President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) on July 21, 2010.
Dodd-Frank is an ambitious overhaul of the financial regulatory system, addressing many of the lapses in oversight, judgment, imagination, transparency and accountability that contributed to the 2008 financial crisis.
At 2,300 pages, Dodd-Frank is a monster. Yet it is only a framework for future regulation, delegating essential details and much discretion to financial regulators.
It covers a wide variety of topics, including consumer protection, financial stability and derivatives. Most of the regulatory onus will fall on commercial and investment banks, hedge funds, derivatives traders, and consumer financial providers. However, Title IX, Subtitle E (Subtitle E) is directed at public companies, and mandates critical changes in proxy disclosure and shareholder rights that could fundamentally impact compensation practices and investor relations.
Subtitle E takes effect six months after the enactment date and will be implemented by SEC and stock exchange rules. The changes will be in effect for next year’s proxy season, thus meriting prompt attention by management, boards and compensation committees.
Topics Covered
Subtitle E covers the following topics:
- Say on pay
- Say on golden parachutes
- Compensation committee and advisor independence
- Enhanced disclosure of the relationship between pay and performance
- Internal pay equity disclosure
- Employee and director hedging
- Clawbacks
- Shareholder proxy access
- Broker discretionary voting
For More Information
For additional information on what Subtitle E will require and what you should be doing now, click here. If you have questions or would like further comment, please contact:
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