Corporate boards and management should engage with shareholders to help improve governance, the top U.S. securities regulator said Tuesday, laying out what she sees as some positive outcomes from increased investor activism.
"It was not long ago the activist moniker had a distinctly negative connotation," Securities and Exchange Commission Chair Mary Jo White said at a conference organized by the European Corporate Governance Institute and held at the SEC's Washington headquarters.
"That view of shareholder activists ... is not necessarily the current view."
In a speech that touched on measures advocated by shareholder activists, from say-on-pay votes to executive compensation disclosures, White said she believed the landscape has changed.
In some cases, she noted, such measures have helped foster more productive communication among management, boards and shareholders.
"The process has become less defensive and more proactive," White said. "We are seeing a concerted effort to persuade shareholders of the wisdom of management's choices and practices. That is a good thing."
While a company cannot and should not always do what every shareholder asks, she added, its board and management should listen to investors and adjust their governance practices "when warranted."
Since taking over the helm of the SEC in the spring, White, an independent, has expressed a range of views on corporate governance matters.
She irked the two Republican SEC commissioners by pushing ahead with a proposal championed by labor rights groups and required by Congress to force companies to disclose the ratio of their CEOs' compensation to the median pay for their workers.
But in another recent speech, she criticized Congress for forcing the SEC to adopt rules that require companies to disclose information designed to exert societal pressures. One such rule required by the 2010 Dodd-Frank law requires manufacturers to say whether their products contain certain "conflict minerals" from a war-torn part of Africa.
Just last week, the removal of a proposal to force companies to disclose their political contributions from the agency's published list of 2014 rulemaking priorities irritated liberal groups.
The idea was prompted by Supreme Court's 2010 ruling in Citizens United, which held that independent expenditures by corporations are constitutional and helped pave the way for spending by so-called "super" political action committees.
Some groups had held out hope the SEC would take up the measure, which has attracted well over half a million public comments.
"We are disappointed that the Securities and Exchange Commission is not including a rulemaking to require disclosure of corporate political spending on its regulatory agenda for 2014," Richard Trumka, president of the AFL-CIO labor federation, said in a statement on Tuesday.
"Since the Supreme Court's Citizens United decision, we have seen a dramatic increase in political spending by corporations. Yet much of this spending is not disclosed to investors who own public companies."
White has declined to offer her opinion on whether the SEC should write rules to require companies to disclose their campaign spending. However, she told reporters on the sidelines of Tuesday's event not to jump to conclusions about the proposal's removal from the upcoming agenda.
The current list of rulemakings "reflects my best estimate as to what we will be able to reach at the commission level" for the remainder of the fiscal year, White said. "I wouldn't deduce anything beyond that."
The current fiscal year runs through September of 2014.
White's speech comes two days before the SEC hosts an event focused on another hot-button corporate governance issue: the role of proxy advisory firms in company elections.
Thursday's roundtable meeting will explore whether proxy advisory firms wield too much influence on elections and whether new regulations could be warranted.
White has declined to say whether she sees a need for rulemaking in this area. However, SEC Republican Commissioner Daniel Gallagher has pressed for reforms.
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