In a letter sent towards the end of February to Gary Cohn, the director of the National Economic Council at the White House from the BRT’s Mark Costa, chair of its smart regulation committee, the BRT identified a number of corporate governance and financial services regulations that need to be reformed to reduce the burden they have on business.
The BRT identified the chief executive (CEO) pay ratio disclosure rule that needed to be repealed. The letter suggested that the requirement to disclose CEO pay as a ratio of the average employee pay was very likely to result in a meaningless and arbitrary number which would be of no material benefit to shareholders. The BRT said it recommended reconsideration by the Securities and Exchange Commission (SEC) and full repeal by Congress. The SEC is currently consulting on the rule and is reconsidering its implementation due to problems of compliance reported by companies. This has been welcomed by the BRT.
The letter outlined the BRT’s concerns about activist investors in the US suggesting that they pursue social and political objectives that are not in the interests of the shareholders as a whole. The BRT has already published proposals which it believes are required to restrict the eligibility for putting forward shareholder resolutions which the BRT said could mostly be implemented through the SEC rule-making process.
The BRT urged for the repeal of the Conflict Minerals Disclosure Act which mandated annual disclosure for companies to state that their products do not contain conflict minerals from the Congo region. The BRT said this led to high compliance costs without benefiting humanitarian efforts in Africa.
A US industry insider suggested it was interesting what was not included in the letter, notably there is no mention of the bill HR 5311, which proposes that proxy adviser firms should be registered. The insider noted that this came after the appointment of Jamie Dimon as chairman of BRT and BRT’s withdrawal from the Shareholder Communications Coalition.
The Shareholder Communications Coalition was set up by the BRT in 2005 initially to address problems in the US proxy plumbing system. After the SEC’s proxy plumbing concept release stalled, the Coalition turned its attention to the lobby against proxy advisors. Today the remaining members of the Coalition are Society for Corporate Governance (company secretaries) and the National Investor Relations Institute.
According to regulatory filings, in 2016 BRT spent $15.7 million on lobbying, of which, the single largest contribution was $510,000 from PriceWaterhouseCoopers. In addition to chairing BRT, Jamie Dimon was a founder signatory of the Commonsense Governance Principles.