What happened: The CHRO Association filed comments this week supporting the SEC’s proposal to simplify filer status categories, consolidating the current five-tier system down to large, accelerated filers (LAFs) and non-accelerated filers (NAFs). The rule would raise the LAF threshold from $700 million to $2 billion in public float and extend scaled disclosure accommodations, including exemptions from CD&A, pay ratio, pay versus performance, and Say-on-Pay votes, to all NAFs.
The SEC estimates that more than 1,700 companies would become newly eligible for NAF status—81% of all companies.
Why it matters: Our comments made two points beyond simple support.
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First, the burden of disclosure has grown disconnected from investor usefulness. The CD&A has ballooned from five pages in 2000 to over 35 today, and Stanford research found only 38% of institutional investors read it at all.
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Second, we pushed the SEC not to stop at NAFs. We reiterated our 2025 recommendations for principles-based executive compensation disclosure across all issuers, including large filers, arguing that mandated tables and rigid definitions like “compensation actually paid” obscure rather than clarify pay-for-performance stories.
The action item: Any member newly falling into the NAF category has a direct stake in seeing it finalized. Although the official comment period closed July 20, the SEC keeps its docket open, and we encourage you to file your own comment letters in support.
Bottom line: Once this rule is finalized, some companies will face pressure from proxy advisors, activists, or outside consultants to keep providing disclosure the SEC has just determined isn’t necessary for investors. In our view, companies should treat that advice skeptically.
The SEC intends for companies to take advantage of this reduction in compliance burden, so unless the majority of your investor base demands it, the suggestion to continue Say on Pay and other disclosure on a voluntary basis should be taken with a grain of salt.
