Senator Dodd Introduces Financial Stability Bill Calling For SEC Proxy Access Authority And Other Governance And Executive Compensation Reforms

Monday, May 3, 2010 - 01:00

Public Company Advisory Group

Weil, Gotshal & Manges LLP

On March 15, 2010, Senator Christopher Dodd (D-CT), Chairman of the Senate Banking Committee, introduced his long-awaited reform bill - The Restoring American Financial Stability Act of 2010 (the "Dodd Bill").1 As modified from the discussion draft he introduced in November 2009, the Dodd Bill's corporate governance and executive compensation reform proposals are similar in important respects to those contained in The Wall Street Reform and Consumer Protection Act of 2009 introduced by Representative Barney Frank (D-MA) and passed by the House on December 11, 2009 (the "Frank Bill").2

Whether the Dodd Bill will be approved by the Senate in its current form is uncertain, given the likelihood of amendments. If and when the Senate passes a version of the Dodd Bill, a conference committee will then meet to reconcile this legislation with the Frank Bill.

Please see pdf version for this chart.

Our readers should follow closely articles on the Weil Gotshal website at www.weil.com/news/pubdetail about the progress of the bill. 1 S. ___, 111th Cong. (2010). The full text of the Dodd Bill is available at http://banking.senate.gov/public/_files/ChairmansMark31510AYO10306_xmlFinancialReformLegislationBill.pdf.

2 For a detailed discussion of the Frank Bill, see our Weil Briefing "Congressional Watch House Passes Sweeping Wall Street Reform Bill Including Governance Provisions on "Say-on-Pay," Compensation Committee Independence and S.E.C. Proxy Access Authority" available at http://www.weil.com/news/ pubdetail.aspx?pub=9670. The full text of the Frank Bill is available at http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR3174:/.

3 S. ___, 111th Cong. § 1011 (2010).

4 S. ___, 111th Cong. § 111 (2010).

5 S. ___, 111th Cong. (2010). Title I contains provisions relating to financial stability and Title II addresses orderly liquidation.

6S. ___, 111th Cong. § 911 (2010).

7S. ___, 111th Cong. (2010). Title IV deals specifically with the regulation of hedge funds, Subtitle C of Title IX proposes improvements to the regulation of credit rating agencies, and Title VII governs improvements to the regulation of over-the counter derivatives markets.

8The SEC would also have the authority to exempt issuers from this requirement based on their size, market capitalization, number of shareholders or other criteria as it deems necessary and appropriate in the public interest or for protection of investors.

9This has also been addressed by the SEC's proxy disclosure amendments adopted on November 16, 2009.