The Dodd-Frank financial reform bill was voted through by both the House of Representatives and Senate by 237-192 and 60-39 respectively. The legislation is now expected to be signed into law by President Obama as early as this week.
The passage of the bill is particularly significant for the corporate governance community which worked together to ensure that potentially crippling riders on proxy access were omitted from the final text.
To learn more about provisions affecting say-on-pay, proxy access, whistleblower protection, and remuneration committee independence Click Here for a summary of the bill or Here to read the full text.
Here are the key points for governance reform;
- Vote on Executive Pay and Golden Parachutes: Gives shareholders a say on pay with the right to a non-binding vote on executive pay and golden parachutes.
- Nominating Directors: Gives the SEC authority to grant shareholders proxy access to nominate directors.
- Independent Compensation Committees: Standards for listing on an exchange will require that compensation committees include only independent directors and have authority to hire compensation consultants in order to strengthen their independence from the executives they are rewarding or punishing.
- No Compensation for Lies: Requires that public companies set policies to take back executive compensation if it was based on inaccurate financial statements that don’t comply with accounting standards.
- SEC Review: Directs the SEC to clarify disclosures relating to compensation, including requiring companies to provide charts that compare their executive compensation with stock performance over a five-year period.
- Permanent establishment of Investment Advisory Committee, a committee of investors to advise the SEC on its regulatory priorities and practices; the Office of Investor Advocate in the SEC, to identify areas where investors have significant problems dealing with the SEC and provide them assistance; and an ombudsman to handle investor complaints.
- SEC Funding: More resources to the chronically underfunded agency to carry out its new duties.