The Securities and Exchange Commission should simplify corporate disclosure to make filings more useful to investors, including doing away with a requirement to show the company’s stock performance, a U.S. Chamber of Commerce report issued Tuesday said.
The chamber issued two sets of recommendations — one that could be accomplished in the short term and the other in the long term — to streamline disclosure, detailing them in the report “Corporate Disclosure Effectiveness: Ensuring a Balanced System that Informs and Protects Investors and Facilitates Capital Formation.”
Its near-term recommendations include eliminating requirements to show the company’s stock price performance and the frequency and amount of the company’s dividends, and to list the markets where the company stock trades, including high and low share prices.
Those details generally are easily accessible from other sources, including the Internet, the report said.
On changes that might require more study and could take place in the long term, the report recommends revising sections in 10-K filings called “compensation discussion and analysis” and “management’s discussion and analysis.”
“Although CD&A was intended to illuminate a company’s executive compensation practices and philosophy, the discussion at most companies has instead resulted in a narrative that is dense and laden with technical jargon and immaterial information,” the report said. “CD&A can be impenetrable, even for sophisticated investors. The length of CD&A alone — a 20-page narrative is not uncommon and it has been known to run on for over 40 pages at some companies — can obscure what is material.”
“As is the case for CD&A, we believe that MD&A is ripe for re-examination with the goal of streamlining the disclosure requirements, eliminating redundancy, and reinforcing the guiding principle of materiality so that MD&A is more useful for investors.”
Chamber of Commerce media contacts couldn’t be reached for comment.