Relaxing Rules: SEC Mulls Easing Exec Pay, Public Company Regulations
July 4, 2025
The US Securities and Exchange Commission (SEC) is reportedly considering both relaxing rules on executive (exec) pay and moving to alleviate regulatory burdens for public companies.
Last week, the SEC held a roundtable on exec compensation disclosure requirements. Discussions centred on whether the exec compensation disclosure framework could be “improved”. This included disclosures of bankers’ pay and clawbacks of bonus pay.
Separately, Reuters reported that the SEC and US exchanges – namely Nasdaq and the New York Stock Exchange – had engaged in talks to mitigate the regulatory burden facing public companies. This aims to coax more highly valued startups to list on US exchanges.
The SEC exec compensation roundtable sought the views of public companies, investors and other experts in the field on whether the current disclosure requirements are “cost-effective and result in disclosure of material information” without presenting an “overload of immaterial information”.
The SEC’s stance on this question appears clear, with the Commission’s Chairman Paul Atkins branding the current disclosure requirements as a “Frankenstein patchwork of rules”.
“Our rules must be grounded in achieving the Commission’s three-part mission: investor protection, fair, orderly and efficient markets, and capital formation,” said Atkins. “These rules should be cost-effective for companies to comply with and provide material information to investors in plain English. Most importantly, the information required to be disclosed should be material to the company and understandable to the Supreme Court’s objective reasonable investor.”
Ahead of the roundtable, Atkins had signalled that pay-versus-performance and clawbacks were prime areas of disclosure which could be overhauled.
SEC Commissioner Mark Uyeda argued that efforts to control executive pay through “indirect” means have “proven clumsy and often resulted in the exact opposite result”. He added that some exec compensation disclosures, including the CEO pay ratio disclosure, “appear to have dubious purposes”.
“The Commission’s rulebook should not serve to further political agendas, said Uyeda. “In addition to distracting from the Commission’s primary mission of providing material information with respect to executive compensation, this rule also increases regulatory compliance costs without providing any corresponding investor benefits.”
He added that the SEC had received “many” recent comment letters on executive compensation that “are critical of the CEO pay ratio disclosure”.
Uyeda also noted that the scope and impacts of the SEC’s current clawback rules may have “increased uncertainty”.
The SEC roundtable featured speakers from oil and gas giant Exxon Mobil, the world’s largest asset manager BlackRock, the US’ largest public pension fund the California Public Employees’ Retirement System, and the world’s largest sovereign wealth fund Norges Bank Investment Management.
It was reported that at the roundtable a senior Exxon Mobil official requested that the SEC to permit companies to shorten and simplify executive compensation disclosures to investors.
Remuneration, including executive pay, is a key priority for investors in the US. According to data from Minerva Analytics, there were 49 remuneration-related shareholder proposals in the US between January and May 2025. This accounted for 12% of all shareholder proposals in the country during the first five months of this year.
These proposals comprised four categories: clawbacks, severance, pay disparity and other executive pay proposals. These proposals largely took an anti-ESG slant.
A shareholder proposal filed at companies including American Express, Coca-Cola and McDonalds called for the Board of Directors’ Talent and Compensation Committee to revisit its incentive guidelines for executive pay and to identify and consider eliminating discriminatory DEI goals from compensation inducements.
The highest support of any of these three aforementioned proposals received was 1.41%.
A separate proposal filed at Dominion Energy requested that the Board eliminate non-carbon emitting generation goals in executive pay incentives. The proposal was backed by just 1.49% of shareholders.
However, not all proposals held anti-ESG objectives. A proposal filed at several companies requested that the Board adopt a policy to seek shareholder approval of senior managers’ new or renewed pay packages that provide for golden parachute payments.
In 2022, Minerva Analytics reported on rules finalised by the SEC which required US-listed companies to disclose how the pay of their top executives compared to the firm’s performance. The rule required companies to disclose in proxy statements how compensation paid related to company financial performance over a five-year period, with smaller companies subject to a three-year reporting period.
Meanwhile, the SEC is in dialogue with Nasdaq and the New York Stock Exchange on altering regulation to lighten perceived burden on public companies which are seen as hampering the listing of valuable startups.
In 2023, it was The rise in regulations and decline in number of public companies has been condemned by J.P. Morgan CEO Jamie Dimon and other senior Wall Street figures and is likely to have played a key role in sparking this new dialogue.
The reforms being considered include reducing the volume of disclosures companies need to make and diminishing the costs incurred by companies in going public.
Most concerningly for investors, the discussions reportedly include making it more challenging for minority activist investors in companies to launch proxy contests and present the filing of proxy proposals from minority investors targeting similar issues.
This would not be the only change being made by the SEC which risks detrimentally impacting investors with the SEC tightening the regulatory screw on rules surrounding shareholder proposals.
Last month, the SEC received approval from a federal judge to enforce rules which make it more challenging for shareholders to file proposals at companies’ AGMs. As reported by Minerva Analytics, amendments to the 14a-8 rule, which governs the filing of shareholder proposals, introduce more stringent requirements over the amount of investment required to file and the support needed to resubmit proposals.
The revised rules mean that shareholders must have invested a minimum of U$25,000 in a company for a year to file a proposal at an AGM, a significant increase from the prior regulation permitting investors to submit proposals if they had owned U$2,000 or 1% of a company’s securities for at least 12 months.
Additionally, the new regulation means proposals now must receive at least 5% of votes from investors to be refiled, an increase from the previous 3% threshold.
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Last Updated: 4 July 2025