12. Address Time Horizons in US Capital Markets (regulatory and legislative):
The SEC and the IRS should examine what steps could be taken to improve a long-term focus in the capital markets and US business. This would include structuring initiatives like proxy access to empower long term investors, improving disclosure for short-term oriented investors like hedge funds, looking at increasing capital gains taxes for short term trading relative to long term investing, and initiatives such as examining the accounting rules to determine if they are disadvantaging long term investments by companies, such as investment in human capital.
9. Create incentive that encourage long-term investing and discourage excessive risk-taking.
For example, empower long-term investors with tools to hold managers and boards accountable (e.g. access to the proxy); require executive pay at federally insured institutions to take into account risk and sustainability of performance (e.g. by not paying bonuses annually, eliminating stock option compensation, and requiring substantial equity holding requirements, as UBS has done); and require asset managers to disclose the performance period for portfolio manager incentive compensation.
Hat-tip: Michael L.