On June 25, 2010, members of the U.S. congressional conference committee reached agreement to reconcile the competing House and Senate versions of proposed legislation overhauling the nation's financial regulatory system. The agreement follows passage by the Senate on May 20, 2010 of its version of the reform legislation and paves the way for Congress to vote on the final legislation next week so that the new law may be signed by the president prior to the Fourth of July holiday.
In addition to financial regulatory reform, the legislation also contains corporate governance provisions that apply to all public companies (please see our May 26, 2010 Legal News Alert: http://www.foley.com/publications/pub_detail.aspx?pubid=7153). The text of the final bill, now renamed the Dodd-Frank bill, is not yet available. However, based on news reports and other publicly available information, it appears that:
- There will not be a requirement in the legislation for companies to adopt majority voting for directors
- The proxy access provisions of the legislation will not set any specific percentage ownership or holding period requirements as conditions for shareholders to submit nominees for directors and will authorize the SEC to exempt certain small issuers
- "Say on pay" provisions of the legislation will allow companies to hold advisory votes on executive compensation every other or every third year, instead of annually
- The legislation will require an advisory vote by shareholders on "golden parachute" arrangements
A comprehensive update on the final corporate governance provisions of the legislation will be provided once the final bill becomes available.
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