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Wall Street’s chief regulator said on Tuesday the U.S. Securities and Exchange Commission should reform rules requiring disclosure of executive compensation and move to reduce the legal burdens facing smaller companies.
In an address at the New York Stock Exchange billed as a statement of his vision for the future of capital markets, SEC Chair Paul Atkins also previewed major themes in the agency’s deregulatory policy agenda.
Since taking over the role in April, Atkins has laid out plans that embrace the cryptocurrency sector and tilt the balance of power from investors back toward companies. The White House, asserting direct control over the agency, has also called for an end to quarterly reporting and reforms to shareholder disputes.
“When the SEC’s disclosure regime has been hijacked to require information unmoored from materiality, investors do not benefit,” Paul Atkins said in his prepared remarks. “We need a reset of these and other SEC disclosure requirements.”
Atkins also said the burden of complying with SEC regulations was a barrier to raising capital for smaller companies.
“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 100 times its size.”
Critics have warned that the SEC’s deregulatory agenda and declining workforce are weakening the agency, potentially allowing risk and misconduct to build up in the financial system.
With support from some corporate leaders, Atkins and other Republicans have taken aim at a series of pay disclosure rules, including those put in place after the 2008 financial crisis, meant to give investors a clearer picture of managers’ incentives.
Among other things, Congress required companies to report the ratio of CEO compensation to median employee compensation. The average pay of chief executive officers at S&P 500 companies stood at $18.9 million last year, a 7% increase over 2023, according to a review by the AFL-CIO labor federation, and the average CEO-to-worker pay ratio was 285 to 1 at these companies.
Democrats have argued for pay disclosures and limits they say are needed to limit risky behavior. In his prepared remarks, Atkins approvingly quoted Warren Buffett saying the required disclosures backfired, helping drive up CEO pay because the “new rules produced envy, not moderation.”
(Reporting by Douglas Gillison in New York and by Ross Kerber in Boston; Editing by Chizu Nomiyama and Paul Simao)
