Jeff Mahoney, Council of Institutional Investors

Summary

Podcast Summary

Podcast: Shareholder Primacy
Episode: Jeff Mahoney, Council of Institutional Investors
Date: May 20, 2026
Hosts: Mike Levin & Ann Lipton
Guest: Jeff Mahoney (General Counsel, Council of Institutional Investors)

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Episode Overview

This episode of Shareholder Primacy dives into the mission, recent activities, and advocacy stance of the Council of Institutional Investors (CII), featuring a comprehensive interview with its General Counsel, Jeff Mahoney. The conversation explores CII's approach to governance best practices, current industry controversies (ESG, antitrust concerns, financial activism), regulatory developments, major Delaware law changes, and broader trends in securities regulation.

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Key Discussion Points and Insights

1. Introduction to the Council of Institutional Investors (CII)

• CII’s Role and Membership
  • Non-profit, nonpartisan association representing U.S. public, corporate, and union employee benefit funds; combined assets over $5 trillion ([02:15]).
  • Members include major long-term shareholders charged with protecting retirement savings for millions of workers.
  • Develops and maintains a comprehensive, publicly available set of governance best practice policies ([02:54]).

"These, in my mind, are true and Real Main street investors through their pension funds." — Jeff Mahoney [02:18]

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2. Navigating ESG Controversy within CII

• CII’s Policy Stance and Internal Dissent
  • CII has historically focused on the "G" (Governance) in ESG, with zero formal policy mention of “ESG” itself ([04:13]-[04:52]).
  • Diverse membership (across red, blue, purple states) leads to varied perspectives on ESG and related controversies.
  • Highly partisan topics struggle to gain consensus within CII’s multi-stage policy adoption process.

"Our comprehensive set of membership-approved policies... does not include a single reference to ESG." — Jeff Mahoney [04:13]

"We're a big tent organization... when issues are highly partisan, it's less likely those are the types of issues that are going to get the approval of our policy committee, our board and then our asset owner membership." — Jeff Mahoney [06:40]

• CII’s Evolving Approach to Social and Environmental Issues
  • Significant growth in educational programming on environmental and social topics, reflecting member interest ([13:56]).
  • CII focuses on education rather than policy/advocacy for E and S.

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3. Antitrust Concerns in Investor Engagement

• CII’s Cautious Approach
  • Supports shareowner discretion for stewardship (via proxy votes, portfolio company dialogue), but does not provide proxy advice or participate in member-company engagements ([10:10]).
  • Hosts closed-door investor-company meetings but avoids situations where collective decision-making could invite antitrust scrutiny ([12:37]).
  • Internal practice and external messaging emphasize non-collusive behavior.

"We're intentional about not requiring or allowing collective decision making or action with respect to any commercial issues, including... voting of securities." — Jeff Mahoney [12:37]

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4. Financial Activism: CII’s Relationship and Disclosure Stance

• Diversity of Member Views
  • "Big A" (hedge fund activism) versus "little a" (shareholder proposals)—few activist hedge fund members within CII ([15:54]-[16:31]).
  • CII policy: Encourages transparency and public disclosure for all institutional investors, including activists ([17:25]).
  • Historic tension between pension funds and hedge funds has softened when alignment with fiduciary duty to maximize long-term returns is clear ([19:53]).

"A CII asset owner member will be more likely to support an activist investor when the investor's goals... appear to be clearly aligned with the member's view of their fiduciary duty to maximize long term financial returns for retirees." — Jeff Mahoney [19:53]

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5. Federal Regulatory Developments & CII’s Advocacy

a. Shareholder Proposal (Rule 14a-8) Changes

• Recent CII policy defines the ability to submit and vote on proposals as “a fundamental right” ([23:59]).
• Argues that shareholder proposals drive adoption of governance best practices (e.g., majority voting, board independence) ([24:37]).
• Criticizes arguments that proposals are overly burdensome; costs are minimal compared to benefits ([27:24]).

"The ability to submit and vote on shareholder proposals is a fundamental right." — CII Policy Amendment [23:59]

• Anticipates SEC proposals that may restrict 14a-8, especially for ESG; CII will oppose any efforts to make proposal submission more difficult ([31:55]).

b. Quarterly Reporting Requirements

• CII supports current quarterly (10-Q) disclosure ([33:07]).
• Cites past (2018-19) and likely forthcoming opposition to shifting to semi-annual reporting.
• Disputes the claim that quarterly reporting drives short-termism, citing lack of supporting empirical evidence ([35:07], [36:56]).

“Requiring quarterly reporting does not, in our view, lead public company managers to focus on short term results to the detriment of long term performance.” — Jeff Mahoney [35:07]

c. Mandatory Arbitration Clauses

• Strongly opposes forced shareholder arbitration in public company documents ([39:43]).
• Cites due process and transparency concerns, including limited discovery, rare right to appeal, difficulty in class actions, and lack of public record ([41:09]).
• Notes that some corporate defense attorneys advise against it due to risk of “massive arbitration” ([42:22]).

“We have a long standing membership approved policy that includes a provision opposing forced share owner arbitration clauses in public company governing documents.” — Jeff Mahoney [39:43]

d. Early Index Inclusion (e.g., SpaceX in NASDAQ 100/S&P 500)

• No substantive position yet; calls only for robust public consultation by index providers on rule changes ([45:52]-[47:01]).

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6. State Law: Delaware and Beyond

• CII's Growing Focus on Domicile Choice
  • Recent research and policy amendments highlight importance of state incorporation decisions (Delaware, Nevada, Texas, Cayman Islands) ([48:14]).

a. SB313 (Shareholder Agreements Post-IPO)

• CII publicly opposed Delaware’s SB313 permitting corporations to adopt control-altering agreements post-IPO without a shareholder vote ([50:21]).
• Criticized for undermining “one share, one vote” and for possible negative impact on Delaware’s corporate law reputation ([52:01]).

b. SB21 (Conflicted Controller Transactions)

• Opposed to SB21’s relaxation of protections in conflicted controller transactions ([53:44]).
• Stressed concern over looser definitions of director independence, dilution of shareholder litigation/inspection rights ([56:55], [58:02]).
• Warned shift may prompt more investors to seek incorporation outside Delaware ([55:49]).

"An independent director is a person whose directorship constitutes his or her only connection to the corporation." — CII Policy Quote [57:45]

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7. Broader Trends: The Increasing Challenge of SEC Rulemaking

• CII has observed a meaningful rise in difficulties for the SEC to enact rules that survive legal challenges ([60:23]).
• Major contributing factors:
  • End of Chevron deference (Loper Bright case): Federal courts no longer defer to agency interpretations ([61:10]).
  • Major Questions Doctrine: Courts are more willing to overturn “transformative” rulemakings without express Congressional approval.
  • Heightened “arbitrary and capricious” scrutiny under the Administrative Procedures Act.
  • First Amendment (compelled speech) arguments now more frequently raised.
  • Increased norm of routine litigation against new SEC rules ([63:18]-[66:55]).

“To survive…the end result is that final SEC rules are more likely than ever to being stayed, revised, or entirely struck down by the federal courts.” — Jeff Mahoney [66:55]

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8. What’s Next for CII: Upcoming Priorities

• Plans to engage on SEC proposals to “streamline or rationalize” disclosure (including opposition to reducing requirements) ([67:17]-[67:56]).
• Support for expanded disclosure around dual-class voting, non-GAAP executive compensation measures.
• Continued advocacy on shareholder proposal rules (14a-8), multi-class share transparency, and executive disclosure ([69:17]-[72:10]).
• Ongoing focus on "transparency" as a foundation of all CII advocacy and governance agenda ([73:32]).

"Transparency is an important part of transparency." — Jeff Mahoney [73:32]

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Memorable Moments & Quotes

• On ESG:
  "You will not find those [ESG] letters anywhere in any of that literature." — Ann Lipton [04:49]
• On Financial Activists:
  "There's always been a basic tension, the union versus...the hedge funds and all that." — Mike Levin [19:25]
• On Rulemaking:
  "SEC rulemaking is more difficult now than it has ever been in their entire history." — Jeff Mahoney [61:10]
• On Arbitration:
  "Some corporate defense counsel...have advised their clients not to adopt mandatory arbitration provisions because...having thousands of individual arbitration claims filed at the same time...this is going to be worse for you." — Jeff Mahoney [42:22]

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Timestamps for Key Segments

• CII Structure & Mission: [01:52]–[03:37]
• CII’s Approach to ESG: [04:13]–[07:14]
• Policy Process & Internal Debate: [07:51]–[09:52]
• Antitrust & Investor Coordination Issues: [09:54]–[13:56]
• Rise of Environmental/Social Topics at CII: [13:56]–[15:05]
• Financial Activism & Historical Tension: [15:51]–[21:09]
• Federal: Shareholder Proposals & SEC Rules: [23:36]–[32:39]
• Quarterly Reporting Debate: [33:06]–[38:54]
• Mandatory Arbitration: [39:18]–[45:00]
• Early Index Inclusion: [45:30]–[47:12]
• CII on State Law (Delaware Focus): [47:12]–[59:06]
• Trends in SEC Rulemaking and Litigation: [60:23]–[66:55]
• Upcoming CII Advocacy Priorities: [67:17]–[73:46]

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Podcast Tone and Style

The conversation balances deep policy and legal analysis (Ann Lipton), practitioner and activism insights (Mike Levin), and detailed, sometimes wry, commentary from Jeff Mahoney. The mood is candid, collegial, and occasionally irreverent, especially when discussing regulatory frustrations and Delaware intrigue.

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This summary presents the rich substance of the discussion for those who missed the episode—capturing not just policy positions but the ongoing tensions, evolving legal landscape, and CII’s strategic responses at the intersection of law, finance, and activist investing.

Transcript

[A]

Welcome to Shareholder Primacy from Free Float Media, a podcast about activist investing, securities law, and all the ways the financial and legal worlds intersect and collide in real life. Ann Lipton and I are here again for you. Ann is a law professor at the University of Colorado Law School who teaches and researches securities and business law. She holds up the legal end of this podcast.

[B]

And that's Mike Levin, an activist investor who lives and works in Chicago. He covers the financial side of our podcast.

[A]

Hey Ann. We have a guest today. We have a guest today, so we are delighted. Hi Jeff, how are you?

[C]

Good. Great to see.

[A]

We have, we have a guest, Jeff Mahoney of the Council of Institutional Investors. Jeff is the general counsel there. He is responsible as general counsel connotes for all things legal. So, so like he writes the letters that CIA sends to Congress and to the sec, among many other important roles. He's also part of the leadership team there and can help us understand kind of what the CIA is about over time in these days and where it's going on. A number of subjects and questions.

[B]

Yeah, we have a lot of questions about what CII and its members think about all the stuff that's going on. So we have a big list of them to talk to Jeff about. And before we continue, really quickly, we've gotten some emails. We'd love to get more. You can email us at shareholderPrimeCrimeFloat LLC.

[A]

Yes, please email us. We want to hear what you think of our interview with Jeff today. How's that sound? All right. Hey Jeff, we have some followers here. We're going to start off easy. Some followers here that, believe it or not, are possibly not that familiar with the cii. Can you just give us the brief overview about who the CIA represents and kind of what it does?

[C]

Sure. Thank you for the question. And first of all, thank you, Ann and Michael for inviting me on your podcast. I'm a huge fan, so it's truly an honor for me to be your guest and I look forward to hosting you as my guests on a future corporate governance podcast.

[A]

Let's see how you think about that when we're done today.

[C]

So the Council of Institutional Investors is a non profit, nonpartisan association with core members that are us public, corporate and union employee benefit funds with combined assets under management of over $5 trillion. That's with a T. Those members include major long term shareholders with a duty to protect the retirement savings of millions of workers and their families, including public pension funds with more than 15 million participants. These, in my mind are true and Real Main street investors through their pension funds. Since the EYES formation in 1985, we have developed and maintained a comprehensive body of membership approved corporate governance best practices that are well respected in both the investor and corporate communities. Those policies are free, publicly available on our [e-mail] and those policies provide the foundation from which CII advocates matters of importance to our members.

[B]

Cool.

[A]

All right, so do you want to ask the next question?

[C]

Yeah.

[A]

And that's fine with me.

[B]

Sure. Well, I mean, one thing that's been on my mind, I mean, obviously there's all this stuff going on with ESG and ESG proposals and various kinds of controversies over these. So we wanted to know, I wanted to know how your membership views all of those developments and in particular, is there disagreement among members? I mean, the fact is that this has become very politicized and you've got members from all over the country, from public and private, as you said. So how are you navigating this? How do your members feel about these issues?

[C]

Well, since our formation in 1985, as I mentioned, our expertise and focus has been on the G of ESG corporate governance and corporate governance best practices at the companies our members invest in. With our primary focus being on the corporate governance of U.S. public companies. So our comprehensive set of membership approved policies, believe it or not, does not include a single reference to esg. As I indicated earlier, we will not

[A]

find those, we won't find those letters anywhere in any of that literature.

[C]

That's correct. Nowhere in our membership approved policies will you find esg. As I noted earlier, CII is a nonpartisan organization. And as you both know, the divide between the pro ESG and the anti ESG movement is largely partisan.

[B]

It wasn't always so. So I didn't know. You have to navigate more recently.

[A]

True.

[C]

As you mentioned earlier, our asset owner members, including our board members, are based in red, blue and purple states. And as you know, some red state treasurers and other financial officers support divestment efforts and antitrust actions targeting ESG policies, often arguing that ESG considerations subvert traditional fiduciary duties by prioritizing progressive political goals over maximum financial returns. On the other hand, some of our, some of their blue state counterparts publicly support mandating consideration of ESG factors, arguing that long term financial risks, such as climate impacts are material to an investment's bottom line.

[A]

So, so the, the focus. Is it fair to say that the way that the CII has kind of navigated some of these more, and I want to explore this a little More, more recent kind of controversies about ESG is to kind of maybe stay above it. Is that, is that, is that kind of fair or is that is not quite accurate?

[C]

Well, we're a big ten organization, so when we develop or amend our policies, you know, we focus on big tent issues. And when issues are highly partisan, it's less likely those are the types of issues that are going to get the approval of our policy committee, our board and then our asset owner membership. Any policy change has to go through the process and get approval from all three of those groups. And that's very difficult when it's a partisan issue.

[A]

How contentious or maybe not. Has the g. Have these governance debates gotten within the committees, within the membership and so forth? You know, setting aside the environmental and the social stuff, stuff where I'm guessing CIA sometimes is called on to sort of take positions and needs to. And we'll get to that in a minute. But are the, are the governance disputes pretty heated or is there tend to be pretty uniform agreement about a lot of the governance policies? How does, how does that kind of look these days?

[C]

Well, as I mentioned, in order to get to be a CII membership approved policy, there's a difficult route that includes policy committee representation and board representation and member representation. And those core asset owner members that do those votes come from public pension plans, union pension plans, corporate pension plans, and as I mentioned earlier, they're from red, blue, purple states. So we have differing views when we discuss most issues. Sometimes we are unable to get approval either at the policy committee or board level for an item, so we have to continually revise it or decide to move to a different item, just drop the item and move to something else where we can get the majority support from the committee and the board. Typically by the time we get it to the membership, it's in such a place where the membership generally approves the policy or the policy change. But it can be a difficult road to get there. You know, we start talking about some issues, including in some cases GE issues, and we just ultimately drop the issue because we're not able to get approval either at the policy or board level. Other times we're able to tweak the issue to get sufficient support to get it through. I think it's fair to say when you have public, corporate and union employee benefit plans being the core of your membership, there's a lot of discussion back and forth that goes on before we can ever get to the point of having a policy or policy amendment be voted on by our entire membership.

[A]

All right. Cool.

[C]

Okay.

[B]

And just, you know, I suppose if the ES are out of the picture, maybe it's less of an issue. But one thing, there's been so much discussion lately about antitrust concerns. If shareholders get together and urge things, is that an issue that you guys have to handle?

[C]

Well, the preamble to our membership approved corporate governance policies. It explicitly supports shareowners discretion to employ a variety of stewardship tools to improve corporate governance at the companies they own. And those stewardship tools referenced in the preamble explicitly include casting well informed proxy votes and engaging in dialogue with portfolio companies. However, in answer to your question, CII as an organization does not provide proxy voting advice to our members or generally participate in member engagement with portfolio companies. However, with respect, there is an exception to that with respect to member engagement. During our semi annual conferences, CII offers what we describe as a CII Investor Company Engagement exchange. That exchange involves kind of a matchmaking program where we host, that we host, that facilitates private one on one meetings between institutional investors and corporate representatives. It provides investors direct closed door access to senior management, investor relations professionals and board directors from publicly traded companies, as you indicated. And you know, we, we are well aware that some state and federal officials and other parties have alleged that various meetings of investor groups violate antitrust laws. Right. But to date I'm not aware of a state or federal official or any other party for that matter that has publicly alleged that CII has violated antitrust laws in some way.

[A]

I'm glad you brought that up because it's really interesting now that you think about it. CIA hasn't, this is probably good, hasn't gotten nearly the attention, probably none of the attention that you see from the proxy advisors or certain major funds that are big invest, you know, members of CIA. I'm thinking, you know, CalPERS and the new York funds and so forth. Yeah, Mike, CI has sort of avoided a lot of that controversy, hasn't it?

[C]

Well, yes. And Mike, you know, part of that might be because we're intentional about not requiring or allowing collective decision making or action with respect to any commercial issues, including the acquiring, holding, disposing and or voting of securities.

[A]

Sure.

[C]

We've communicated that message both to our members and publicly to those who, who access our website. So I think that's been helpful to us.

[A]

Okay, so. So the members have sort of, or the proxy advisors or others, you know, have sort of taken a lot of the, taken a lot of the heat that has been kind of launched at the shareholder community at large, I guess. Huh. Interesting. All right. So, so they, they tend to kind of make their own decisions where CII kind of acts as a coordinating body, but coordinating only to an extent, but also educational, you know, with all the long list of policies and research and so forth, kind of helps those members get a lot smarter about, in this case, mostly governance issues. I'm guessing there's not nearly as much research on environmental, social. There's plenty of other people who do that. Right?

[C]

I mean, when I started at CII 20 years ago, we did very little education related to environmental and social issues. We do much more today. If you go to any of our conferences, you'll see some programs, sometimes it's our own, sometimes it's sponsored events on the side of our program that get into ENS issues. So when I started 20 years ago, that that didn't happen. But because of member interest in that space, we do do education and you know, whether it's webinars or podcasts or other educational events at our conferences and say, and then we have sponsored events alongside our conference that we aren't responsible for in those events much more frequently than 20 years ago, where we rarely had any events, whether it's ours or sponsored events on ens. It's much more common now that we have at our conferences sponsored events related to ens.

[A]

Wow. Hey, here's another question for you. We have a couple more and then maybe we'll take a quick break. I'm really. And this, this is a little more directly related to also what I do day to day, but what's the current thinking among, I guess, the CIA members and so forth about what I'm going to call for our purposes right here, financial activists and their, or I should say our efforts at, you know, our portfolio companies. Now, Ann and I have struggled. I don't know if struggled, but we've debated extensively what the right label for those sometimes called hedge fund activists, whatever, folks who aren't like ESG proponents but are really, they're turnarounds. Go ahead, Ann.

[B]

Yes, I just call it Big A and little A.

[A]

Big A and Little A.

[B]

Great big A is the hedge fund intervention stuff and little A is the shareholder proponent.

[A]

Now there's are these kind of funds and these kind of investors. How active are they at cii? I don't think there's many CIA members that come from this community. Is that correct?

[C]

We have a handful of members that I think would. Would fit that category and they participate at various levels in connection with our conferences and our educational programs.

[A]

So it's not. There's Not a lot. Okay.

[C]

As I mentioned, you know, in response to the earlier question is when you say, you know, what's the current thinking? As I mentioned earlier, you know, our core members include public, red, blue, state, purple, corporate and union and pension plan. So when you ask me any question about anything, you know, there's, there's not going to be a single answer coming out of our core members given, given that diversity. Well, we currently do not have any membership approved policies that explicitly address so called financial activists. One possible exception to that is we do have a membership approved policy that goes back to 2009 entitled Best Disclosure practices for Institutional Investors. And that policy states that in order to foster an environment of transparency and accountability institutional investors, and it includes specifically pension funds, hedge funds, private equity firms and sovereign wealth funds, among others, that they should under our policy make publicly available in a timely manner series of information that includes proxy voting guidelines, proxy votes cast, investment guidelines, names of governing body members, and an annual report on holdings and performance.

[A]

So that's a policy that was adopted, you know, 15 or so years ago for just. And that applies to anybody, not just,

[C]

not just our core members, but broadly including activists, so called activist members.

[A]

The reason I was kind of wondering about this is because I, I think again I wasn't there at the founding, none of the three of us were. But my understanding or my sense was that there's always, there was at least early on, some kind of what I'll say, wariness between the core founding members, the pension fund members from all sorts of states, as you say. Absolutely right. You know, corporate, government, whatever, and some of the hedge funds. And again, going back in time, you know, that was at a time when, you know, activists weren't what they are today. They were much more, I'm not going to say reckless, but they were, you know, they were really cutting jobs. They were really going after companies in some very aggressive ways. And I could see where those investors might attract some, some of the ire of pension fund investors whose jobs were at risk here, whose members jobs are at risk here.

[B]

It's always been a basic tension, the union versus Like. Yeah, right.

[A]

Between the hedge funds and all that. And I was wondering if there's a way to kind of characterize the state of, you know, if there's even some sort of a way to describe the current thinking. I mean, is there like some sort of a much warmer alliance? Are they, is it still. Are still people wary? Is people haven't thought about it since then. What's the, what's. What's your, what's your take?

[C]

Yeah, Michael, the way I would describe it, my view is that, you know, the one thing that all of our core members have in common is that they have long term obligations to retirees that are the beneficiaries of their funds. And when you look at it that way, I think a CII asset owner member will be more likely to support an activist investor when the investor's goals, as evidenced by their prior track record, their in the current plan for a particular portfolio company when those goals appear to be clearly aligned with the members view of their fiduciary duty to maximize long term financial returns for retirees. I think that's kind of the decision point for all of our members. Now do some of them get there in different ways? Do sometimes they reach different conclusions? And going through that thought process, you know, yes, they do. And that relates back to my earlier point that we have very diverse core members in public, corporate and union employee benefit plans.

[A]

Sure. Well I think I like that answer. I think that's, well, no, really, that's encouraging that there's a commonality of interest between financial activists who are really just again wealth maximizers, you know, and pension, pension fund managers or asset owners as you've talked about them, who are also, you know, they may have other considerations but overall the view seems to be for most of them that they also are trying to maximize returns. But in this case for their retirees, I'm trying to do it for LPs and the CIA members predominantly are doing it for their how many millions, 15, 20 million, whatever number of retirees that they're responsible for. Wow. Okay, that's nice to hear. We have a whole lot of other questions we want to cover because there's a lot more specific stuff around developments at the federal level, at the state level, all sorts of things that are going to get a little more legalistic here. So what I'd propose to do is let's take a quick break and then we can return to those. Does that sound good to everybody?

[C]

Okay, great.

[A]

We're going to take a break and come back here at Shareholder Primacy.

[C]

Shareholder Primacy is brought to you by freeflowanalytics.com the only free database of corporate directors, their influence and their performance. If you own a stock or retirement plan, go to freeflowanalytics.com and look up which of your elected directors are performing well and which aren't. Use your vote in the alternative democracy and get your data @free flow analytics.com now back to the show

[B]

welcome back to Shareholder Primacy. I'm Ann Lifton and I'm here with Mike Levin. And we're also here with Jeff Mahoney of the cii.

[A]

The Council of Institutional Investors.

[B]

The Council of Institutional Investors. So we're going to talk about recent developments and how CII and its membership think about them.

[A]

Right. Should we start. Let's start at the top and go and dive deep. And the top means the federal level.

[C]

The federal level?

[A]

Yeah, federal stuff. Federal, which is securities law and the SEC and all that. I don't know. Ann, what do you want to ask Jeff about? We got him here, we might as well just pick his brain.

[B]

Jeff, I know you said you guys don't take positions on ES issues, But what about 148 proposals and the developments there? Considering that a lot of those are being used for es. Not always. Some of them are just pure governance. But how does CIA feel about the SEC's new positions and restriction? Well, I mean, that's state, not federal, but four TAA proposals. All that restrictions.

[A]

Sure. What's going on?

[C]

So at this spring's CIA conference, our asset owner members approved an amendment to our existing corporate governance policy on shareholder participation. And that amendment includes the following new sentence that states states, quote, the ability to submit and vote on shareholder proposals is a fundamental right and allows investors to monitor and hold corporate management accountable. Some of the background and intent.

[A]

Yeah,

[C]

to give you a little bit of the background and intent behind that policy, we actually had a number of bullet points that we discussed during the development of this policy through the Policy Committee board and to the membership vote. And I expect, you know, some of those bullet points in the, in the background intent will probably be expanded upon in future CII comment letters in response to the expected near term issuance of a securities and Exchange Commission proposal to amend and quote, modernize, unquote, Rule 14a8 as described in the SEC's current Unified Regulatory agenda. So I'll just run through quickly just a few of the bullet points that was part of the discussion as we were developing and approving that policy. So first, the basis and intent talks about the fact that we believe shareholder proposals have encouraged many companies to adopt corporate governance policies that today are viewed as best practice. And we give some examples, including electing directors by majority vote, which is a radical idea A decade ago when shareholders pressed forward in proposals is now the norm at 90% of large cap companies. We also talked about other governance enhancements such as independent directors constituting a majority of the board and annual elections of all directors. Those were also substantially driven by shareholder proposals. The second point we discussed was that we believe that the critics of shareholder proposals often contend that shareholder proposals are a growing burden on companies. But we look at the data, and the data on shareholder proposals, at least that filed between those filed between 2004 and 2008, are inconsistent with the critics view. In addition, we believe that companies often exaggerate the cost of shareholder proposals. We believe that the cost is largely their choice. That much of it, it's the cost of trying to exclude the proposal from the proxy, and the cost to actually put a proposal in a proxy statement, we view as the de minimis.

[A]

It's negligible. It's like nothing.

[C]

We agree. In any event, we've concluded that the costs of shareholder proposals to companies are far outweighed by the benefits to shareholders of increased board accountability. So to the extent the SEC puts out a proposal to amend 14A8, which we very much expect they will, that seems to be a priority of the sec. You know, we will be making these points and expanding upon them as well as a number of other points. We, we have weighed in on many occasions to the SEC on shareholder proposals. You might remember, in the First Trump administration, SEC Chair Jay Clayton had a proposal that amended 1488. We had a 60 plus page comment letter addressed every single question that was raised in that proposal. And I expect you'll see the same again if Chair Atkins proceeds with the proposal to amend 1488.

[A]

Let me go back and just explore a little more about one aspect of this. We started by talking about 1488 proposals, but your, the language that your membership adopted seemed to be kind of broader. I mean, I view 14A8 as this, you know, legal mechanism and so forth, the regulatory mechanism. But I think you were getting at something a little deeper, which is the whole idea that shareholders, should. Shareholders have the right to be allowed to, like, propose business at an AGM. And, and that could be under 14A8 regulatory process. It could be under 14A4, which is the whole proxy solicitation method. I'm assuming that you're agnostic as to how this works between those two. The idea of, you know, precatory proposals compared to bylaw amendments, which is a hobby of mine, and so forth. Is there, is there any nuance here that's worth exploring? Is it really the right to just propose business that you think that was, was the most important part of this?

[C]

Well, yeah, I think our members wanted to make it clear that they view this as a fundamental right. We had not said that previously wasn't in our existing policies. It was not, not a term that we had used in the past in discussing shareholder proposals, but our membership was very important that we do. So I think, you know, looking ahead as to the expected proposal to amend 14 8, I thought they thought it was important to get that, that point out. You know, historically we have been quite pleased with the, you know, the SEC staff's operation of 14A8, the no action process. We've had times when we disagreed with the SEC staff decision and we've let them know about it. But overall we think that process has been pretty efficient and effective and the alternative we think is unlikely to be superior, whatever you think that alternative should be.

[A]

Because there would be some members that I think that get deeply frustrated with the no action process as it used to be and it doesn't really exist anymore. But. Go ahead.

[B]

But the other thing this is, I mean, I don't know if you can possibly anticipate the kinds of things, but one of the things that's been proposed in terms of what may change about 1488 is to try to specifically restrict environmental social proposals. And since you can't take a position on environment, I mean, is your policy, do you view it as. It doesn't matter whether it's environmental social, the point is to have shareholders be able to vote on it, or is that going to be. I mean, if you can't answer it because you haven't seen it, that's completely fine. But I mean, I just wonder if that's going to turn out to be a fault line if what they propose is restricting environmental social specifically.

[C]

Yeah. I can't predict what, what they're going to propose other than, you know, based on the statements. You know, it does appear they're going to make it more difficult for shareholders to get their proposals on company proxies and.

[A]

Right.

[C]

And we're going to. As we, you know, we shared our concerns on making it more difficult.

[A]

Right.

[C]

Under Chair Clayton and. Excuse me. And I think particularly bolstered by this new policy language, we're going to have concerns again if the objective seems to be to make it more difficult.

[A]

Cool. All right. There's other things going on at the sec. There's a few things I don't know, Jeff, if you've been. Probably started your job. So, you know, there's some other things they've talked about. Yeah, like. Like quarterly and semi annual reporting.

[B]

Right. I don't think you guys have weighed in on that. I'm guessing you're Likely to.

[A]

Has there been a position taken yet about that proposal, that regulatory thing?

[C]

Well, yes, actually. This again is kind of a repeat of the first. What happened during the first Trump administration where, if I recall, you know, President Trump had a meeting with some corporate executives. And following that meeting, he tweeted out the idea of eliminating quarterly reporting. And then Jay Clayton then he put out a document, a request for, for comment. It was titled Request for Comment on Earnings Releases and Quarterly Reports. So Jay Clayton put that out. That was in December of 2018, following the President tweet. And we wrote a comment letter in response to that request. And then Jay Clayton held a public roundtable on the topic. And I, I participated on that roundtable. And then interestingly enough, the project was then essentially dropped after the roundtable was held.

[A]

So in other words, CIA didn't like it then and the semiannual and probably doesn't like it now.

[C]

Well, yeah, I can highlight some of the things we said back in response to the 2018 request for comment. Yeah. Just to summarize a couple of the arguments we made back then, which I, I suspect will be similar in the, in response to the proposal they put out for comment. And yes, and we currently do expect to respond. I just started reading it. It's, it's not the shortest SEC proposal ever. And so I'm still in the early parts of it.

[A]

You're still working through it.

[C]

You. And I am still working through it. I was actually reading it this past weekend and I got a long ways to go. But a couple of points we made before I think are likely to be made, perhaps expanded upon in response to the current proposal. So one point we made is that we believe investors, companies and other market participants benefit from the current reporting frequency model, which, as you know, requires domestic issuers to file quarterly reports on Form 10Q. Second, we made the point that the requirement to report historical earnings on a quarterly basis we believe to be a key element of the timely and accurate information flow that underpins the quality and efficiency of our capital markets. And three, we made the point that the existing quarterly reporting requirement helps ensure that important information is promptly and transparently provided to the marketplace, allowing investors to assess concrete progress toward strategic goals. And finally, in 2018 or our 2019 letter, we made the point that requiring quarterly reporting does not, in our view, lead public company managers to focus on short term results to the detriment of long term performance. We view that point of view as outdated and not supported by the existing empirical evidence.

[A]

Yeah, evidence is, I mean, I'm with you.

[B]

I mean, I know. I mean, I just keep saying everyone's investing in AI for the, like, distant future and they're throwing billions of dollars at this. The idea that somehow quarterly reporting is.

[A]

Yeah, anyway. All right, so I talked to some

[C]

of the academics who have done research in this space that I cited in my 2019 letter, and I asked him, you know, is there anything new that would lead to a different result when doing an economic analysis of getting rid of quarterly reports? And they said, no, I haven't found anything yet.

[A]

Yeah, no, the quarterly report. I mean, you know, as the economist among us, because there's two lawyers on this, this podcast, I mean, I can assure you that the evidence is that, you know, the difference between short and long term. There's a lot of executives and company leadership that may kind of jump up and down and say, oh, you know, this really, you know, this quarterly reporting makes us make these. But if they're making the decisions, it's not because of some difference in short and long term. There's all sorts of other pressures that changing out of quarterly report or eliminating quarterly reporting is not going to fix. You know, in the whole academic debate about short term and long term, you know, the long term is just a series of short terms. I can show you that. I can show you that mathematically. So anyway, go ahead, Jeff.

[C]

I'm still early on reading the proposal. I haven't got to the economic analysis yet, but just looking at some of the email traffic, there's at least two prominent academics whose studies apparently have been cited in the proposal, and they have both, at least about it. They both suggested that the research cited is overstated or it's cited in a way that's misleading.

[A]

Don't use our paper. Don't put our names on this. Oh, right. Oh, wow. All right, let's.

[C]

There's a couple other. I don't have the proposal yet, but I'm looking forward to reading it and reading back the comments from some of those academics on their view of how their paper was cited and what it was cited for.

[A]

Well, I'm relying on the two of you to read this proposal. So tell me, tell me about, tell me about it when you. When you get there. So anyway, let's go on. There's a couple other other kind of subjects. Annual. Should we ask about these other other couple?

[B]

Yeah. So mandatory arbitration in which, so far, public companies. So this is just bylaws or charter provisions that would require arbitration usually of securities claims. The only company that so far has actually done it is of course the biblical oil and gas company. But the reports are that SpaceX is going to have one of these. So does CII have a view?

[C]

Yes, we have a long standing membership approved policy that includes a provision opposing forced share owner arbitration clauses in public company governing documents. And we've in the past have described those clauses as a potential threat to principles of sound corporate governance that balance the rights of shareholders against the responsibility of corporate managers to run the business. That policy was based in part on a number of problems that were identified when we were developing that policy by our members and other experts. And I just mentioned a few of them that were part of the basis for that policy. One, you know, concerns that the process for discovering evidence may be limited in comparison with a judicial proceeding. Concerns that the right to appeal may be rare. Concerns that arbitration may not allow similarly impacted parties to organize as a class. And fourth, that disputes that go to arbitration do not necessarily become part of the public record and that can undermine deterrence.

[A]

These are all the same things, Ann, that you've worried about. That's the whole essay.

[B]

Companies are using them precisely because they make it difficult. You can't bring class actions.

[A]

So. So, so the whole idea of mandatory arbitration is something that the CII has had a longstanding policy.

[B]

It's funny though, if a few large investors brought serial claims against Elon Musk and Space X in accordance with their mandatory arbitration bylaws, which we haven't seen yet, but I'm assuming they deny class status and so that Elon Musk had to be deposed and testify multiple times. That would be funny.

[A]

That would. Wow.

[B]

That. Well, that would be. That's part of the reason why companies haven't leapt on these. It's because like among other things, you don't have a lot of the protections of the pslra. And also they don't like the idea of multiple investors suing and then having to have their officers.

[A]

Some resourceful plaintiff would start to really tie up company.

[B]

Yeah, I mean Section 11. Well, Section 11 has its own issues, but may not be applicable in SpaceX if it doesn't drop below offering price. But right it. It could come up if there are 10B claims.

[A]

We'll see. Anyway, one more is one more federal ish.

[C]

Please can I make one more point on, on arbitration. We've made it clear that we don't oppose arbitration as a concept. We've specifically in our policy refer to forced share owner arbitration clauses in, in public company governing documents. That. That's where our concern is. Yeah, And I don't know if you've had conversations with any corporate defense lawyers recently, but one of the things I've heard, and I'm not sure how broadly this is viewed this way, but, but some corporate defense counsel, as I understand it, have advised their clients not to adopt mandatory arbitration provisions because some of them have concluded that replacing class actions with mandatory arbitration could result in the complexity and cost of having thousands of individual arbitration claims filed at the same time. What some have referred to as massive arbitration, which has been the recent experience in the consumer litigation space. So I, I've read as you have, and that, you know, SpaceX is going to have a provision, but I've also heard from others that they've had similar, if they've heard similar information from defense counsel that I have, that some of them are telling their clients, no, don't go down this path, at least from a resource point of view, this is going to be, this is going to be worse for you.

[B]

It's more than that. It's like the, like the thing about consumers is the expectation with consumers is that, you know, most of them have claims that are so small that it's just not worth bringing them individually. And lawyers have found ways to do it, a lot of them anyway. But that's going to be worse in the investor space because there are a lot of investors who have, you know, reasonable size investments that would make it economical to bring claims, at least in arbitration individually. And it's more. And the plaintiff's bar is so opposed to these arbitration clauses that they're going to make sure to bring multiple arbitration claims if in companies that adopt them, essentially to establish you don't want to do this.

[A]

So. But what's interesting here as well is that what you and I have talked about almost on a strictly kind of theoretical basis and kind of hypothetically is something. Jeff, you've heard from company attorneys that, in fact, is a legitimate worry.

[B]

They have a lot of protections in federal court that you don't get in arbitration. So I'm actually surprised. I mean, we'll see the SpaceX thing when we see it. But the reason I'm surprised is there. If what he wants to do is kill section 11 claims, which is claims by people who buy in the offering, there are a lot of ways to do it without mandatory overseas.

[A]

Right?

[B]

I mean, there really are. And plus, I'm not sure they're going to be Section 11 claims, because for Section 11 claims to happen, it has to drop below the offering price. And I have no reason to Think that's going to happen?

[A]

All right, let's keep going.

[B]

Yeah. So which as long as we're talking about SpaceX, is this a SpaceX issue? Early index inclusion. So Nasdaq 100 changed its rules so that the mega IPO, SpaceX being the first but also open air anthropic, can be added to the index. Early S&P 500 is considering changing its rules along these lines to CI have a view about this?

[C]

No, not at this point in time. We have a membership approved policy entitled A Statement on Index Provider Consultation Processes. And that statement urges index providers to conduct robust public consultations when contemplating significant changes in methodology related to major indexes. That statement, however, does not take a view on any substantive issues relating to early index inclusion, such as Nasdaq's recent adoption of a fast entry rule that reduces the time it takes for certain newly public companies to be included in NASDAQ 100. So to date, CII is not taken a public position on early index exclusion inclusion, including Nasdaq's fast entry fast track. It doesn't mean we won't take a public position at some point in the future, but we have not.

[A]

Right now you're kind of quiet on that.

[B]

Well, and right now S and P, I mean, as I understand it, they are consulting, so I guess they may very well be following CIS policies like S&P.500 hasn't made its decision yet.

[A]

All right, let's, let's talk a little bit about state level regulatory stuff. Now. I think I have a broad question about sort of CI's interest. I mean, to what extent does CII institutionally or as a members, think deeply and then adopt policies at the state level? You know, Delaware in particular, but other states, what's your level of involvement relative to kind of federal level regulatory and legal issues?

[C]

Well, on the state corporate law issue, just last month the Council of Institutional Investors Research and Education Fund, which is our Nonprofit affiliate of CII501C3, we issued a research report that offers a high level comparison of jurisdictional approaches among Delaware, Nevada, Texas and the Cayman Islands.

[A]

Oh, right, I saw that.

[C]

Yeah. The table.

[A]

Yeah.

[C]

It summarizes what we view as critical corporate governance and shareholder rights differences, such as director and officer liability, fiduciary duties and shareholder litigation rights, highlighting how specific features impact corporate oversight, investor protection. But you know, with, and within, you know, the past couple years, CII asset owner members have approved two amendments to our existing corporate governance policies on reincorporation and on accountability to investors. And those, oh, revisions to Those policies reflect the view that, you know, domicile choices have become a significant issue for many of our members and, and other institutional investors.

[A]

All right, so. So it doesn't. Maybe you do advocate kind of on individual issues, say I'm going to focus on Delaware or what? We should focus on Delaware because that's the biggie was there and there were like two or three kind of more recent ones. I don't know, Ann, which ones would you think about would be ones with

[B]

changes to Delaware law, you mean?

[A]

Yeah, sure.

[B]

Well, I mean, obviously we have two big things, which is when rapid succession where they authorized these sort of overweening shareholder agreements and then they sort of made it easier to cleanse conflicted deals. Does CII have a view on those

[A]

changes or did you, did you advocate. Did. Was there, were you active, like in Delaware, I suppose, in the legislature when some of these changes were coming out? Was that, was that something that CIA was getting involved in?

[C]

Yes, we did.

[A]

Oh, okay, good. Let's, let's hear about that.

[C]

So start with SB313, right? Yep.

[B]

That's the shareholder agreement one.

[A]

Was that man, was that the Moalis one?

[C]

Yes, yes, yes.

[A]

Okay, thank you.

[B]

Correct.

[A]

Great. That's how I think about it.

[C]

So we, we publicly opposed that bill, including we submitted a letter in July 2024 to the governor of Delaware requesting that he veto the bill. Of course he didn't veto the bill,

[B]

but did not happen.

[A]

Yeah, he was not.

[C]

So our concerns about that bill included a number of points and I'll just mention a couple of them. One, there was, in our opinion, no need for what we described as a legislative rush to judgment as to whether the opinion in the Moelis case was correct or not, because the opinion was subject to potential review by the Delaware Supreme Court, which had not yet ruled on the opinion when the bill was developed and approved. Second, we noted that under the provisions of the bill, a company could go public with a single class capital structure and then after the company is already public, confer comprehensive control rights by contract without any shareholder vote. Thus, in our view, we saw that bill as in effect permitting companies to adopt a capital structure in conflict with our long standing membership approved policy on voting rights, which states that each share of common stock should have one vote. Corporations should not have classes of common stock with disparate voting rights. Policy also says that companies should not adopt alternative structures or mechanisms that similarly misalign voting rights and economic ownership. So we publicly commented that, you know, whether or not CI members and other long term investors have checked to multi class capital structures. We found it very troubling that that bill permitted a company to pursue a post IPO transformation to a stealth multi class capital structure without a shareholder vote. The third argument that we made was just a broader argument that we believe the hallmark of Delaware general corporation law is the careful and deliberate nature in which it's adopted and enforced, as well as the ways in which Delaware law balances board decision making with accountability to shareholders. And we believe then, as we do now, that the enactment of SB313 could impair the reputation of Delaware corporate law because of the perception that influential corporate lobbyists could easily change Delaware corporate law whenever the Delaware Court of Chancery ruled against them.

[A]

Right.

[B]

Which brings us to SB21.

[A]

Same story. Same story with. Same story with the controlling shareholder in

[B]

general, making it a lot easier to cleanse conflicted deals. I don't remember if CII took a position on that one.

[C]

Yes, we did. And actually I read Inspection Rights and participated in some of the discussions, including discussions before the entire General Assembly.

[A]

Oh, wow. Okay.

[C]

Yeah. So after SB313, in March, our membership approved an amendment to our policy on reincorporation. That amendment made two significant changes to our existing policy on reincorporation, in part driven by Senate Bill 313's passage. So, first, the amendment expanded the existing policy on reincorporation to place limits on reincorporation between states. Our previous policy had just focused on reincorporation internationally and not reincorporation between states. So we expanded the policy to include reincorporation between states if the destination jurisdiction offers less robust corporate governance structures. Second, the amendment provided protections for governing documents by including new language indicating that boards should not amend or adopt new articles of incorporation or bylaws in conjunction with the reincorporation if those articles or bylaws dilute shareholder rights. I publicly referenced this new policy before the General assembly in opposition to SB21, warning that the enactment of SB21 and the implementation of this CII policy could lead to more institutional investors supporting incorporations and reincorporations in states other than Delaware.

[B]

Yeah.

[C]

More specifically, with respect to the provisions of SB21, I raised a number of concerns when I was in Delaware and in our related letters, you know, you mentioned that you mentioned some of them, and I'll just highlight a couple. First, that the bill would curtail protections for shareholders in the context of conflicted controller transactions by lowering the default standard of review for conflicted controller transactions, allowing controlling shareholders to escape judicial review for transactions which, under existing Delaware law, were required be negotiated by truly independent fiduciaries and approved by independent and disinterested directors and shareholders. Second, we. We raise concerns that the bill further marginalizes shareholders by amending what it means to be disinterested for purposes of a conflicting troller transaction.

[B]

Right, Right.

[C]

By presuming that a director is disinterested if the board merely deems such a director as independent, or the director satisfies the standard for independence under any actual stock exchange rule. We are particularly honed in on that point because we believe that that approach is inadequate. And more specifically, it falls far short of our long standing membership approved definition of independent director related guidelines for assessing independence. That definition and the guidelines are very extensive in our membership approved policies, but they can be summed up, and are summed up in a single sentence. Our policies are that an independent director is a person whose directorship constitutes his or her only connection to the corporation. So that's far different than what Delaware was including at SB or the exchanges or whatever.

[A]

So. Yeah, third, interesting.

[C]

We did communicate concern about controlling stockholders from liability for duty of care violations, another thing that SB21 did. And, and fourth, we did raise concerns that SB21 restricts shareholders inspection rights to the books and records of companies, limiting the period of time from which shareholders may inspect books and records, and that it heightens the standard for shareholders to request inspection. So those are the four main points we made with our biggest concern. As I referenced earlier, one of our big concerns was how our policy related to independent directors was in significant conflict with the amendments in SB21.

[A]

Right.

[C]

Oh, interesting.

[A]

All right, we are starting to approach our limits of our available time here. So I was gonna. I was gonna ask a couple other more broader questions, Jeff, about kind of like what you've seen. So you, you've been. You've been with the CIA, like, 20 years. Wow.

[C]

You're saying I'm very old.

[A]

No, I didn't say that. I'm saying you started when you were in high school, Right?

[C]

I was a. I was a high school intern.

[A]

Right, but you're also. Hey, you're. You're a cpa. You were an attorney in private practice. You were a law clerk. You worked at fasb. Fasb. I know the. I mean, accounting regulation.

[C]

You're suggesting I couldn't hold a job now, Michael? Is that what you're saying?

[A]

No. No. I don't know. You just kept on advancing your career. Well, no, you held a job at CII for 20 years, and so you've obviously hung around CIA a long time in corporate governance and shareholder rights and so forth. But also like in Washington, how would you kind of characterize what you've seen? What's been the Trend, one or two trends in the past, I don't know, 20 years or whatever that, that is worth kind of mentioning here.

[C]

You know what, One of the changes I've experienced in the last several years, actually over a number of years is what I view as an increasing difficulty of the securities Exchange Commission to issue a final rule that can actually successfully withstand a legal challenge. And I think, you know, there's at least five, at least five reasons for this change that I believe has occurred. And that's beyond, you know, the budgetary issues, the reduction in staff.

[A]

Yeah, yeah, yeah.

[C]

Now the new political process where you have to go through OMB for proposals and final rules. Setting all that aside, you know, I think there's, there's been a number of reasons that, you know, I personally think SEC rulemaking is more difficult now than it has ever been in their entire history. And you know, a few of the reasons are one, the elimination of the Chevron deference that, you know, and much better than me. Historically courts have deferred the federal agency's interpretations of ambiguous statutes. But then we had loper bright and courts are now conducting de novo review of statutes, meaning they give the SEC's interpretation no special weight, making it in my opinion, vastly easier to invalidate an SEC rule. Then on top of that, you have the major questions doctrine following the Supreme Court's landmark decision in West Virginia vs EPA where courts again are increasingly require Congress to speak with unmistakable clarity. So when the SEC issues a rulemaking that a judge could view as expansive or transformative or economically impactful, judges are now have much more freedom to strike down those rules, arguing that the agency is attempting to regulate massive swaths of the economy without explicit legislative permission. Permission. And then you have, you know, the long standing Administrative Procedure act and possible violations there. Opponents of SEC rules more and more frequently are challenging SEC final rules is arbitrary and capricious. And more courts seem open to those arguments. And so, you know, to survive, the

[A]

SEC is under as much pressure as ever is what, what I think is, is kind of happening or happened. And so, so for CII members, asset owners to kind of navigate through that because somewhat, you know, a degree of what they do is, you know, is subject to that regulation is, is, is probably, you know, makes, makes it even that much harder for those asset owners to kind of try to anticipate what, what's going to be next? You know, can they have a meeting with a company? Can they, you know, what, what's the nature of their fiduciary duty? You know, are they going to be forced to buy SpaceX? I don't know. And they just don't know.

[C]

Absolutely. There's also the First Amendment issues, compelled speech issues that are much more popular now and that some judges seem to take much more seriously. And challenging an SEC rule or other federal rule, I think those have all made that rulemaking more difficult. And the fifth, you know, fifth reason that I've seen is that there's fewer informal policies by organizations where they are. There are fewer informal policies by organizations that oppose or do not consider suing the sec. You know, I first started this job that was quite common for organizations to not even consider suing the sec, including on final rulemakings. But now many organizations, it's part of the rulemaking process or just to litigate the rule.

[B]

Yeah. At this point, I just have to do a shout out to my friend Amanda Rose at Vanderbilt, who just published a paper specifically on this on how it's become much more common to sue the sec.

[C]

Yeah, I think in many cases, litigation overturn an SEC rule, it's just an accepted part of the SEC rulemaking process. So if you're advocacy at the SEC through, you know, meetings with commissioners and staff, you then send in a comment letter. You may lobby administrative officials or members of Congress. If all of that fails to, you know, prevent the issuance of a final rule that you oppose, you know, the next step is, you know, you hire a lawyer. And there's many that are ready, particularly in this town, that are ready, willing and able to, to represent the case. Yeah. And then, and then you bring an action against the SEC to vacate a rule and your complaint includes, you know, many of the arguments I just went through are now part of many complaints on an SEC rule. You have a lot more hooks than you had in the past. So, you know, when you combine all the factors that I mentioned, you know, even minor flaws in an SEC's rulemaking process can lead to litigation pursuit by willing plaintiffs and lawyers. And the end result, maybe that final rules. I believe the end result is that final SEC rules are more likely than ever to being stayed, revised, or entirely struck down by the federal courts.

[A]

All right, one last quick subject before we have to wrap up, which is, so based on that perspective going back, what can we expect kind of from the CII in the next couple of years? You know, what's. What are some of its priorities. What are, what are we. What have you been working on and what do you sort of see happening?

[C]

Well, when I match up the securities Exchange Commission's priorities for the next year or two with our membership approved policies and related public positions, I expect that the priorities that CII will emphasize in the next year or two will include, for example, you know, responding to SEC proposed rules issued in connection with their agenda project on rationalization of disclosure requirements. That's a project as you know, is intended to streamline disclosure requirements and it includes eliminate disclosure.

[B]

Eliminate disclosure requirements. Let's be clear, they want to eliminate disclosure requirements.

[C]

So we already talked about the current proposal on semiannual reporting. So as I mentioned we're likely to weigh in on that. We did the first go around on that topic and there's as I understand it, there's likely at least two additional proposed rules related to regulation S K disclosures that are priority for the sec. I understand that there's likely to be a single REGSK disclosure proposal related to item 402 on executive compensation and then at least one other proposal related to other SK disclosure requirements. So we're likely to weigh in on all of those proposals. We've already, you know, submitted a letter in response to requests from the SEC on executive compensation in connection with the roundtable they held last year. And we also sent this letter to the SEC in response to their solicitation for comments on reg.sk generally.

[A]

Right.

[C]

Yeah. We have a.

[A]

You're go ahead.

[C]

We have multiple membership approved policies that are relevant to issues that will be raised in those proposals. To highlight a few of them, but there are many. We have membership policies on disclosure reasons behind auditor changes which is a REGSK item, the board's role in strategy risk oversight, a statement on stock sales by insiders, disclosure of voting results and related to our proposal, our policy on disclosure voting results. We have also been supporting for many years bipartisan legislation in Congress. It's entitled the Enhancing Multi Class Share Disclosures Act. That bill passed the House of Representatives this Congress and there is bipartisan support for a companion bill in the US Senate. That bill's about. It's designed to increase corporate transparency for investors by mandating that companies with multi class stock structures with unequal voting rights clearly disclose exactly who holds the voting power at the company. So we're continuing to support and do advocacy work on that. Other membership approved policies that are relevant to SK disclosures are we have a policy on core objectives on executive pay transparency, executive compensation performance based compensation in that space. Our policy talks about a related 2019 SEC rulemaking petition that we submitted that would require non GAAP financial measures presented in the compensation discussion analysis section of the proxy statement to be quantitatively reconciled. The US GAAP within the proxy statement itself were made accessible through a hyperlink in the proxy statement. That's an improvement to the CDNA disclosures that we have advocated for quite some time and we're going to continue to advocate that in connection with any regulation SK disclosure proposals. We also plan to respond, as I to I mentioned, as I mentioned earlier, to the SEC shareholder proposal modernization project, which is also a priority 14 AA likely to amend 14A 8 and I went through some of our points on that earlier. We have a number of membership approved policies in that space, including the recent amendment I, I referenced earlier in our discussion. So we're going to be weighing in on all of that.

[A]

Right. Well, there's

[C]

a great, a couple of disclosures with respect to dual class and with respect to non GAAP pay metrics that we have been advocating for quite some time and we're going to continue to advocate those improved disclosures in connection with the, with the, the current priorities of the sec.

[A]

So I think it would be fair to just to sort of characterize that as while there's a long standing agenda of governance reforms that the CIA membership is interested in continuing to try to advocate for, in the middle of it, the SEC and others keep on bringing up all sorts of other changes, things that in fact may have been kind of settled, you know, like quarterly reporting that continue to take away from your ability to kind of push some of that long term agenda. So you just, you kind of have to navigate between responding to a lot of the pressures of the, you know, day, week, month, but then continuing to, as I said, advocate for some of the longer term interests related to better disclosure and better, you know, board processes and so forth.

[C]

Transparency is an important part of transparency.

[A]

Exactly. Yeah.

[C]

And it's, you know, it's, it's a high level concept that flows throughout all of our corporate governance practices and policies.

[A]

All right, cool. Well, we have really covered very thoroughly a lot of this stuff and I am really grateful and edified here as we kind of went along. Ann, I don't know how you feel, but.

[B]

No, this is great.

[A]

This is wonderful. So we should probably wrap up and let our followers move on to something else today. Jeff, it has been a delight and a pleasure to kind of hear kind of what's going on and I hope you enjoyed it. Hope you enjoyed it. As much as we did.

[C]

I did. Thank you very much. And again, I look forward to having you as my guest Voice of Corporate Governance podcast.

[A]

So that's, so that's, that deal is still on. Thank you. Thank God. Thank goodness. And we did it. All right. This is Shareholder Primacy hosted by Anne Lipton and me, Mike Levin. We have been with Jeff Mahoney, general counsel for the Council of Institutional Investors. I am an independent activist investor and advisor to investors about their activist situations and is, as always, professor of law and The Lawrence W. DeMuth Chair of Business Law at the University of Colorado Law School. As we said, Jeff is the general Counsel of the CII. You can find me, [e-mail] you can find ann@law colorado.com you can find Jeff Mahoney on the homepage of the CII, which is cii.org Our podcast is produced and distributed by Free Float Media. Thanks for listening. We'll talk.