. 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. Contact us at info@ccrcorp.com or 800.737.1271 if you would like to sign up.
At last week’s meeting of the SEC’s Investor Advisory Committee, SEC Chairman Paul Atkins delivered remarks on the topic of tokenization of securities. In his remarks, Chairman Atkins notes his proposed approach for facilitating decentralized ledger technologies and tokenization in securities markets:
Today, our rules assume that securities are issued, traded, and managed through layers of intermediaries, which help to address risks like information asymmetry and operational friction. But as we consider the rise of public blockchains and tokenization, we must acknowledge that these technologies have the capacity to streamline not only trading but the entire issuer-investor relationship.
In other words, tokenization is not just about transforming how trades occur. It can also enable direct connectivity for proxy voting, dividend payments, and shareholder communications, reducing the need for multiple intermediaries in those processes as well. As we modernize our rules, we must consider the full scope of these changes, both in how markets trade and in how security ownership is recorded and serviced. I welcome the IAC’s assistance in helping us think through how to respond appropriately to these innovations.
As with any technological shift, market participants are experimenting with different tokenization models, and I am interested to hear the panel’s thoughts about the implications of these approaches. Several models may warrant discussion. First, some companies are issuing equity directly on public distributed ledgers in the form of programmable assets that, in some cases, have the ability to embed compliance, voting rights, and other governance functions. This path allows investors to hold a security in digital format, with fewer intermediaries and more transparency.
Second, third parties are tokenizing equities by creating on-chain security entitlements, which represent ownership interests in equities that exist off-chain.
Third, we are seeing synthetic exposures—tokenized products that seek to mirror public equity performance. While today the offer and sale of these products are proliferating offshore, they illustrate the global demand for U.S. market exposure built on distributed ledger-powered infrastructure.
Of course, the shift to on-chain capital markets requires more than just issuance. We must also tackle other stages in the securities transaction lifecycle. For example, tokenized shares risk becoming nothing more than conversation pieces if their owners cannot trade them competitively in liquid on-chain environments. But making this possible requires the Commission to think carefully about how our regulatory mandate intersects with technological realities. Furthermore, issuers should be at the center of the discussion to help ensure that these new systems work effectively and align with the overarching goals of transparency and investor protection.
The previous Commission attempted to address on-chain markets through a brute-force redefinition of “exchange” to include even basic “communication protocols,” and then subjecting whatever was captured by that new definition to the full panoply of our regulatory framework for exchanges. That approach lacked limiting principles, expanded the SEC’s reach beyond what Congress intended, and ultimately created uncertainty that chilled innovation.
We must not repeat that mistake. If we want to boost innovation, investment, and jobs here in the United States, we must provide compliant pathways that allow market participants to leverage the unique capabilities of this new technology. That is why I have asked staff to recommend to the Commission ways in which we can use our exemptive authorities to allow for on-chain innovation while we continue to work on long-term, durable rules of the road.
Congress has given the SEC broad exemptive authorities under the Securities and Exchange Act of 1934, and we must use these authorities responsibly. A thoughtful exemptive framework—cabined, time limited, transparent, and anchored in strong investor protections—could allow the markets to develop on-chain models and give investors innovative new choices. And, drawing on input from market participants, we will be able to craft rules that distinguish between truly decentralized finance and the wide spectrum of centralized, on-chain finance in existence today.
A durable rulebook must recognize this spectrum without forcing square pegs into round holes. If we attempt to regulate decentralized protocols as if they were centralized brokers, we will undermine the very innovation that makes them resilient and transparent. But if we allow centralized intermediaries to benefit from regulatory arbitrage just because they operate on-chain, we erode the principles of accountability and investor protection that have contributed to our global market dominance. Our task, as well as our responsibility, is to write rules that match functional reality. I look forward to working with my counterparts across the Administration in the coming years to do just that.
The SEC’s role is not to resist the market’s transition to on-chain capital markets, nor to force it into legacy definitions, nor to push innovators offshore. Rather, it is to allow market participants to operate and innovate subject to clear guardrails that protect the public, ensuring that U.S. markets remain the most dynamic, transparent, and trusted in the world. If we stay true to this course, we can ensure that the United States leads—not follows—in the next chapter of capital markets innovation.
Meanwhile, in a recent article published in The Economist, Blackrock’s Larry Fink and Rob Goldstein address the move to tokenization, calling it “the next major evolution in market structure.” They liken the state of tokenization today to where the Internet was in 1996, noting that it will not replace the existing financial system any time soon, but that we should think of the development of tokenization as analogous to a bridge being built from two sides of river to converge at the center. They argue for the thoughtful implementation of safeguards as the technological developments advance.
Wilson Sonsini recently released its 2025 Silicon Valley 150 Corporate Governance Report, which surveys governance practices among Silicon Valley’s largest companies. The report includes information regarding board matters, officer matters, defensive measures, proxy statement disclosures, ESG and sustainability reporting, stockholder proposals, activism, and executive compensation. Among the key takeaways from this year’s report include:
– Diversity Disclosure Significantly Down. Diversity disclosure in SV150 proxy statements dropped significantly this year to 57.3 percent compared with 92 percent last year. The decrease occurs not only amid the change in U.S. presidential administration and elimination of the Nasdaq diversity matrix referenced above, but also the consequent changes in some institutional shareholder voting policies regarding DEI. Emblematic of the decrease in disclosure, the use of the word “diversity” or “diverse” in proxy statements plummeted following these developments to 7.61 average uses versus 20.12 average uses in prior year proxy statements, representing a decrease of 62.2 percent.
– Human Capital Disclosure Also Decreased. After three years of increases, human capital disclosure decreased to 66.0 percent, down from 74.7 percent in the prior year. Quantitative human capital disclosure in which the company provides numerical data about employees or other human capital matters was particularly down from 41.6 percent of companies providing such information in 2024 to 26.5 percent in 2025.
– ESG/Sustainability Down Slightly. After increasing prevalence over the last few years, ESG/sustainability disclosure in proxy statements has also trended down this year, although less significantly than DEI, from 80.7 percent in 2024 to 71.3 percent this year. Companies continued to post ESG reports on their websites at a slightly reduced rate (114 this year compared to 117 last year). The majority of such reports (57.9 percent) were dated 2024, with 23.7 percent dated 2025.
– Other Areas Largely Status Quo. Despite the decreases in disclosure regarding diversity, human capital, and ESG/sustainability, most proxy statement disclosures and practices in other areas remained largely consistent with prior years. Virtual annual meetings continued to be the norm for most companies (85 percent) and the presence of women in the boardroom and executive suites remained on par with prior years (33.5 percent of directors and 20.7 percent of executives in 2025). Despite the shift away from diversity disclosure, the percentage of ethnically diverse directors, to the extent it was disclosed at all, continued to remain at approximately 29.4 percent, similar to our findings last year.
The report also notes that only 5.4 percent of SV150 companies were affected by activism in 2025, and only two activism campaigns resulted in a proxy fight, with the most frequent result being at least one director added to the board in a settlement with the activist stockholder.
All indications are that we are in for a very active 2026 on the regulatory front, as the SEC ramps up its rulemaking efforts and continues issuing new guidance. Given all of the expected developments, you will not want to miss out on any of our latest updates, practical guidance, insights or invaluable content across all of our publications. Be sure to stay up to date with the latest securities regulation and corporate governance developments as we head into 2026 by maintaining uninterrupted access to insights from your favorite CCRcorp editors and contributors.
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Last week, the proxy advisory firm Glass Lewis released its 2026 Benchmark Proxy Voting Policies for Canada, Continental Europe, the United Kingdom and the United States, as well as Supplementary Guidance outlining the Glass Lewis approach to specific situations. As this Goodwin Public Company Advisory Blog notes, the proxy voting policy for the United States reflects the following updates:
1. Enhanced Pay-for-Performance Evaluation
Glass Lewis has updated its pay-for-performance model to adopt a scorecard-based approach. Instead of assigning a single letter grade (A–F), the model now consists of up to six tests, each receiving an individual rating. These ratings are aggregated on a weighted basis to produce an overall score ranging from 0 to 100. This change is intended to provide a more nuanced and transparent assessment of executive compensation alignment with company performance.
2. General Approach to Shareholder Proposals
Glass Lewis has updated its language regarding shareholder proposals in light of ongoing and anticipated changes to the U.S. shareholder proposal process. While prior guidance on companies’ treatment of the SEC’s former no-action process has been removed, Glass Lewis maintains that shareholders should have the opportunity to vote on matters of material importance. The policy acknowledges that some proposals may unduly burden companies or cross into board responsibilities, and not all proposals serve long-term shareholder interests. Nonetheless, Glass Lewis views the fundamental right of shareholders to submit proposals as critical to effective corporate governance and the economic interests of all shareholders. Glass Lewis notes that its approach may be further revised prior to or during the 2026 proxy season if regulatory developments warrant additional updates.
3. Shareholder Rights
Glass Lewis has updated its guidance on situations where boards amend governing documents to reduce or remove key shareholder rights. Such actions may lead to recommendations against the chair of the governance committee—or, in certain cases, the entire committee. Examples include amendments that:
– Limit shareholders’ ability to submit proposals;
– Restrict shareholders from filing derivative lawsuits; and
– Replace majority voting with plurality voting.
4. Mandatory Arbitration Provisions
Glass Lewis has introduced guidance on mandatory arbitration provisions within its Benchmark Policy. When reviewing companies’ governing documents after an IPO, spin-off, or direct listing, Glass Lewis will assess whether such provisions or other potentially negative governance provisions present. If such provisions are included, it may result in a recommendation to vote against the chair of the governance committee or, in certain cases, the entire committee. Additionally, Glass Lewis will generally recommend opposing any bylaw or charter amendment that seeks to adopt mandatory arbitration unless the company provides clear and sufficient rationale and disclosure.
5. Amendments to Governing Documents
Glass Lewis has consolidated its approach to amendments to the certificate of incorporation and bylaws into a single section. Proposed amendments will be evaluated on a case-by-case basis, with strong opposition to “bundled” proposals that combine multiple changes under one vote. In general, Glass Lewis will recommend supporting amendments that do not materially harm shareholder interests.
6. Supermajority Vote Requirements
Glass Lewis has clarified its stance on supermajority voting provisions. Proposals to eliminate these requirements will be assessed individually. While Glass Lewis generally supports removing supermajority thresholds, it recognizes that such provisions may protect minority shareholders when a company has a large or controlling shareholder. In these cases, Glass Lewis may oppose their elimination.
As I noted in the blog back in October, Glass Lewis announced that it “will move away from singularly-focused research and vote recommendations based on its house policy and shift to providing multiple perspectives that reflect the varied viewpoints of clients.” For now, we still have the proxy advisory firm’s benchmark proxy voting policies to consider as we enter the proxy season.
On Friday, the SEC announced that it had consented to the termination of undertakings in the early-2000s Global Research Analyst Settlement. The modifications are subject to court approval. The SEC’s announcement notes:
The final judgments contained an Addendum with undertakings that addressed potential conflicts of interest between equity research analysts and investment banking personnel. The Addendum also included a sunset provision for newly adopted rules that would supersede the undertakings, and stated that for terms that were not superseded, the SEC would agree to an amendment or modification, subject to court approval, unless the SEC believed the amendment or modification would not be in the public interest. The Addendum was modified by court order in March 2010 to remove or modify certain provisions. The revised Addendum also stated that the SEC would agree to further amendment or modification of the undertakings, subject to court approval, unless the SEC believed the amendment or modification would not be in the public interest.
In 2015, FINRA adopted and implemented, and the SEC approved, Rule 2241 (Research Analysts and Research Reports), which addresses conflicts of interest between research analysts and investment banking personnel within registered broker-dealers.
The settling firms filed motions in June and December 2025 seeking to terminate the remaining undertakings in the Addendum based in part on the adoption and implementation of FINRA Rule 2241. In its responses to the motions, the SEC acknowledges the sunset provision in Addendum A of the final judgments and the passage of FINRA Rule 2241, states that it “believes modification of the Judgment is in the public interest,” and consents to the requested modification of the final judgments.
It’s not a coincidence that since 2004, there has been a lot less research out of Wall Street, particularly for small and medium-sized companies. The result has been a chilling effect on research coverage in precisely the segments—emerging growth and smaller public companies—where investors most need high quality analysis. In 2017, the U.S. Department of the Treasury recommended that the SEC conduct a holistic review of the Global Research Settlement and the research analyst rules to determine which provisions should be retained, amended, or removed, with the objective of harmonizing a single set of rules for all financial institutions.
Today, the Commission moved toward more thoughtfully regulating some of the most important providers of sell-side equity research. It seems hard to argue that the requirements of the Global Research Settlement still hold their relevance. FINRA Rule 2241 now provides a robust framework for managing research analyst conflicts, disclosures, and supervision, but does so through a principles-based SRO rule that can be updated through notice-and-comment and interpreted consistently across member firms. These are not weaker protections; rather, they are conflict mitigation tools that are targeted, transparent, and aligned with how research is actually produced, paid for, and consumed. The Commission’s action will lower compliance friction, promote more consistent interpretations, and, ultimately, expand the availability of research coverage that helps investors make better decisions.
In short, this is the kind of good government reform that will better serve investors, issuers, and the integrity of our U.S. capital markets.
If you are an old-timer like me, you will recall that the Global Research Analyst Settlement was a momentous event that addressed research analyst conflicts of interest and other concerns that emerged from the late 1990s dot.com boom (and bust), radically changing the way that research is done on Wall Street.
Join us tomorrow for the joint Practical ESG.com/TheCorporateCounsel.net webcast – “Disclosing Sustainability Financial Value in 10-Ks” – to hear the perspectives of the following panel on the topic of reporting sustainability matters in periodic reports:
– Dan Goelzer, Retired Partner, BakerMcKenzie and former Board Member of the Public Company Accounting Oversight Board
– Rich Goode, Principal, ESG Services, PwC
– Kristina Wyatt, CSO, Persefoni, former SEC Counsel
– Maia Gez, Head of Public Company Advisory Group, White & Case LLP
– Daniel Aronson, Founder & CEO, Valutus
Topics to be discussed on the webcast include:
1. Setting the Baseline: U.S. SEC Reporting Basics, Including “Materiality” and Managerial v. Financial Accounting
2. What Companies Are Doing Now – Informal Reporting, Results from PESG Compendium
3. Where Sustainability Generates Meaningful Business Value – Double v Financial Materiality, Managerial Accounting v Financial Accounting
4. Why Companies Should Report Sustainability Value in 10-K/Q – Formalize Reporting to a Single, Credible Standard (Financial Accounting v. Non-Financial Framework), Eliminate Question of Materiality (Financial v. Operational Metrics), Control the Narrative, Meet Investor Needs, Take Conversation Away from Anti-ESG, Defend Budget and Jobs
5. Barriers: Accounting Topics, Lack of Data (Attribution of Material Financial Matters To Sustainability Initiatives), Inadequate Controls on Sustainability Data/Reporting, Fear of risk, Corporate Inertia
6. Fighting No: How to Make Your Case for Reporting Sustainability Value in 10-K/Q
Note that this webcast is being provided free of charge. CLE credit is not available.
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.
