Yearly Archives: 2026

Speech by Chairman Atkins on U.S.–European Capital Markets Cooperation and Regulatory Modernization

Posted by Paul Atkins, U.S. Securities and Exchange Commission, on
Thursday, February 5, 2026
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Paul S. Atkins is the Chairman of the U.S. Securities and Exchange Commission. This post is based on his recent speech. The views expressed in the post are those of Chairman Atkins and do not necessarily reflect those of the Securities and Exchange Commission or its staff.

Thank you very much, Adam [Farkas], for your kind introduction, and for the invitation to join you all this evening. I regret that a government shutdown here in the United States prevented me from joining you in person today. But I am grateful for the opportunity to take part in this conversation virtually, and to discuss ways in which we can work together on matters of mutual concern.

Let me begin by thanking Adam and our hosts at AFME for their flexibility under these circumstances. And let me also add that the views I express here are my own as Chairman of the SEC and not necessarily those of the SEC as an institution or of the other Commissioners.

I understand that, by design, tonight’s dinner will spark a constructive dialogue on transatlantic cooperation. That sentiment captures the spirit in which I appear before you this evening—here to speak, of course, but no less, to listen.

After all, headlines can emphasize our differences. But, if my time in public service has taught me anything, it is that wisdom more reliably dwells in the lessons of our past than in the passions of the present. History, I think, has a way of steadying us.

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Emerging Governance Safeguards Against US Political Risk

Posted by Stephen M. Davis (Harvard Law School), on
Thursday, February 5, 2026
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Stephen M. Davis is a Senior Fellow at the Harvard Law School Program on Corporate Governance. He co-founded the UN Principles for Responsible Investment and the International Corporate Governance Network and originated the Firearms Safety Principles.

Corporate boards and institutional investors have long embedded political risk analysis into governance and stewardship frameworks. But most have focused mitigation strategies on jurisdictions outside the US while considering political risk to be close to nil in America. That approach changed following the January 6, 2021 insurrection at the Capitol, when many executives and shareholders began to confront the prospect that macro political risk in the US—for instance, social unrest in the wake of partisan mayhem—could trigger threats to enterprise and market sustainability.

Today, political stressors in the US have metastasized into a new and unprecedented micro-level phenomenon: the president himself has intervened at specific companies in board decisions over share buybacks, hiring practices, corporate mergers, foreign investment, and other matters. Previously, regulators and courts had ring-fenced such responsibilities from shareholder oversight based on the business judgement rule. Under it, boards could claim a safe harbor protection from outsider second-guessing if directors were making ordinary corporate decisions. Now the US president is asserting the right to such second guessing—and wielding threats if boards don’t yield. Worse, observers have found it difficult to predict or rationalize which corporate targets might be singled out, and when, or how, for presidential intervention. In addition, the president is engaged in an assault on the independence of the Federal Reserve, a body both companies and investors have relied on as a backstop to political impulsiveness. All this is unfolding while macro political risks—for instance, lethal Trump administration anti-immigrant raids in Minnesota sparking social unrest—remain at sharply elevated levels.

At the same time, though, the Trump administration is offering deregulation measures sought by certain corporations. And the president’s appointees are pushing the US Department of Labor and the Securities and Exchange Commission toward far-reaching curbs on shareholder influence and proxy advisors, items long on the policy agenda wish list of some public companies. READ MORE »

Rethinking Compensation Disclosure

Posted by Michael Albano, Julia Petty, and Amanda Toy, Cleary Gottlieb Steen & Hamilton LLP, on
Thursday, February 5, 2026
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Michael J. Albano, Julia Petty, and Amanda K. Toy are Partners at Cleary Gottlieb Steen & Hamilton LLP. This post is based on a Cleary Gottlieb memorandum by Mr. Albano, Ms. Petty, Ms. Toy, Julia Rozenblit, and Gretchen Dougherty.

A number of changes to executive compensation disclosure may occur in 2026, reflecting potential Securities and Exchange Commission (SEC) rulemaking previewed during a July 2025 roundtable discussion as well as separate updates to guidance from ISS and Glass Lewis.

Executive Compensation Roundtable: SEC Signals Potential Future Changes to Compensation Disclosure Rules

On June 26, 2025, the SEC hosted an Executive Compensation Roundtable[1] (the Roundtable) to conduct a retrospective review of its executive compensation disclosure rules. Roundtable panelists included representatives from public companies, investors, compensation advisors and other experts in the field. The discussion focused on the question of whether the current disclosure regime accomplishes its intended goal of providing investors with material information related to executive compensation.

The SEC has stated that the Roundtable is an initial step in its review of the existing executive compensation disclosure framework, and the Staff has solicited public comment on the disclosure requirements.[2]

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S&P 500 CEO Compensation Trends

Posted by Aubrey Bout, Perla Cuevas, and Jose Lawani, Pay Governance LLC, on
Wednesday, February 4, 2026
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Aubrey Bout is a Managing Partner, and Perla Cuevas and Jose Lawani are Consultants at Pay Governance LLC. This post is based on their Pay Governance memorandum.

Key Takeaways

  • CEO pay increases moderated in 2024. Median CEO actual total direct compensation (TDC)* reached $17M in 2024, reflecting a moderated 5% increase following a strong 14% increase in 2023.
  • Long-term incentive continues to dominate. Long-term incentives (LTIs) remain the primary driver of CEO compensation, with continued emphasis on performance-based equity, reinforcing alignment with shareholders.
  • Shareholder returns remain strong. This was the third consecutive year of robust total shareholder return (TSR) (+26% in 2023, +25% in 2024 and +18% in 2025). Despite robust returns, CEO pay increased more moderately.
  • CEO pay directionally correlated with TSR. Since 2010, CEO pay has increased at an estimated +5% compound annual growth rate, while TSR over same period has grown at +14% annually.
  • Outlook: Looking ahead, we expect 2025 CEO pay to increase in mid-single digits in 2025, supported by a third consecutive year of strong TSR and financial performance.

*TDC = sum of actual base salary, bonus incentives (based on actual performance), and reported grant date fair value of LTI awards

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Purpose-Driven Compliance

Posted by Veronica Root Martinez (Duke University School of Law), on
Wednesday, February 4, 2026
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Veronica Root Martinez is the Simpson Thacher & Bartlett Distinguished Professor of Law at Duke University School of Law. This post is based on her recent article, forthcoming in Texas A&M Law Review.

In recent decades, corporate compliance programs have become ubiquitous across large organizations. Firms now invest significant resources in compliance infrastructure, often spurred by enforcement actions, regulatory expectations, and the prospect of mitigation credit in the event of misconduct. Yet despite these investments, high-profile corporate compliance failures continue to occur with troubling regularity. These failures raise a fundamental question: whether the prevailing enforcement-driven model of compliance is actually well suited to preventing misconduct and promoting ethical organizational behavior.

In Purpose-Driven Compliance (forthcoming, Texas A&M Law Review), I argue that today’s dominant approach to compliance—one that is largely reactive to enforcement priorities and premised on the acceptance of imperfect compliance—may be inherently limited. Modern compliance programs are frequently designed around the priorities of regulators and prosecutors, rather than the firm’s own mission, risk profile, and ethical commitments. As a result, compliance efforts may be misaligned with the most significant risks organizations actually face, while simultaneously normalizing small amounts of misconduct that can later escalate into more serious violations.

The Article traces the origins of enforcement-driven compliance to developments in the 1990s, including Caremark, law-and-economics scholarship on self-policing, and the emergence of corporate enforcement policies that reward firms for adopting formal compliance programs. These interventions succeeded in motivating firms to build compliance infrastructures, but they also embedded two core assumptions: that enforcement incentives are the primary drivers of effective compliance, and that perfect compliance is unattainable and therefore unnecessary. Over time, these assumptions have shaped compliance programs that prioritize external expectations over internal norms and tolerate certain levels of misconduct as inevitable. READ MORE »

Public Company Outlook for 2026

Posted by William Regner, Eric Juergens and Susan Reagan Gittes, Debevoise & Plimpton LLP, on
Wednesday, February 4, 2026
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William Regner, Eric Juergens and Susan Reagan Gittes are Partners at Debevoise & Plimpton LLP. This post is based on a Debevoise memorandum by Mr. Regner, Mr. Juergens, Ms. Gittes, Simone Hicks, Daniel Priest, and Tim Cornell.

Key Takeaways:

  • As we turn the calendar to 2026, public companies face an evolving set of legal and market dynamics that will shape governance, transactions and engagement with stockholders.
  • In this Debevoise In Depth, we outline the key issues facing public companies this year.

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Thoughts for Boards: Key Issues for 2026

Posted by Martin Lipton, Wachtell, Lipton, Rosen & Katz, on
Tuesday, February 3, 2026
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Martin Lipton is a Founding Partner at Wachtell, Lipton, Rosen & Katz. This post is based on a Wachtell Lipton memorandum by Mr. Lipton, Steven A. Rosenblum, Karessa L. Cain, Elina Tetelbaum, Loren Braswell, and Alexander H. Sugerman.

In a year of significant regulatory, geopolitical, technological and macroeconomic turbulence, boards have had to manage through an environment of uncertainty. Unpredictability caused by frequent policy shifts and evolving expectations and demands from governmental and market actors added complexity to the array of demands that a modern public company board must address. Yet there were also more opportunities for proactive and well-advised companies to utilize new technologies, take a fresh look at their corporate governance practices and strengthen relationships with stakeholders in ways that helped boards not only navigate, but also take advantage of a rapidly shifting environment for public companies.

Set forth below are some of the most important trends and developments that shaped the landscape in three key areas for boards, along with some considerations for boards to bear in mind as they address these developments.

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The Limited Effects of Regulating Greenwashing: Evidence from Europe’s SFDR

Posted by Paul Smeets (University of Amsterdam), on
Tuesday, February 3, 2026
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Paul Smeets is a Professor at the University of Amsterdam. This post is based on a recent paper by Professor Smeets, Hunt Allcott, Professor at Stanford University, Mark Egan, Professor at Harvard Business School, and Hanbin Yang, Assistant Professor at London Business School.

Over the past decade, sustainable and ESG investing has grown rapidly. At the same time, concerns about greenwashing, the exaggeration of environmental or social benefits of financial products, have increased just as quickly. A growing body of research suggests that many sustainable investments have limited real-world impact, and in some cases may even be counterproductive.

In response, regulators have increasingly turned to disclosure-based regulation. The idea is appealing: rather than restricting investment choices, regulators can require standardized transparency, allowing investors to discipline markets themselves.

One of the most ambitious disclosure regimes to date is the European Union’s Sustainable Finance Disclosure Regulation (SFDR). Introduced in March 2021, SFDR requires mutual funds to classify themselves into three categories: Article 6 funds with no sustainability focus, Article 8 funds that promote environmental or social characteristics, and Article 9 funds that pursue a sustainable investment objective.

In our recent NBER working paper, we study whether SFDR achieved its core objectives. Did the regulation affect investor behavior? Did it lead funds to become more sustainable? And what lessons does it offer for the design of future ESG regulation?

What Must Happen for Disclosure to Matter

For sustainability disclosure to affect real economic outcomes, several steps must occur. First, funds labeled as more sustainable must actually differ in their underlying portfolios. Second, the disclosures must convey new or clearer information to investors. Third, investors must respond by reallocating capital based on that information.

Only if all three steps occur can disclosure-based regulation possibly influence asset prices and, ultimately, firms’ real-world behavior.

Our analysis evaluates each of these channels. READ MORE »

As Activism Becomes a Year-Round Sport, Possible Regulatory Changes Could Impact Both Activists and Companies

Posted by Elizabeth R. Gonzalez-Sussman, Ron S. Berenblat, and Roy Cohen, Skadden, Arps, Slate, Meagher & Flom LLP, on
Tuesday, February 3, 2026
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Elizabeth R. Gonzalez-Sussman is a Partner, Ron S. Berenblat is of Counsel, and Roy Cohen is an Associate at Skadden, Arps, Slate, Meagher & Flom LLP. This post is based on their Skadden memorandum.

Key Points

  • Activist investors remain a powerful force in the corporate landscape, increasingly using more sophisticated multimedia and digital strategies to exert pressure on companies and boards.
  • An increase in off-cycle and “vote no” campaigns in the U.S., coupled with more activists going public without any private engagement, is making activism a year-round phenomenon.
  • Companies may need to consider reevaluating their approaches to shareholder engagement if proposed regulatory changes are adopted to curb the influence of institutional investors and proxy advisory services in shareholder votes.

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Does Adding an Activist to the Board Improve Shareholder Returns?

Posted by Lex Suvanto (Edelman Smithfield), Jack Flaherty (Edelman Smithfield), and Marco Castellani (UBS), on
Monday, February 2, 2026
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Lex Suvanto is the CEO at Edelman Smithfield, Jack Flaherty is a Senior Vice President at Edelman Smithfield, and Marco Castellani is the Head of Activism & Defense at UBS. This post is based on an Edelman memorandum by Mr. Suvanto, Mr. Flaherty, Mr. Castellani, Luc Priddle, and Charlotte Prunty.

Earlier this year, we published research revealing that public companies that settle with activists tend to underperform the market, on average, over the three years following the settlement. Specifically, we examined 634 settlements in the U.S. over 14 years (2010–2024) and found that in the aggregate, companies that settled with activists underperformed the S&P 500 by 7.1%.

These findings suggest that settlements do not generate positive returns for investors. The exception occurs when looking at companies that were sold within the same three-year period. On average, these companies outperformed the market by more than 15%. It should therefore not be a surprise when activists push companies to run a sale process.

In this second edition of our research, we took a closer look at the settlement data to determine if the addition of one or more activist principals to the board led to a different stock price outcome in comparison to settlements that only added independent directors (for clarity, “activist principal” means an executive that works for the activist fund; “independent” means a director that is not an employee of the activist fund. [1]) We also examined whether companies were more or less likely to sell themselves if an activist principal was added to the board versus only independent directors.

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