Executive Compensation and Corporate Governance Provisions in the Dodd-Frank U.S. Financial Regulatory Reform Bill

Non-Binding Shareholder Vote on Executive Compensation ("Say-on-Pay")
(Section 951)

Companies must hold an annual, biennial or triennial non-binding shareholder advisory vote to approve the compensation of named executive officers.  Shareholders must vote no less frequently than every six years to determine the frequency of such advisory vote.

No

Shareholder meetings beginning six months after enactment

All public companies[1]

Disclosure of Golden Parachute Compensation
(Section 951)

In the proxy materials relating to a shareholder vote to approve an acquisition, merger, consolidation, or proposed sale or other disposition of all or substantially all the assets of a company, companies must disclose any compensation of a named executive officer that is based on or otherwise relates to the transaction.

Yes[2]

Shareholder meetings beginning six months after enactment

All public companies[1]

Non-Binding Shareholder Vote on Golden Parachute Compensation
(Section 951)

In connection with a shareholder vote to approve an acquisition, merger, consolidation, or proposed sale or other disposition of all or substantially all the assets of a company, companies must hold a non-binding shareholder advisory vote on any named executive officer compensation based on or otherwise relating to the transaction, unless such compensation already has been subject to a say-on-pay vote by shareholders.  Depending on the transaction’s circumstances, two such shareholder votes may be required, one each for the acquiring company and target company.

No

Shareholder meetings beginning six months after enactment

All public companies[1]

Disclosure of Institutional Investment Manager Say-on-Pay and Golden Parachute Votes
(Section 951)

Institutional investment managers subject to Section 13(f) of the Securities Exchange Act of 1934 (the "Exchange Act") must disclose no less than annually how they voted on any say-on-pay and golden parachute matters.

No

Six months after enactment

Institutional investment managers subject to Section 13(f) of the Exchange Act[3]

Compensation Committee Independence
(Section 952)

Each member of a company’s compensation committee must be independent under a definition of independence to be established by the exchanges that includes consideration of the sources of compensation paid to compensation committee members (including any consulting, advisory or other compensatory fees) and whether the members are affiliated with the company.

Yes[4]

SEC rulemaking no later than 360 days after enactment[5]

Listed companies, other than controlled companies, limited partnerships, companies in bankruptcy, registered open-ended investment management companies and foreign private issuers that provide annual disclosures to shareholders of reasons why they do not have an independent compensation committee[6]

Compensation Consultant and Other Adviser Independence
(Section 952)

Compensation committees may only select a compensation consultant, legal counsel and other advisers after taking into account independence factors to be established by the SEC, which factors must be competitively neutral and treat large and small consultants equally.

Yes[4]

SEC rulemaking no later than 360 days after enactment [5]

Listed companies, other than controlled companies[7]

Compensation Committees’ Authority to Retain Independent Compensation Consultants, Legal Counsel and Other Advisers
Section 952)

Compensation committees will be directly responsible for the appointment, compensation and oversight of independent compensation consultants, legal counsel and other advisers.  The legislation should not be construed to require compensation committees to follow the recommendations of such consultants and advisers or to affect compensation committees’ ability or obligation to exercise their own judgment in fulfilling their duties.

Yes[4]

SEC rulemaking no later than 360 days after enactment [5]

Listed companies, other than controlled companies[7]

Disclosure Regarding Use of Compensation Consultants
(Section 952)

Companies must disclose in their annual proxy statements whether a compensation consultant has been used, whether the consultant’s work has raised any conflicts of interest and how any such conflicts are being addressed.

Yes[4]

Shareholder meetings beginning one year after enactment

Listed companies, other than controlled companies[7]

Funding for Compensation Committee Consultants and Advisers
(Section 952)

Companies must provide funding for the reasonable compensation of compensation consultants and other advisers retained by the compensation committee.

Yes[4]

SEC rulemaking no later than 360 days after enactment [5]

Listed companies, other than controlled companies[7]

Disclosure of the Relationship Between Pay and Performance
(Section 953)

The SEC must adopt rules requiring a company to disclose in its annual proxy statement the relationship between executive compensation actually paid and the company’s financial performance, which disclosure may include a graphical representation of the required information.

Yes

Not specified

All public companies

Disclosure of Internal Pay Ratios
(Section 953)

The SEC must adopt rules that require each company to disclose in its annual proxy statement and other SEC filings described in Item 10(a) of Regulation
S-K: (1) the median of annual total compensation of all employees other than the CEO (or any equivalent position); (2) the annual total compensation of the CEO (or any equivalent position); and (3) the ratio of those two amounts. For the purposes of this requirement, "total compensation" must be calculated in accordance with Item 402 of Regulation S-K, as in effect the day before the Dodd-Frank Bill’s enactment.

Yes

Not specified

All public companies

Recovery of Erroneously Awarded Compensation (Clawback)
(Section 954)

Companies must adopt and implement policies: (1) for disclosure of the company’s incentive-based compensation that is based on the financial information required to be reported under the securities laws; and (2) to recoup unearned payments awarded to current or former executive officers as incentive compensation during a three-year look-back period if the company is required to prepare an accounting restatement based on erroneous data due to material noncompliance with any financial reporting requirement under the securities laws, regardless of whether the individual was involved in misconduct that led to the restatement.

Yes[4]

Not specified[8]

Listed companies

Disclosure Regarding Employee and Director Hedging
(Section 955)

The SEC must adopt rules requiring each company to disclose in its annual proxy statement whether its employees or directors or their designees may purchase financial instruments that are designed to hedge or offset any market value decrease of equity securities granted as compensation or held directly or indirectly by the employees or directors.

Yes

Not specified

All public companies

Broker Voting
(Section 957)

A broker that is not the beneficial owner of a company’s shares (e.g., shares held in street name on behalf of retail investors) is prohibited from voting on the election of directors, executive compensation matters (including say-on-pay) or other significant matters (as determined by the SEC by rule) unless the beneficial owner has provided the broker with voting instructions.

Yes

Not specified

All public companies

Proxy Access
(Section 971)

The SEC may, but is not required to, issue rules permitting shareholders to use company proxy solicitation materials for the purpose of nominating directors.

No

Determined by SEC rule, if any

Determined by SEC rule, if any[9]

Disclosures of Board Leadership Structures
(Section 972)

The SEC must issue rules requiring companies to include in their annual proxy statements the reasons they have chosen the same person, or different people, to serve as chairman and chief executive officer.

Yes

SEC rulemaking no later than 180 days after enactment

All public companies

Risk Committees for Certain Financial Institutions (Section 165)

Publicly traded nonbank financial institutions supervised by the Federal Reserve and publicly traded bank holding companies with at least $10 billion in assets must establish a separate risk committee of the board of directors, which is required to: (1) oversee the financial institution’s risk management practices; (2) include a number of independent directors determined by the Federal Reserve, based on the nature of operations, size of assets and other criteria; and (3) include at least one risk management expert.

No, although Federal Reserve rulemaking is required

Federal Reserve rulemaking no later than two years after enactment, to take effect no later than two years and three months after enactment

Publicly traded nonbank financial institutions supervised by the Federal Reserve and publicly traded bank holding companies with at least $10 billion in assets[10]

Beneficial Ownership and Short-Swing Profit Reporting
(Section 929R)

The SEC may, but is not required to, issue rules shortening the period of time within which the following must be filed with the SEC:  (1) a Schedule 13D in connection with acquiring beneficial ownership of more than 5% of a registered class of equity securities; and (2) a Form 3 in connection with becoming a director, officer or greater than 10% shareholder of a public company.

No

Determined by SEC rule, if any

Determined by SEC rule, if any