The SEC under the Trump administration is rapidly advancing and/or considering meaningful
policy changes, and has begun considering a variety of new and updated rules covering a
diverse group of topics, including mandatory stockholder arbitration in charter documents,
standing stockholder voting instructions, proxy adviser rules, quarterly reporting and changes
to executive compensation disclosure rules, each as discussed below.
Mandatory Stockholder Arbitration in Charter Documents
At an open meeting held on September 17, 2025, the
commissioners addressed the SEC’s decades-old policy
stance, whereby the SEC would refuse to accelerate the
effectiveness of an issuer’s registration statement if its
charter documents require the arbitration of investor claims
arising under the federal securities laws. Under Commissioner
Atkins’ leadership, the SEC voted (in a 3 - 1 vote along
partisan lines) to abandon its historical policy and adopted
a new policy statement, which provides that the presence
of mandatory arbitration provisions in charter documents
would not affect registration statement acceleration decisions
(other than whether such provisions were sufficiently
disclosed). Commissioner Atkins specifically stated that such
mandatory arbitration provisions in corporate charters are “not
inconsistent with federal securities laws.”
Proponents of mandatory arbitration provisions have long held
that such governance structures discourage frivolous and
costly class action claims in that investors must individually
pursue (and fund) securities laws grievances in a private forum
without a jury. It remains to be seen whether public issuers
will widely begin to amend their charter documents to take
advantage of the SEC’s policy shift. Institutional investors and
proxy advisors may refuse to support management proposals
for charter amendment to effectuate mandatory arbitration,
and there may be state corporate law barriers as well. Recent
changes to Delaware law essentially prohibit Delaware
incorporated companies from using mandatory arbitration as
Delaware now requires that stockholders have access to at
least one court in the State of Delaware for federal securities
laws claims, among others. Commissioner Atkins noted
that other states may take other positions and, notably,
the state laws of Texas or Nevada (two popular states for
“Dexit” re-incorporators) do not address, and would likely not
prohibit mandatory arbitration charter and bylaw provisions.
Nevertheless, the SEC’s policy reversal opens the door for a
new defensive measure against class action litigation that we
expect to be of interest to many public companies.
Stockholders’ Standing Voting Instructions
On September 15, 2025, the SEC issued a no action letter
to Exxon Mobil Corporation (Exxon) regarding its proposed
“Retail Voting Program.” With the Retail Voting Program,
Exxon proposes to solicit its retail shareholder base and
request that they empower Exxon with standing voting
instructions to vote their shares on an ongoing basis at future
Exxon annual or special shareholders’ meetings in accordance
with the Exxon board’s recommendations in the proxy
statement. Exxon contemplates that its Retail Voting Program
would include a mechanism for a participating shareholder to
override their instructions for an upcoming meeting and would
have an annual reminder process conducted during the proxy
off-season (i.e., not in connection with the annual meeting)
that would give shareholders the opportunity to revise voting
instructions or revoke the authorization altogether.
In granting no-action relief for the Retail Voting Program, the
SEC agreed that it would not seek enforcement action against
Exxon under SEC proxy rules that separately prohibit a proxy
from conferring authority to vote at (i) more than one meeting
(other than adjournments) or (ii) an annual meeting other than
an annual meeting for which a proxy statement is sent. In
its correspondence with the SEC, Exxon asserted that the
standing voting authorizations contemplated by the Retail
Voting Program are allowed under the state corporate laws of
New Jersey and Delaware.
Proxy Advisor Rules
On July 1, 2025, the DC US Court of Appeals (the “DC Court”)
ruled in favor of Institutional Shareholder Services (ISS), a
leading proxy advisory firm, in it its legal challenge to the SEC’s
definition of “solicit/solicitation” under Section 14(a) of the
Securities Exchange Act of 1934, as amended. In 2020, the
SEC adopted rules defining “solicit” and “solicitation” to include
the provision of client-requested proxy voting advice (ISS’s
core business), which generally would have required ISS and
other proxy advisory firms to file their voting recommendations
with the SEC as proxy solicitations. In its recent decision in
favor of ISS, the DC Court found that “the ordinary meaning
of ‘solicit’ does not include entities that provide proxy
voting recommendations requested by others, even if those
recommendations influence the requestors’ eventual votes.”
Accordingly, proxy-voting advice rendered by a third-party for a
fee falls outside of the definition of “solicit/solicitation.”
The DC Court’s decision is a blow to public companies and
other observers, as well as advisors who have become
increasingly concerned with the influence and methodology
of proxy advisors in making proxy voting recommendations.
Quarterly Earnings Reports
President Trump made recent social media statements that
he favors eliminating quarterly reporting of earnings and
encouraging quick regulatory action to implement the change
(a change considered by the SEC during the first Trump
administration). The statements appear driven at reducing
regulatory burdens on issuers, but it should be noted that
institutional investors (many of which are themselves public
companies) generally oppose the idea of receiving information
about their investments with less frequency. The US capital
markets have historically been attractive for issuers and
investors alike, with much of that appeal being built on a
foundation of high-quality, routine financial reporting. As such,
this remains a dynamic topic that will likely draw worldwide
attention as it continues to evolve.
Executive Compensation
The SEC held a highly attended public roundtable this summer
regarding potential executive compensation disclosure
reforms. At the roundtable, SEC commissioners made evident
that they are in favor of simplifying the SEC’s rules regarding
executive compensation (SEC Chair Paul Atkins described the
current regime as a “Frankenstein patchwork of rules”). While
we have yet to see any specific rulemaking or reforms in this
area, we fully expect changes before long.
Spring 2025 Regulatory Flexibility Agenda
On September 4, 2025, the SEC released its Spring 2025
Reg Flex Agenda. While not a binding commitment, the
SEC’s Reg Flex Agenda provides insight into the types of
rulemaking the SEC is considering and likely to pursue in
the coming years. The Spring 2025 Reg Flex Agenda appears
to be among the most issuer friendly agendas in recent
years, which SEC Chair Paul Atkins emphasized in his public
statements: “This regulatory agenda reflects that it is a new
day at the Securities and Exchange Commission. The items
on the agenda represent the commission’s renewed focus
on supporting innovation, capital formation, market efficiency
and investor protection.” The agenda includes proposed rules
such as “Rationalization of Disclosure Practices” (which many
anticipate will begin addressing executive compensation
disclosures as highlighted during the summer roundtable), as
well as “Shareholder Proposal Modernization” (focused on
modernizing the requirements of Exchange Act Rule 14a-8
to reduce compliance burdens for registrants) and “Shelf
Registration Modernization” (focused on modernizing the
shelf registration process to reduce compliance burdens and
facilitate capital formation).
