- CII Policies
- CII Advocacy Priorities – 2021
- Comment Opportunity Tracker
- CII Correspondence and Testimony
- Department of Labor Proposal on ESG—Selected Comment Letters
- Dual-Class Stock
- Majority-Supported Shareowner Proposals
- Director Elections
- Executive Compensation
- Investor-Company Engagement
- Independent Board Leadership
- Legal Issues
CII generally supports required disclosure of:
- Climate change risk metrics
- Board diversity
- Key workforce metrics
- Political spending
CII seeks improved transparency across a range of areas. These include the reconciliation to GAAP of non-GAAP metrics used to determine executive compensation, information to enhance investors’ understanding of audit quality, climate change risk metrics, board diversity, key workforce metrics and the use of shareholder capital for political purposes.
Transparency and safeguards around executive trading in company stockUnder SEC Rule 10b5-1, executives, directors and other top company insiders are able to establish a written plan that details when they will be able to buy or sell shares at a predetermined time on a scheduled basis. But press reports and empirical research suggest that corporate insiders may have used 10b5-1 trading plans as cover for improper stock trades. Insiders can adopt, amend and cancel these plans easily and without disclosure, a recipe for fortuitously timed trades while in possession of material, non-public information. In 2012, CII submitted a rulemaking petition to the SEC recommending improvements to Rule 10b5-1 and we have urged the commission repeatedly to close the loopholes that invite plan abuse.
Enhanced transparency of share buybacksCII believes that executives should have discretion to allocate capital as they think best. This may include returning capital via dividends or buybacks. Legislation or regulation tying companies’ hands on capital allocation could lead executives to invest in businesses that falter or fail to create jobs, harming the company and the economy in the long-run.
But CII also believes some buybacks are not appropriate. Companies should not repurchase their own shares to boost the stock price in the short term—especially if executive pay is linked to earnings per share or measures of capital efficiency, such as return on equity or return on assets, which are lifted when equity is reduced
Under current rules, companies that adopt a share repurchase program are not required to describe how the program will affect executive compensation, or elements used to determine that compensation. CII has supported legislation to change that. Additionally, companies are only required to disclose the actual repurchases on a quarterly basis. CII supports more rapid disclosure, on par with disclosure of trades by insiders. This would give the market a better understanding of the relationship between stock buybacks, executive compensation and capital allocation decisions.