SEC Chair Jay Clayton, SEC Commissioner Kara Stein and other SEC officials and industry leaders shared perspectives on developing challenges and opportunities in shareholder engagement. In a SEC-NYU Dialogue on Shareholder Engagement in New York, panelists debated the current state of shareholder governance and the roles of key stakeholders in an evolving corporate landscape.
Chair Clayton focused on activist investors and their market influence. He questioned the impact activist investors have had on public markets, and how investment funds and the interests of their fiduciaries fit into the ongoing debate on corporate governance. Chair Clayton offered some perspective on the nuances associated with a governance structure that depends on autonomous interests working collectively through investment vehicles. He stated that market participants should be mindful of the greater impact institutional actions have on all investors, given the fiduciary duties that arise out of collective capital allocation.
Commissioner Stein characterized the relationship between corporations and shareholders as the "bedrock upon which . . . capital markets stand," and explained that increasing globalization and complexity has complicated the traditional state of shareholder engagement. She expressed concern that company operations are too often managed without input from shareholders. She highlighted technological developments (such as webcasts and data analytics advancements) as a means by which companies can more actively engage with shareholders. Commissioner Stein emphasized the importance of engagement with various tiers of shareholders - particularly retail investors - so that the interests of all parties are protected.
Commentary / Steven Lofchie
In his consideration of the divergence of interests among shareholders of a company, Chair Clayton raises important questions. Here are a few more: What does it mean to say that a company is "American" if a large percentage of the shareholders are not, or if the company's controlling shareholders are not? Conversely, is a company "American" if its operations or profits are made outside the United States? Much of the recent debate as to the role of corporations has been about their social obligations. To whom is such an obligation owed? Does it relate to the location of the shareholders? of some other group? the workers? the customers? the suppliers?
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