Reducing federal oversight will allow states to set rules that focus on business value over politicized initiatives.
Opinion: Bring Back State-Led Corporate Governance
Wall Street Journal
By: Senator Bill Hagerty
September 17, 2026
Link here.
Michael Toth is right that Texas is showing the country a better model for corporate governance (“BlackRock Casts a Vote of Confidence in Texas,” Cross Country, Sept. 5). The Securities and Exchange Commission deserves credit for pursuing reforms that give this state-level model the room it needs to succeed.
For years, political activists have used a federal policy known as Rule 14a-8 to force their agendas into corporate boardrooms. This has made climate mandates, DEI initiatives and other value-destroying ESG priorities regular, costly fixtures on corporate proxy ballots. It has also empowered a duopoly of foreign-owned proxy advisory firms that shake down companies when they issue recommendations on these shareholder votes.
In a July speech, SEC Chairman Paul Atkins rightly questioned why this federal rule should dictate the shareholder proposal process in an area of corporate law that has traditionally been handled by states. Since then, the SEC has worked toward rescinding Rule 14a-8, a move that will end the federal infringement and allow states to set their own rules.
Texas is already showing what happens when states reject politicization and adopt rules that let businesses focus on creating value. Major companies like Exxon and Tesla are moving their legal homes there. As Mr. Toth emphasizes, even BlackRock is now voting in favor of companies seeking to incorporate under the Texas framework. Tennessee has taken similar steps by passing laws to crack down on proxy adviser conflicts of interest and keep public pensions focused on investment returns. As the SEC’s reform agenda progresses, we can expect more states to follow.
Mr. Atkins and pro-business state governments are showing what the future of effective corporate governance can look like. This is great news for federalism and every retail investor who relies on the strength and integrity of America’s capital markets.