SEC chairman shares priorities in
Senate oversight hearing
11, 2018 3:34 PM
Securities and Exchange Commission
Chairman Jay Clayton
buybacks and Brexit's impact on U.S. markets were the biggest
questions for Securities and Exchange Commission Chairman Jay Clayton
Senate Banking Committee oversight
raised were possible proxy voting reforms, executive compensation and
ESG investing factors including climate change.
Democrat Chris Van Hollen pressed Mr. Clayton on whether 2017 tax cuts
intended to stimulate more capital investment were being misdirected
to company executives. With an estimated $800 billion in stock
buybacks since tax reform legislation passed, there is "mounting
evidence that insiders are cashing out after a buyback," Mr. Van
Hollen said, telling Mr. Clayton, "I think a little more work needs to
be done on that."
Sen. Jack Reed, D-R.I., about whether buybacks harm long-term Main
Street investors. Mr. Clayton said the SEC does not have authority
over a company's capital allocation decisions, "but I agree with a
number of observers in terms of how a company communicates. We can do
a better job around disclosure," including on executive pay.
"If the purpose
is to drive up value for an individual (executive) ... that's a
problematic situation," Mr. Clayton told the committee.
Brexit "is very
much front of my mind," Mr. Clayton said. "One reason I am worried
about Brexit is that there are a number of issues that seem to get
kicked down the road."
On proxy voting,
Mr. Clayton said the SEC is looking for short-term fixes to "proxy
plumbing" — how votes travel from end investors back to the company —
and wants industry to propose them. On the issue of proxy advisers, "I
think there's broad agreement that there are elements of the proxy
ecosystem that can be improved," said Mr. Clayton, adding that he is
not "wedded" to running a potential vote recommendation through the
company before it is published.
priority for the SEC is finalizing a Dodd-Frank Act hedging disclosure
regulation calling for companies to report whether they permit
directors, officers and employees to hedge against drops in company
stock, Mr. Clayton told the panel.
Crain Communications Inc.