ASA Comments on SEC’s Reopening of “Pay Versus Performance”
WASHINGTON – The American Securities Association (ASA) today submitted a letter in response to the Securities and Exchange Commission (SEC) reopening the comment period for the “pay versus performance” rule mandated by the Dodd-Frank Act.
“As an initial matter, the ASA is concerned with the process used by the SEC to ‘reopen’ a comment period for a rule that was initially proposed in 2015,” ASA CEO Chris Iacovella wrote in the letter. “The SEC’s actions here are not an actual ‘reopening’ of a comment period but rather they constitute a new rule proposal that must be subject to the procedures outlined in the Administrative Procedure Act. The SEC is therefore required to conduct a thorough economic analysis to assess the impact of the new mandates it is proposing.”
In the letter, ASA expressed concerns with the 2015 Proposal’s prioritization of metrics that will contribute to “short-termism” in the capital markets, increase complexity to confuse investors, all while failing to provide a clear picture of pay for performance.
“A significantly more desirable approach for the SEC to adopt is one based on principles,” Iacovella wrote in the letter. “Adopting a principles-based standard that allows issuers to explain – in their own words and based upon their unique profile – how they align executive pay with performance will benefit investors."
“The SEC should re-propose the pay versus performance rule so that it can estimate - and the public can properly assess - the impact of the new mandates being considered,” Iacovella concluded.
ASA’s regional financial services companies work in communities across the country to create jobs, grow the economy, and increase prosperity for all Americans. The ASA exclusively represents the capital market and private client interests of its members and seeks to promote free market principles making it easier to access financial advice and capital. ASA members help Americans save for retirement, provide Main Street businesses with capital to grow, and advise hardworking Americans how to create and preserve wealth. For the latest updates follow @AmerSecurities and learn more at http://americansecurities.org/.