Governance & Sustainability Roundup – May 27, 2026

Welcome to our Governance & Sustainability Roundup — Our regular briefing that gives a quick overview on what has recently happened in the world of governance and sustainability that may be of interest to your company, your executive team, or your boards. This is a fast-evolving space and we hope to share brief highlights with you on a regular basis. V&E is happy to discuss any of these updates in more detail, so please reach out with any questions.

Vinson & Elkins continues to monitor these developments and is available to assist with comment submissions.

Breaking News

Exxon Shareholders Approve Reincorporation to Texas

Today Exxon Mobil Corporation (“Exxon”) shareholders voted to approve moving the company’s domicile from New Jersey to Texas, with approximately 71.3% supporting the reincorporation. Initial reports indicate that Exxon’s reincorporation proposal received support from major investors such as Norges Bank Investment Management and CalSTRS despite facing resistance from other major investors such as L&G Asset Management and proxy advisors. Institutional Shareholder Services Inc. (“ISS”) and Glass, Lewis & Co. LLC (“Glass Lewis”) both recommended against the proposal, arguing that it would be adverse to shareholder rights despite the company not opting into various elective provisions under Texas law that the company noted would “weaken shareholder rights” as compared to New Jersey law. Exxon pushed back against the proxy advisors, claiming that ISS and Glass Lewis failed to disclose their conflicts of interest in making such recommendations given their ongoing legal entanglements with the Texas Attorney General. The latest front in these legal entanglements is described below.

In an additional win for Exxon, the New York City Comptroller’s shareholder proposal regarding the company’s retail voting program was rejected (only approximately 23.5% voted in favor). The proposal called for Exxon to make changes to its novel retail voting program, which allows retail shareholders to opt into the automatic voting of their shares in line with the recommendations of the Exxon Board of Directors. The New York City Comptroller requested that Exxon offer alternative voter options under its program, such as a general “against management” policy. Exxon argued that the proposed changes would be both unworkable and illegal.

Other Key Developments You Should Know

• SEC Proposes Registered Offering Reforms
• SEC Proposes Sweeping Changes to Filer Status Framework and Related Disclosure Obligations
• ISS Sued by Four States Over ESG Matters
• SEC Ends “Gag Rule” Policy for Enforcement Settlements
• SEC Makes Additional Moves to Rescind Climate Rules
• EEOC Sues The New York Times Over Alleged DEI-Related Discrimination
• Delaware General Corporation Law Amendments

SEC Proposes Registered Offering Reforms

The SEC has proposed sweeping amendments to the registration framework for public securities offerings. The proposal would expand Form S-3 eligibility by an estimated 60 percent or more, through the elimination of the 12-month reporting seasoning requirement and the $75 million public float threshold. Any issuer that meets the proposed registrant requirements, such as current and timely Exchange Act reporting and the absence of blank check, shell company, or penny stock issuer status, would be eligible to use Form S-3 for primary or secondary offerings.

The proposal would also replace the existing Well-Known Seasoned Issuer (“WKSI”) framework for domestic issuers with two new categories: Eligible Listed Issuers (“ELIs”), defined as Form S-3 eligible issuers with at least one class of common equity listed on a national securities exchange, and Seasoned Eligible Listed Issuers (“SELIs”), defined as ELIs with at least 12 months of Exchange Act reporting history. ELIs would receive increased flexibility in pre- and post-filing communications, the ability to pay filing fees at the time of takedown rather than at filing, and the option to register additional securities via post-effective amendment. SELIs would additionally benefit from automatic shelf effectiveness, a privilege currently reserved for WKSIs.

Additionally, the proposal seeks to modernize Form S-1 by expanding incorporation by reference (including forward incorporation for all issuers) and would preempt state blue sky registration and qualification requirements for all securities sold in registered offerings.

SEC Proposes Sweeping Changes to Filer Status Framework and Related Disclosure Obligations

The SEC has proposed major changes to the public company reporting framework and significantly reduced disclosure obligations for most public companies, which you can read more about here. If adopted, the current five-category framework would collapse into just two primary categories—large accelerated filers (“LAFs”) and non-accelerated filers (“NAFs”)—with the SEC estimating that approximately 81 percent of public companies would be classified as NAFs. NAFs would receive significant scaled disclosure accommodations, including an exemption from external auditor attestation on internal controls over financial reporting, only two years of audited financial statements in annual reports (rather than three), and reduced executive compensation disclosure obligations.

To qualify as a LAF, a company would need to maintain a public float of at least $2 billion (up from $700 million) for two consecutive fiscal years and be subject to Exchange Act reporting requirements for at least five years, which would guarantee newly public companies five years of NAF status before facing potentially heightened disclosure obligations. Public float would also be calculated using a 10-trading-day average rather than a single-day closing price, reducing the risk of a one-day market swing triggering an unexpected status change. The proposal is currently at the comment stage, but given the potentially significant reduction in compliance costs and reporting burdens for NAFs if the proposal is adopted, companies should consider beginning their evaluation process to determine where they would fall within the new framework and the corresponding impact on their filing and disclosure obligations.

ISS Sued by Four States Over ESG Matters

On May 20, 2026, the Attorneys General (“AGs”) of Texas, Nebraska, Iowa, and West Virginia filed separate lawsuits against ISS, alleging that the proxy advisory firm violated state consumer protection and deceptive practices laws by providing services that, according to the AGs, prioritized an undisclosed environmental, social, and governance (“ESG”) agenda over financial principles and fiduciary duties. The AGs also contend that ISS failed to disclose certain conflicts of interest to its clients, arguing that ISS does not fully and fairly disclose its close involvement with, and its ownership by, “ESG activists.” Additionally, the AGs contend that ISS has not adequately disclosed the conflicts between its research arm and consulting business, arguing that companies that purchase ISS consulting services receive favored treatment in ISS research reports. The lawsuits seek, among other things, monetary penalties and injunctive relief. In response to the lawsuits, ISS has stated that it “believe[s] the allegations lack merit and will vigorously defend against them.”

The lawsuits are similar to the enforcement action sought by the Florida Attorney General against ISS and Glass Lewis in 2025, and are part of a wider push at both the state and federal level to curb the influence and practices of the proxy advisors.

SEC Ends “Gag Rule” Policy for Enforcement Settlements

After half a century of compulsory application, the SEC jettisoned its “Gag Rule” settlement policy, prompting a new era of how companies will have to navigate the landscape of settlement negotiation. The now defunct policy allowed parties to enforcement actions to settle without admitting to the SEC’s allegations on the condition that they simultaneously agreed to refrain from publicly denying the SEC’s allegations. SEC Chair Paul Atkins noted that the policy’s rescission recognizes that “the effect on the public interest from such denials may be minimal,” and that “the policy itself may have created an incorrect impression that the Commission is trying to shield itself from criticism.”

The implications of this shift in policy for parties to enforcement actions carry both potential benefits and uncharted hazards. On the one hand, defendants can now conceivably present their own side of the story to the public for the first time in 54 years and point out where the SEC’s allegations may have been off base or incomplete. The court of public opinion could serve as a valuable tool for companies looking to balance the twin concerns of avoiding a lengthy investigation and maintaining reputational integrity. On the other hand, the press and other public stakeholders may now view previously sheltered information as fair game, and nothing stops companies—other than an organization’s own motives—from answering tough questions about their complicity in alleged wrongdoing.

SEC Makes Additional Moves to Rescind Climate Rules

In a move that comes as no real surprise, the SEC has signaled that it plans to formally rescind its climate-related disclosure rules—The Enhancement and Standardization of Climate-Related Disclosures for Investors. On May 7, 2026, the SEC sent a letter to the U.S. Court of Appeals for the Eighth Circuit to inform the court that it does not intend to renew its defense of the climate-related disclosure rules and of its plans to reconsider the rules through a “notice-and-comment rulemaking” process. Notice-and-comment rulemaking could turn out to be a lengthy process, and it is very likely that the rescission rule will be subject to legal challenge, too.

The rules, adopted by the SEC during the Biden administration in March 2024, mandated various climate-related disclosures from public companies in their public filings. The rules were quickly challenged, and the numerous lawsuits were eventually consolidated in the U.S. Court of Appeals for the Eighth Circuit.

Following the change in presidential administration, in March 2025, the SEC announced that it had voted to discontinue its defense of the rules. However, the SEC asked the Eighth Circuit to lift the stay on the litigation so that arguments regarding the scope of the agency’s power to adopt such requirements in the first place could proceed. The Eighth Circuit declined and directed the SEC to determine whether the climate-related disclosure rules would be rescinded, repealed, modified, or defended. Earlier this month—May 2026—the SEC submitted a proposed rulemaking to the White House’s Office of Information and Regulatory Affairs (“OIRA”) dashboard titled Rescission of Climate-Related Disclosure Rules, which you can read more about here. The proposal is currently undergoing review by OIRA.

Public and private companies should continue to follow developments, particularly once the rescission rule is formally published.

EEOC Sues The New York Times Over Alleged DEI-Related Discrimination

On May 5, 2026, the U.S. Equal Employment Opportunity Commission (“EEOC”) filed a federal lawsuit against The New York Times, alleging that the newspaper violated Title VII of the Civil Rights Act of 1964. The complaint alleges the New York Times passed over a white male employee for a promotion because of his race and sex, and instead hired an external candidate—which the EEOC described as a “multiracial woman” whom the EEOC claimed had little to no experience in real estate journalism despite such experience being a listed requirement for the position. The EEOC contended that the company’s diversity, equity, and inclusion (“DEI”) goals influenced the hiring decision in violation of Title VII. The New York Times rejected the allegations, with a spokesperson calling the lawsuit “politically motivated.”

The lawsuit is the latest and most high-profile in a string of DEI-related enforcement actions by the EEOC, following recent actions against other companies including Nike and a Coca-Cola distributor, and comes on the heels of the first DEI-related settlement by the Department of Justice (“DOJ”) under the False Claims Act with IBM. Companies should continue to closely evaluate their DEI-related practices and statements in this area, particularly in light of the EEOC’s and DOJ’s continued and expanding enforcement focus on these topics.

Delaware General Corporation Law Amendments

Amendments to the Delaware General Corporation Law (“DGCL”) were signed into law on May 21, 2026, and will take effect on August 1, 2026. The amendments are relatively modest compared to recent years and do the following:

• Clarify that the inclusion in a certificate of incorporation of a provision that opts out of the class vote required by DGCL §242(b)(2) to change the number of shares of a class of stock authorized for issuance will not automatically opt the corporation out of the default provisions of DGCL §242(d) unless it expressly states that the corporation is not governed by §242(d)(1) or (2) or specifies a greater or additional vote to change the authorized number of shares of one or more classes of stock;
• Amend DGCL §275 to (1) provide that the authority and responsibilities of a corporation’s registered agent terminate when a dissolution of the corporation becomes effective, except for service of process received before that time; (2) establish procedures for the Secretary of State to accept service of process for a dissolved corporation after the dissolution has become effective; and (3) require certificates of dissolution to include an agreement that the dissolved corporation may be served with process in Delaware by service to the Secretary of State in accordance with the Secretary of State’s rules and regulations; and
• Amend DGCL §312(j) regarding the revival of the certificate of incorporation of a nonstock corporation to clarify that no action by members entitled to vote on a dissolution is required for revival.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.