Garrett Muzikowski is a Managing Director, Christina Dell’Orto is a Senior Director, and Caleigh Leyton is a Senior Consultant at FTI Consulting. This post is based on an FTI Consulting memorandum by Mr. Muzikowski, Ms. Dell’Orto, Ms. Leyton, and Patrick C. Tucker, all at FTI Consulting.
SpaceX, one of the largest companies in the world, just went public, and its founder, Elon Musk, holds 82.4% of the company’s voting power.[1]
Theoretically, controlled companies are supposed to be insulated from shareholder pressure. Even “effectively controlled” companies – those with a large investor (for example, a 20% holder) – should benefit from this protection. Conceptually, a controlling shareholder, whether through economic ownership or through multi-class share structures, should remove the threat of proxy contests, hostile takeovers or other challenges to board decisions. The textbook activist mechanisms that are supposed to hold management and a company’s board accountable to shareholders do not apply to these companies.
Why, then, are controlled companies among the hottest new targets for shareholder activism and under pressure from the capital markets to pursue or stop pursuing merger and acquisition (“M&A”) decisions?
SEC’s Proposal to Simplify Filer Status for Public Companies: Comment from CHRO Association
More from: Ani Huang, CHRO Association
Ani Huang is the President, Policy and Practice, for the CHRO Association. This post is based on a comment letter by CHRO Association submitted to the U.S. Securities and Exchange Commission regarding the proposal to simplify filer status for public companies.
The CHRO Association submits these comments in response to the rule proposal issued by the Securities and Exchange Commission (SEC) regarding the simplification of filer status for public companies (“Proposal”). We appreciate the SEC’s ongoing efforts to reform public company reporting requirements and are pleased to provide our views on the Proposal.
The CHRO Association is a public policy advocacy organization that represents the most senior human resource officers (CHROs) in nearly 400 of the largest corporations across industries doing business in the United States and globally. Collectively, these companies employ more than 10 million employees in the United States, nearly nine percent of the private sector workforce, and 20 million employees worldwide. Approximately two-thirds of the Association’s members are federal contractors, including those operating within the defense industry.
Under current SEC rules, based upon metrics such as public float and annual revenue, issuers may qualify as a 1) Large accelerated filer (LAF); 2) Accelerated filer (AF); 3) Non-accelerated filer (NAF); 4) Smaller reporting company (SRC); or 5) Emerging growth company (EGC). Each status confers a specific regulatory framework upon issuers. Many companies qualify as more than one type of filer; for example, the Proposal notes that in 2024 NAFs that were also SRCs or EGCs (or both) accounted for 51.9% of all issuers.[1]
READ MORE »